Ladies
and Gentlemen,
The
subject of my speech today is developing countries' priorities for
negotiations at the WTO. It sounds unexceptional, and yet it is very
revealing.
The
multilateral trading system has changed dramatically since the Uruguay
Round. Until then, developing countries hardly participated in
negotiations. Most of them were not members of the GATT. And those
that were members benefited from the liberalizing outcome of GATT
rounds, but scarcely had to reciprocate with tariff concessions of
their own. In a sense, they were passive members of the multilateral
trading system.
It
is different now. Developing countries have rushed to join the WTO.
Among our 140 members, four out of five are from the developing world.
What's more, in addition to receiving all the benefits of membership,
they are now expected to offer concessions of their own in return for
concessions given by developed countries. Generally, then, developing
countries now participate on a reciprocal basis at the WTO.
This
is good. For one thing, domestic liberalization typically does more to
boost economic growth than greater market access from developed
countries. That is why so many developing countries have liberalized
unilaterally over the past 15 years and have reaped the benefits of
faster economic growth. But perhaps more importantly from a WTO
perspective, it means that developing countries are now full and
active members of the multilateral trading system. And since they are
expected to make concessions, they have a right to make demands.
Moreover, since they make up the overwhelming majority of the WTO's
membership, their demands cannot be ignored. They can set priorities
for negotiations and expect to meet many of them. They no longer have
to make do with the scraps tossed from the rich men's table.
The
older members of the Organization are adjusting to this new world. The
big players know they can no longer simply cut deals amongst
themselves and expect the rest of the world to fall into line.
Developing countries are adjusting too. In the past, some developing
countries said no to a new round until their demands on implementation
issues were met. Many claimed as well that they could not honourably
enter into new obligations when, for various reasons, they could not
implement the ones already agreed upon.
The
tide is turning. While developing countries know they have the power
to block the launch of a new round, they also increasingly realise
they can most effectively achieve their trade and development
objectives through a new round. They also know that no new round will
ever conclude without their needs being addressed.
What,
then, are developing countries' priorities for negotiations? It is
impossible to speak in more than very broad-brush terms about a group
that encompasses Brazil and Gabon, India and Lesotho. Nor is it
appropriate for me, as WTO Director-General, to set out individual
members' positions. But I can still make some general, and hopefully
useful, remarks.
Let
me start with agriculture, where negotiations in Geneva have just
entered their second year, and which is particularly important for
developing countries. If one looks at the proposals they have
submitted, they are pressing for two things.
First,
they want radical reforms from developed countries. This would include
the eventual elimination of export subsidies and other forms of export
subsidisation, drastic reductions in domestic support and very
substantial improvements in market access for agricultural products of
actual and potential interest to them. They point out that
agricultural subsidies have increased since the Uruguay Round to about
$1 billion a day; that OECD subsidies equal in dollar terms the GNP of
all of Africa.
Second,
a number of developing countries, particularly non-Cairns Group
developing countries, want to give developing countries significantly
more flexibility than under existing provisions, especially in
domestic support and market access with respect to staple foods and in
the context of food security concerns.
In
services, negotiations are also going into their second year. Most of
the negotiating proposals have been submitted by developed countries,
although Venezuela has now submitted one on energy services, in
addition to earlier proposals by India and CARICOM. One priority is
the liberalization of the so-called “movement of natural persons”,
which basically means that it should be easier and more transparent
for workers from developing countries to get short-term visas to work
in developed countries, be they Indian software engineers in Germany
or Mexican construction workers in the United States. Another priority
should be the use of the GATS to bind liberalization in important
service sectors such as telecoms and financial services. This is a
must if countries are to attract invaluable foreign direct investment.
Every economy needs an efficient services backbone, whether it exports
tomatoes or textiles.
A
third priority relates to implementation-related concerns and issues.
Many developing countries have concerns about the burden of
implementing their Uruguay-Round commitments and its perceived
inequities. They have raised a number of issues, which are being
discussed in the WTO's General Council and in WTO committees. Modest
progress has been made, notably at a special session of the WTO
General Council last December. But there is now a growing recognition
that further efforts relating to past agreements require new
negotiations. As well as the in-built agenda of agriculture and
services, a new WTO round must have implementation issues at its
heart.
Another
issue that is important to developing countries is industrial tariffs.
Developed countries still have many high tariffs, mainly in textiles,
clothing and leather. Moreover, most rich countries have higher
tariffs on processed goods than on raw materials. This tariff
escalation makes it harder for developing countries to industrialise.
The
burden of these remaining barriers to industrial trade falls mainly on
developing countries. Manufactures account for around three-quarters
of developing-country exports, up from around 30% twenty years ago.
Moreover, developing-country exports of manufactures face much higher
trade barriers than exports from developed countries. In one World
Bank Study it is estimated that barriers to manufacturing exports
account for around 70% of the total export barriers faced by
developing countries and that three-quarters of the gains from further
manufacturing liberalization would go to developing countries.
Clearly, then, manufacturing could be at the heart of a new round if
it is truly to benefit developing countries.
Last
but not least, developing countries, and least developed countries in
particular, must continue to receive increased technical assistance in
order to ease the burden of implementing new agreements as well as to
help them reap the fullest benefits from them. I have made this one of
my priorities as Director-General. We at the WTO have increased
technical assistance to LDCs. With our limited budget and trade focus,
the WTO can only contribute so much to export capacity building in
LDCs. But our technical-cooperation programme is an unsung success
that helps developing countries take greater advantage of trading
opportunities at a tiny cost.
Another
success story is the Integrated Framework, a strategy for inter-agency
co-operation on trade-related technical assistance to the
least-developed countries. It is an important step towards
mainstreaming trade so that it is at the heart of countries'
development plans and poverty reduction strategies. The IF had laid
dormant for years. But we have now reinvented it and are in a position
where we hope several countries will start to benefit from it by the
time the UN conference on LDCs meets in May. I should add that at the
Conference I intend to report on progress in a range of additional
areas including market access (with over 20 countries offering
improved access for LDCs), standard setting and accessions.
Developing
countries have much to gain from a new WTO round and a wider set of
negotiations. With a positive agenda and strength in numbers, they can
ensure the next round has a strong focus on developmental concerns.
But they will gain little unless we actually launch a round. In the
absence of a round, all countries will lose, but more so the weaker
and the more vulnerable.
I
know that many developing countries have argued that we cannot launch
a new round until the perceived injustices of previous rounds have
been dealt with. I understand their concerns. But dwelling on the
perceived injustices of the past does nothing to prevent even greater
injustices in future. Many developing-country governments are coming
round to that view. They increasingly say that the greatest threat to
their economies is not globalization, but marginalization. A new round
is the surest way to prevent the further marginalization of developing
countries from the world economy and to deal with the problems that
they may have with existing WTO agreements and the way the WTO is run.
As a study by the Tinbergen Institute points out, the potential
benefits of a new round to the developing world are three times what
it receives each year in overseas aid.
As
storm clouds threaten the world economy, the prospect of launching a
new round is a ray of sunlight for everyone, not least the developing
world. Now is the time to move from words of support for a new round
to making the compromises needed to launch one. Now is the time to
question narrow, selfish interests in the interest of the overwhelming
national good. Now is the time to look beyond yesterday's battles
towards tomorrow's opportunities. The world needs a new WTO round.
Let's launch it as early as possible, this year.
Thank
you. |
