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I want to
congratulate the United Nations University and individual contributors
to the book, The Role of the World Trade Organization in Global
Governance. It is an excellent volume and an important
contribution to current debates on the WTO. I welcome this opportunity
to explore with you some of the themes in the book. In particular, I
have been asked to speak today on the topic ‘The WTO:
challenges towards the Doha Ministerial’.
Let
me start with a quote from the book, by an old friend, Martin Wolf:
‘The multilateral trading system at the beginning of the
twenty-first century is the most remarkable achievement in
institutionalized global economic cooperation that there has ever
been.’ I agree. And figures support this. As Gary Sampson points out
elsewhere in the book, the current trade rules permit world trade in
goods and services to be successfully conducted at the rate of close
to US$1 billion per hour every hour of every day.
This
sort of success is bound to attract attention. But there are other
reasons as well for the heightened interest in the WTO. Current trade
rules affect the lives of every one on this planet. As well, we have a
binding dispute settlement mechanism that is truly unique among the
international institutions. Our membership has increased dramatically
and the composition has changed so that among our 140 members, four
out of five are from the developing world. Developing countries are
far more visible in the WTO and are pursuing their legitimate
interests actively. I think it is also worth noting that the first
five years of existence of the WTO has coincided with a growing
anxiety among many parts of the world population about the effects of
globalization.
The
WTO is a young organization. We are a major player among the
international institutions but we are still defining our role. It is
in this context that I welcome your book. It helps us to reflect on
the objectives of the trading system and how these objectives can best
be met. It identifies many of the issues currently facing the WTO both
in terms of institutional matters (transparency, effective
participation of all members, relations with civil society, etc), and
issues of substance (trade and labour, trade and environment, etc). I
welcome the book and the discussion it encourages. Let me now turn to
the current WTO work programme and the road to Doha.
It
is no secret that this is a crucial year for the multilateral trading
system. In November, Qatar will host the next WTO Ministerial
Conference. Our aim is to launch a new round. It is a big challenge
but prospects are encouraging. I believe that with focus and
flexibility we can succeed.
The Arguments for Launching a Round
The
economic argument for a new WTO round is compelling. Cutting by
a third barriers to trade in agriculture, manufacturing and services
would boost the world economy by $613 billion, according to one study
from Michigan University. That is equivalent to adding an economy the
size of Canada to the world economy. Doing away with all trade
barriers would boost the world economy by nearly $1.9 trillion: the
equivalent of adding two more Chinas to the world economy. All
countries would gain from further multilateral liberalization.
Of
course, these are only estimates. Reasonable people can quibble about
the exact size of the gains from a new round. But the basic message
from study after study is clear: a new round brings huge benefits to
all parts of the globe.
The
development argument for a round is equally compelling. 1.2
billion people are living on less than $1 a day. Another 1.6 billion
are living on less than $2 a day. It is a tragedy that while our
planet is blessed with sufficient resources to feed its 6 billion
people, many are going hungry and many are living in the misery that
poverty breeds. The first responsibility lies with governments in
these poor countries. Development requires peace. It requires good
governance and sound economic policies. It requires adequate
investment in education and health care. It requires protection of
human rights and gender equality. But poverty in all its forms is also
the greatest challenge to the international community and we will be
judged by our response to our most vulnerable members.
Poor
countries need to grow their way out of poverty. Trade is the key
engine for growth but currently developing country products face many
obstacles in entering rich country markets. For example, the 49 least
developed countries, representing 10.5 per cent of the world
population, have less than 1 per cent of world exports. Open markets
can play an important role in lifting billions of people out of abject
poverty. And the most effective way to achieve these openings is by
launching a new round.
There
is another argument, an historical one that I have already
touched on. Liberalization works. The multilateral trading system
works. The last 50 years has seen unparalleled prosperity and growth
and more has been done to address poverty in these last 50 years than
in the previous 500. Since 1960, child death rates have halved in
developing countries; malnutrition rates have declined by a third;
access to safe water has improved dramatically; and the proportion of
school children who do not go to school has dropped from around a half
to a quarter. Let me add, experience shows, and studies confirm, that
those countries that are more open to trade, like South Korea and
Japan, grow faster than those that aren't. The multilateral system has
proved its worth repeatedly.
Setting the Agenda for a New Round
The
building blocks of a new round are almost in place. Negotiations in
Geneva on liberalizing trade in agriculture and services are entering
their second year. Progress so far has been good. But we urgently need
to broaden the negotiating agenda beyond agriculture and services.
Why?
We need a wider agenda because it creates political trade-offs. Take
agriculture. The European Union and Japan have stated that they are
willing to negotiate meaningfully on reducing agricultural protection.
Yet agricultural liberalization is extremely sensitive politically.
There is a much greater chance of reducing agricultural support in
Europe and Japan if other countries are willing to make concessions in
areas where Europe and Japan have demands.
A
similar logic applies to implementation-related issues. Some
developing countries have concerns about the burden of implementing
their Uruguay-Round commitments and its perceived inequities. Modest
progress has been made in addressing some of these concerns. But there
is now a growing recognition that further efforts relating to past
agreements require new negotiations. Instead of being a stumbling
block, implementation could thus become yet another building block of
a new round.
Another
potential building block is manufacturing, which has been at the heart
of every previous round. There are still many damaging trade barriers
in manufacturing. Most of their burden falls on developing countries.
In one World Bank study, it estimated that barriers to manufacturing
exports account for around 70% of the total export barriers faced by
developing countries and that 75% of the gains from further
manufacturing liberalization would go to developing countries.
Clearly, then, manufacturing has to be at the heart of a new round if
it is truly to benefit developing countries.
Setting
the agenda for a new round is not just about including issues. It is
also about excluding some. From what I have seen, WTO members will
never agree to use trade sanctions to enforce labour standards. It is
a line in the sand that developing countries will not cross. They fear
that such provisions could be abused for protectionist purposes. They
also believe such matters are more appropriately considered in other
international fora.
The
environment issue is different. Our work at the WTO dovetails with
environmental aspirations in potentially important ways. It is already
part of our process now. In areas like agriculture and fisheries, some
existing subsidies can compromise environmental quality. We should
work together to address these issues. More importantly, poverty is no
friend of the environment. The virtuous circle of open trade and
growth contributes to poverty reduction, and the WTO has a positive
role to play here too. But potential conflicts also exist, most
notably when it comes to environmental quality issues that spill
across national frontiers. Here we need greater cooperation among
governments. The WTO cannot solve these problems alone. Punitive
sanctions in the absence of international agreements are hardly the
answer. It should not be impossible for governments to square their
commitments at the WTO with those in MEAs.
Leaders
have called for greater coherence in global governance. We should
follow their instruction and advice. The social dimensions of
globalization and the anxieties about the wider implications of the
age of globalization are real and feed into reactionary forces that
could damage the opportunities the poorer of our members have to grow
and export. Most international agencies are addressing these concerns
one way or another. These concerns will not go away and if the global
economy stalls, they will get stronger.
Instead
of approaching these concerns in an ad hoc, individual way, I believe
the international agencies could share ideas and research, the better
to inform their membership. This can be done without affecting or
infecting the core mandates of the agencies. Information strengthens
us. Believe it or not, solid practical work was done pre-Seattle and
at Seattle on the social issues. I am encouraging delegations to look
again at the papers prepared at that time.
Between
now and July, we at the WTO shall make every effort to hammer out an
agenda for a new round so Ministers can put the final touches to it in
Qatar in November. We need always to keep in mind that this is about
launching a round – not concluding a round. The agenda has to be
broad enough to have something in it for everyone, but must exclude
issues that are inappropriate or where compromise is impossible. It
has to be detailed enough to be meaningful, but not so detailed that
it becomes a pre-negotiation.
July ‘Reality Check’
By
July, we need to have a reality check, we need to have identified and
boiled down our differences to a few issues that we can put to
Capitals and Ministers, so these issues can be resolved at the highest
level. Some doubt the wisdom of my comments about a July reality
check. This is a 'real' time when we can report to Capitals and our
owners on the scope and depth of an agenda for the Ministerial
Conference in Doha. Remember that Doha is a part of our process of
accountability. We report to Ministers and they decide our direction
for the next two years, and beyond. I believe it is right and
appropriate that Trade Ministers should assemble in this manner - to
hold us accountable but also to discuss their core responsibility
which is trade. I hope that one day such meetings are uncontroversial.
After all, health, labour and environment Ministers meet frequently.
However,
let me repeat and make clear my ambition for July. July will not be
the time at which we will decide to launch a round. I have seen this
comment printed somewhere. Only Ministers can decide to do this. But
in July we will report clearly and objectively what is possible to
include in a trade negotiation, beyond our current mandated agenda of
agriculture and services, which many Members believe is too limited.
Many
want to add other issues such as implementation, environment, etc. We
will report to colleagues in Geneva and Capitals on what looks
achievable and where we can find common ground if we get the necessary
political leadership. July is not too soon for such a reality check.
The issues have been discussed for years. Following July, and then the
summer break when Capitals will have had the time to consider and
digest our reality check, there are just six Saturdays before we all
catch our planes to Doha.
I
can report on one consensus that Ministers have already reached. They
want a manageable agenda for Doha. If we have the same differences in
July as we had in Seattle, then it is most likely we will have the
same result as Seattle. We are in the hands of our owners, the
Members.
Political
Commitment
Time
is short. July is approaching fast. I have already outlined the
arguments for a round and sketched in broad terms some of the elements
that might be included in the negotiations. Most trade hands will
agree that it is realistic. The missing ingredient is the political
will from Members to compromise. Finding it will be difficult and will
require courage and commitment. But once it is found, progress can be
swift.
There
are many positive signs. The new US administration has made a new
trade round a priority. The European Union is showing signs of
flexibility. The transatlantic relationship, which is key, also seems
to be improving.
Developing
countries too are being more realistic. Many of them have abandoned
their previous opposition to a new round. They increasingly recognise
that dwelling on the perceived injustices of the past does nothing to
prevent even greater injustices in future. They increasingly say that
the greatest threat to their economies is not globalization, but
marginalization. Let me add that any new round can only start and
conclude if it addresses the real concerns and ambitions of developing
countries.
All
of this is good. But all WTO members still need to find the courage to
go the final mile. It is all too easy to pay lip-service to the need
for a new round without showing the necessary flexibility. It is all
too easy to lose sight of the overwhelming national good in the
defence of narrow, special interests. And it is all too easy to allow
the WTO to cop the blame for national failings and to fail to explain,
and explain again, the case for trade liberalization to voters.
Risks
of Not Launching
There
are risks in not launching. The world economy is looking vulnerable.
The US economy, its motor for the past decade, is stuttering. A
recession in America could export trouble to the rest of the world. An
upsurge in protectionism could make things much worse. For example, if
companies squeezed by falling profits convince governments that they
need protection from foreign competition, the virtuous circle of trade
liberalization and economic growth could all too easily become a
vicious spiral of protectionism and stagnation.
Failure
to launch a new round this year could also jeopardise the multilateral
trading system itself. A global rules-based system based on
non-discrimination could give way to a patchwork of discriminatory
regional deals and even potentially hostile blocs, combined with
aggressive unilateralism by the big guys. Everyone would lose from
this. But the biggest losers would be the poor and the weak.
It
need not come to that. The precariousness of the world economy
provides an opportunity as well as a threat. The prospect of stagnant,
or even shrinking, domestic markets increases the lure of new, foreign
ones. This can help muster an export lobby powerful enough to overcome
the entrenched interests opposing freer trade.
A
growing risk of protectionism makes the need for an insurance policy
that protects against it all the more pressing. For instance, car
manufacturers that start to fret that their supplies of cheap foreign
steel will be cut off may start to lobby vigorously for open markets.
A
shared sense of vulnerability need not lead to beggar-thy-neighbour
policies: it can also encourage greater co-operation among
governments. That, after all, was the rationale for setting up the
multilateral trading system after the protectionist nightmare of the
1930s. Anxious politicians could come to see fresh moves towards trade
liberalisation as a way to tide the economy through hard times.
Final
Comment
My
concluding comments are simple and often repeated. Don't take the
benefits of the WTO for granted. Don't assume that the world trading
system will look after itself. Don't fight yesterday's battles and
neglect tomorrow's opportunities. The world needs a new WTO round.
Let's launch it in Qatar this year. Thank you. |
