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WTO NEWS: SPEECHES — DG PASCAL LAMY

12 December 2005

Hong Kong session of the Parliamentary Conference on the WTO

Inter-Parliamentary Union and European Parliament

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Ladies and gentlemen,

We first met in September at your Geneva headquarters, when you had invited me to address your members exactly 3 weeks after I had taken office in the WTO. At the time we spoke about the preparatory work needed in the lead-up to the WTO’s 6th Ministerial Conference in Hong Kong. That Conference is now before us.

Assembled in Hong Kong today is a vast array of world leaders, of parliamentarians, of non-governmental organizations, and of media. This certainly creates a more challenging negotiating environment for WTO Members, but is a challenge that we must all rise to in Hong Kong.

I am heartened by the continued interest of parliamentarians in the WTO. Your presence in Hong Kong today brings greater democracy and accountability to the WTO as an institution. It reminds us of the importance of the project that countries launched back in 1947 in an attempt to bring law and order to international trade — that project was of course the “GATT”. Today we all have a collective responsibility to strengthen that project, and to take it forward. After all, it is a project that has contributed to world peace and economic growth, and which has brought greater predictability and accountability to trade relations.

I would like to thank Mr. Casini for his call on this Parliamentary Conference to “remind negotiators of the imperative of reaching a successful outcome”. This is precisely the sort of message that would give momentum to this critical of week of negotiations.

You will recall that when we last met, I had said that the Hong Kong Ministerial Conference must take countries 2/3ds of the way towards the completion of the Doha Round, whose target date is the end of 2006. That target date corresponds to the end of the negotiating mandate of one of our Members Ś the United States, whose Trade Promotion Authority will be expiring.

Since then, you may have heard that Members decided to “recalibrate” their expectations for Hong Kong. I hasten to stress that by recalibration Members meant neither a lowering of the level of ambition for the Doha Round, nor a license to let the final 2006 end date slip. The Round must be completed on time, and must fulfil its promise of a cross-cutting developmental outcome. The call for recalibration was necessary only in order to adjust expectations to the “real” state of the negotiations.

Immediately prior to this Conference, Members demonstrated their serious engagement in the Doha Round by taking two important decisions — ones that will undoubtedly make a difference for developing and least-developed countries. First, Members agreed to give least-developed countries until 2013 to comply with the provisions of the WTO Agreement on intellectual property rights with respect to trademarks, copyrights and other protection. They also agreed on an even longer extension of the implementation period for pharmaceuticals — 2016. This important step was taken to help least-developed countries integrate into the multilateral trading system. It recognizes that a “one size fits all” set of rules would ignore the reality of the different stages of development that WTO Members are at.

Even more recently, on 6 December, Members reached a decision to amend the TRIPS Agreement so as to allow developing countries more flexibility in responding to public health crises. The recent agreement makes operational, and more legally secure, the waiver that had been given to developing countries in 2003 to let them import generic copies of patented drugs for emergencies. I would draw your attention to the fact that this represents the very first time that a WTO Agreement has been amended. It shows that our rules are not set in stone. They can evolve, and are capable of responding to changing needs. It is my hope that national parliaments will see the significance of this amendment and will rise to the challenge of its ratification.

Your focus today is on the contribution that trade can make to the attainment of the Millennium Development Goals. This is a concrete example of the way that it can. In this particular instance, the WTO has responded to the challenge of the 6th Millennium Development Goal — that of fighting the spread HIV/AIDS, and of other diseases.

The Draft Hong Kong Ministerial Declaration that is before countries today has the potential to contribute to other Millennium Development Goals as well — in particular those of “eradicating extreme poverty and hunger”, and forming “a global partnership for development”. Through greater trade opening in agricultural goods, industrial goods, and services, developing countries stand to enhance their export opportunities and to raise their standards of living.

The Round is intended to address issues such as unfair agricultural subsidies that have kept some developing countries out of international markets, to reduce tariff peaks and tariff escalation particularly for products of interest to developing countries, and to fine-tune WTO rules in areas like anti-dumping. Anti-dumping measures have sometimes unfairly been used against developing countries, but perhaps a more worrying trend today is that some developing countries are using these measures against each other.

Let me walk you, then, through the Draft Hong Kong Ministerial Declaration to demonstrate what it represents. The Declaration is intended, first, to capture the progress that countries have made in the negotiations since July 2004; and, second, to build on progress in key areas so that Hong Kong may be a launch pad for “full negotiating modalities”. These cannot be delayed, and must be reached only a few months after the Conference. By “modalities” I mean a numerical work plan that would set out in full the rates at which tariffs would be cut, subsidies reduced, the target dates, and so on.

In agricultural and industrial goods the Draft Declaration captures the progress that has been made. In both areas, it shows that Members have now entered a new phase in the negotiations: one, in which much greater precision can be given to the architecture of the final deal.

Let me give you a concrete example. In agriculture, it captures the notion that tariffs will be cut on the basis of different, quote unquote, “bands”. What does this mean? In the Uruguay Round, countries got away with making average tariff reductions. So, for instance, a country could cut one tariff significantly, but many others very little. This could be done because all that was required was an average reduction, accompanied by a minimum cut per tariff line that was quite low. Today, a country can no longer lump all of its tariffs together in making its reduction. Different tariffs will be placed in different tariff bands, and all tariffs will have to be cut. The highest will be reduced the most.

Even greater precision has been achieved in the area of internal and export subsidies. With respect to internal subsidies that are trade distorting, Members have not only agreed on a similar “banded approach”, but they are also well on their way to agreeing on the actual rates of reduction to be made. Furthermore, export subsidies will be completely eliminated. This must be done in parallel with the elimination of the more disguised forms of export support, such as food aid that causes commercial displacement. Members have also reaffirmed their intention to prioritize the “cotton dossier”, which as you know is of great interest to some of our poorest Members.

The Draft Declaration also represents a greater level of precision on industrial goods. It recognizes that there is support for an ambitious formula, one that would cut higher industrial tariffs the most. This again, stands in contrast to the Uruguay Round, where equal reductions were made to different tariff lines, irrespective of their level.

The Draft Declaration is an important step forward in another area as well — trade facilitation. This is the negotiation that is aimed at facilitating the customs clearance and release of traded goods. It includes measures that range from the provision of timely information on trade regulations, to the setting of parameters for the fees that are to be charged in connection with trade. There is much to gain from these negotiations, in which significant progress has been made, in particular for many of the small or landlocked countries.

In the area of services, where the negotiations are not based on formula reductions, but on intensive discussions between national regulatory authorities on a sector-by-sector basis (such as in banking and insurance), the process can be very time consuming. Members must therefore accelerate the pace of these negotiations — the Draft Declaration provides for benchmarks to do that. Let us remember that services represent a major component of developing country trade. In fact, tourism services alone are the main foreign currency earner for most of the least developed world. We cannot afford, therefore, to set these negotiations aside.

In proposing a global partnership for development, the Millennium Development Goals called on the WTO to address the specific market access needs of least-developed countries. They explicitly called for the granting of duty-free, quota-free, access to LDC exports, in addition to more generous development assistance. The Draft Hong Kong Declaration represents an important step forward in this regard. It asks developed countries, and developing countries that are in a position to do so, to grant this access to the world's least developed nations by the end of the Round.

In addition, it takes the concept of development assistance further, by setting the foundation for a new “Aid for Trade” package to address the developing world’s supply side constraints. Market opening opportunities can be of little use to countries if their limited production capacity and infrastructure holds them back. This is the issue that Aid for Trade focuses on.

To conclude, let me reiterate that in the coming few days WTO Members will have to take important decisions, although not the very final ones. Hong Kong is one of many steps along the road of a complex and lengthy negotiation. However, it is a step that should take us closer to our finishing line next year. Members must strengthen the Draft Declaration, build on it, and take it forward. There is little time to spare. As the WTO expands to include new Members, like Saudi Arabia and Tonga, the world expands its expectations of the WTO. And now is the time to start delivering.

I thank you for your attention.