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> Supachai Panitchpakdi's speeches
My dear friend Director-General Jacques Diouf, Excellencies, Ladies and
I am very pleased to participate in person at this important meeting and
to convey our gratitude to the FAO for its continued support to the
WTO's Doha Development Agenda negotiations. I wish to thank my dear
friend Jacques for inviting me to join you. FAO is an important partner
of the WTO both in terms of our trade-capacity building programmes and
in the provision of information and analysis. It is indeed my great
pleasure to participate in a discussion on such an important issue as
food security, one of the targets of the Millennium Development Goals.
Technology and modern agriculture has transformed the nature of the
quest for food security but in one respect there has been no significant
change. Despite the impressive material progress that our civilization
has made, hunger and starvation have sadly not been eradicated in all
parts of the world.
No individual can with good conscience turn a blind eye to the suffering
of those starving. No civilized society can accept hunger and
malnourishment. No government can survive, nor keep law and order,
without ensuring that its people enjoy the regular availability of basic
foodstuffs. Revolutions have been sparked off by the price of bread.
Wars have been fought over food or the resources to produce food. Food
security remains undeniably as important today, as in the past.
Today there is, however, the realisation that a sustainable domestic
food supply cannot be ensured by each government acting individually.
History has repeatedly shown that protectionism and isolation from world
markets have never been the right answer. Food self-sufficiency is not
equivalent to food security. The goal of self-sufficiency is illusory in
today's world where a vast range of inputs constitute the full
production equation. Nor is any country insulated from sudden adverse
climatic effects which can dramatically reduce domestic agricultural
Past, as well as present, experience shows us that food security is best
achieved in an economically integrated and politically interdependent
world. In an interdependent world the effects of any deficit or surplus
in food production in one country can be spread over a broad range of
countries. The burdens of short-term fluctuations and longer-term
structural change are thereby reduced. Economic integration also keeps
the cost of inputs for production down and ensure that markets will
remain open at critical moments.
Different countries have different factor endowments. These differences
can be used to judicially increase domestic production and to benefit
from the production of other countries. To my mind, food security is not
best achieved by the production in a particular country of a particular
foodstuff. Fuels, fertilizers, machinery, capital and other inputs from
other countries are needed to improve domestic agricultural production
as well as to supplement a country's food stocks. Efficient production,
peaceful relations between nations, and efficient storage and
distribution, are all vital factors in the world food security equation.
The WTO's contribution to efficient production is obvious and actually
requires no elaboration. What is perhaps less obvious is the WTO's
contribution to keeping the peace which is so vital to ensuring that
supply channels remain open. Let us not forget that international trade
conflicts have historically been a frequent cause of war, which
jeopardizes directly people's access to food. The GATT/WTO system has,
since 1948, provided a framework for the rule of law, peaceful
negotiation and conflict resolution in international trade relations.
Moreover, economic integration through trade provides a powerful
incentive for political cooperation among nations. If I may quote from
Montesquieu: “Peace is the natural effect of trade”.
It is therefore no coincidence that the multilateral trading system is
an essential pillar of the global political system. Stable trading
relationships are vital not only for food security but also for global
security. It is also no coincidence that more than two-thirds of WTO
Members are developing countries. After all clear and strong rules are
of particular value to smaller and less powerful nations.
The WTO also contributes in more specific ways to food security.
Ensuring efficient production and distribution of food supplies is,
however, only part of the food security equation. Hunger and
malnutrition are almost always the result of poverty. While many other
factors play their role, the vast majority of the hungry and
malnourished suffer from inadequate income, not from inadequate food
supplies. The poor often lack purchasing power even when food supplies
are domestically relatively plentiful or are readily available through
world markets. A real lack of food supplies due to war, civil strife or
natural disaster is comparatively small.
Seen in this light, one of the most concrete ways which the WTO can
contribute to improving food security is by providing the opportunity
to raise income levels through economic growth. As is recognized in
the Rome Declaration and Plan of Action — trade is a key element for
food security — as it stimulates economic growth. It permits the
efficient transfer of food supplies from surplus to deficit regions. It
allows countries to become self-reliant rather than trying to become
self-sufficient, regardless of cost.
Since 1948, tariffs in the industrialized world have been cut by more
than 80% in 8 successive rounds of negotiation, and a vast range of
quantitative restrictions and bureaucratic controls have been removed.
Since 1948, trade has grown faster than international output in all but
eight years. Trade liberalization has also been an important stimulus
for the expansion of knowledge, technology and capital.
We may quibble about the figures and economists can at times produce
paradoxical outcomes. Yet, the fact is that stagnant economies cannot
generate jobs and raise incomes. The basic equation seems to stand:
trade does inspire growth, and growth, to a greater or lesser degree if
supported by other policies, will combat poverty. There are no magic
solutions or equations to alleviate poverty. Nor can we ignore the
adjustments triggered by trade policy reforms, and in particular its
immediate effect on the poor. But the appropriate response is often not
to abandon trade or the reform process but to provide support and
alleviate hardships for the poor.
It is difficult to escape the conclusion that those countries that have
chosen to make trade a pillar of economic growth have indeed, grown
strongly. We need only look at China and India, countries with a large
share of the world's poor. Until the mid-1980s to 90s, these two nations
pursued inward-looking policies on investment and trade. They registered
low growth rates of exports and also of income. They also failed to make
an impact on poverty reduction. The experience of both countries, with
the onset of economic reform policies from the mid-1980s onwards, have
shown that they can do much better. In the case of China, for instance,
the share of people living on less that $1 a day declined from 61% in
1981 to 17% in 2001. While careful consideration to the pace and
sequencing of reform is required, open economies consistently outperform
those that are closed. This is a fact.
As underscored by the UN Millennium Project, “International trade can
be a powerful driver of economic growth and poverty reduction....The
poorest countries should pursue open trade and negotiate vigorously for
greater market access in the high-income markets. But they should also
emphasize, and receive, additional aid to overcome their supply-side
It is therefore no surprise that the overwhelming majority of developing
countries that have embraced agricultural trade liberalization have done
so as part of broader domestic reforms to stimulate economic growth and
alleviate poverty. These reforms often go significantly beyond the
commitments undertaken in the WTO.
But I am not standing before you now just to sing the praises of the
WTO, its achievements, and what it represents in terms of economic and
international legal principles. My central point is that trade
liberalization can be a forceful weapon in the fight against poverty, if
accompanied by sound macroeconomic and development policies. And
reducing poverty is key to combating hunger and malnourishment.
The other major contribution that the WTO can make is, of course, in
terms of the impact of trade policy on agricultural production. A
common policy for governments seeking to enhance food security via
self-sufficiency is to maintain high border protection and high internal
prices to encourage domestic production. This, however, has adverse
impacts on food security. High internal prices can act as a regressive
tax. Poorer consumers tend to be hardest hit by high food prices.
Reducing their purchasing power undermines their food security.
Subsidies and other measures to induce production may also inadvertently
benefit those members of the farming community, particularly rich
farmers and landowners for example, who need it the least. It is clear
that for these countries the pursuit of self-sufficiency will be an
expensive, and arguably less than optimal, route to food security.
The distortion introduced by such policies also affects other countries.
Its most direct effect is to curtail the agricultural exports of
countries and regions where food can be produced at lower cost. This
aspect is particularly important for developing countries. For many of
these countries, including the poorest amongst them, how well they do
economically depends on how well they do in agriculture. Of course,
improvements in agricultural output and export performance depend on a
wide range of factors outside the trade policy sphere. But it is widely
accepted and understood that a further reduction of trade barriers and
trade-distorting subsidies will help boost the economic performance of
developing country agricultural producers.
The ongoing Doha Development Agenda round of trade negotiations includes
agriculture as a key sector. I will come back to the negotiations later
but let me underscore that the Doha Round has the potential to unlock
substantial new resource flows to developing countries far greater than
those available through official development aid. The Commission for
Africa Report, for instance, has concluded that an ambitious Doha Round
will “expand Africa's market opportunities and allow diversification
of exports by destination and product, including in higher value-added
That being said the elimination of subsidies may, in the short-term,
have terms-of-trade consequences for net food importing developing
countries, as world prices have been kept artificially low for so many
years. This is an important consideration and the special problems of
net food importing developing countries deserve attention. The WTO
provides some mechanisms to help. However, to address this problem in a
definitive way we will need a broader response that involves the
international development and financial agencies.
The IMF has launched a new trade initiative designed for certain
developing countries, in particular LDCs and net food importing
developing countries, to deal with a terms of trade shock, the erosion
of preferences and loss of tariff revenues. The World Bank is also
considering a new programme called "aid for trade initiative". The G-8
also intends to discuss the recent Commission for Africa report and
various other proposals for increased aid. These are important
initiatives that can help net food importing developing countries, but
we should not forget that there is an important allocation effect from
the removal of market distortions. By allowing world food markets to fix
their own prices, we will be inducing more production globally,
including from net food importing developing countries. The allocation
effect can only be positive in the long run.
Moreover, addressing tariff peaks, tariff escalation, trade-distorting
domestic support and export subsidies would open up trading
opportunities not just between developed and developing countries, but
also between developing countries. In 2003 about 46 per cent of
agricultural exports of developing countries were sold in the markets of
other developing countries, up from 32 per cent in 1990.
According to the Commission for Africa there are “more than 250
agricultural goods for which one or more sub-Saharan African countries
have a comparative advantage, a third of which are goods of which other
African countries are importers.....increased intra-regional trade could
both provide opportunities for the poor rural agricultural producers and
assist in partially alleviating Africa's food security problems. For
example, Kenya has for the past decade imported grain from Uganda and
Tanzania during periods of drought”. In terms of absolute numbers,
the largest growing market for agricultural products are in the
developing world. With efficient production in a diversity of regions we
will have more food security.
Before concluding, let me turn more specifically to the Doha Round, in
particular the agriculture negotiations. The WTO Agreement on
Agriculture as concluded by the Uruguay Round established an important
framework for further liberalization of the sector. But clearly more
needed to be done to allow developing countries to more fully exploit
their actual or potential competitiveness in agriculture. The launch of
the Doha Round with an agenda that included correcting existing
distortions in world agricultural markets was a significant achievement.
From a development perspective, the outcome of the Doha Round must be
more ambitious than what was achieved in the Uruguay Round, and we are
on track for an ambitious outcome. But I must stress that to reach this
outcome we will need meaningful results across the board, but especially
in agriculture. All WTO Members will have to show considerable
flexibility to reach an outcome which is ambitious and at the same time
achieves a balance between import sensitivities and export interests.
Let us not forget that food has always been an important element of
trade, with markets integrated to a greater or lesser extent for
thousands of years. But during the twentieth century, trade in basic
foodstuffs was subjected to increasingly higher impediments. The Doha
Round gives us the opportunity to reverse this trend. We have in the
Doha Development Agenda an obligation we must live up to, not only as
trade negotiators but also as representatives of governments that have
committed themselves to meet the Millennium Development Goals and other
vitally important international development initiatives. The longer the
reforms are delayed, the longer the development gains are postponed.
I know that there are concerns that trade liberalization somehow poses a
"threat" for food security. This really is a misperception. Let me
explain why. Firstly, to facilitate their transition to a more liberal
trading environment in agriculture, developing countries will have
access to a range of special and differential treatment (SDT)
provisions. This means lower cuts in tariffs, trade-distorting domestic
support and export subsidies, and longer implementation periods.
Least-developed countries (LDCs) are not expected to make further market
openings. LDCs will not have to reduce their tariff ceilings and will
have full access to all SDT provisions.
Secondly, all developing countries, including LDCs, will have access to
a range of policy instruments including Sensitive Products, Special
Products and the new Special Safeguard Mechanism. In the agriculture
negotiations, modalities, including those to protect import-sensitive
sectors and farmers, are being fleshed out with the aim to reach a
"first approximation" by July; a reality check in preparation for the
Hong Kong Ministerial. Moreover, implementation of commitments, when we
reach this stage, are to be phased in over a number of years giving
farmers time to adjust.
Thirdly, developing countries can also rest assured that most of their
development programmes to ensure food security will hardly be affected
by the WTO domestic support reforms, to the extent that they are
non-trade distorting and are covered by the Green Box of the Agreement
on Agriculture. The Green Box covers government services, such as
agricultural research, education, infrastructure, public stockholding
for food security purposes, domestic food aid, as well as certain direct
payments. In addition, developing countries will continue to have a free
hand, as far as the WTO Agreement on Agriculture is concerned, to
provide input and investment subsidies to their poor farmers. In brief,
the flexibility for developing countries to support food security and
rural development is well recognised and safeguarded in the WTO policy
framework and in the ongoing negotiations.
Fourthly, in addition to agriculture, negotiations on services are also
underway. Results here could help to reduce transport, distribution and
marketing costs for food and its inputs. Further benefits can also be
expected from the negotiations on non-agricultural goods, including
agricultural machinery, fertilizers, pesticides and other essential
inputs. Overall, the contribution that liberalization of the range of
sectors in the Doha Round can make to food security will be very
In 1980, the Brandt Commission, in a two-year study involving
representatives of 17 rich and poor countries, concluded: “Mankind
has never before had such ample technical and financial resources for
coping with hunger and poverty. The immense task can be tackled once the
necessary collective will is mobilized. What is necessary can be done,
and must be done”. In some ways, the Doha Development Agenda, albeit
from the stand point of market access, is a test of our collective will.
If I may diverge from food security, let me offer some thoughts on the
current state of our negotiations. We now have a high-level of
convergence on the need for a substantial breakthrough by our Hong Kong
Ministerial Conference in December this year and to set the stage for
the final phase of the Round in 2006. Ministers are engaged, and we have
a series of ministerial gatherings in the forthcoming months that can
provide the negotiating process with the needed political inputs on key
issues. There is, however, an immense amount of progress to be made in a
very short time if we are to achieve our objectives for Hong Kong; a
daunting task remains to be done.
In our preparations for the Hong Kong Ministerial Conference, July looms
large as a marker in our process. By July, if not earlier, we should
start to see what some have called a “first approximation” of the
package for Hong Kong. There is a high level of activity in the
negotiations but I feel we still need to translate this activity into a
greater sense of urgency.
The Doha Development Agenda is, without question, one of the most
ambitious rounds of trade negotiations ever attempted. Never before have
there been so many Members involved; we now have 148 Members compared
with less than 120 participants at the end of the Uruguay Round. Never
before have there been so many negotiating subjects on the table. And
all areas of the negotiations need to be agreed together in final
“single undertaking” package. This means that a successful result in
agriculture, for example, is contingent upon successful results in
services and other areas of the negotiations. These are, of course, all
ingredients for a balanced outcome and one that could bring very
significant results. The breadth of the negotiations offers
opportunities for trade-offs and something of interest to everyone.
Failure to advance the Doha Development Agenda would certainly be a lost
opportunity for developing countries to become more fully integrated
into the global economy, and to benefit from the economic growth that
trade can generate. As well as being a moral imperative, we must all
realise that a world where prosperity is more widely spread is in the
interests of all. Developing countries are the markets of the future.
Food security is a complex matter. Enhancing food security requires
initiatives and policy actions on many fronts, with trade being only one
element among others. That being said the successful completion of the
Doha Round from a food security perspective can only be viewed as
positive. The path to food security is through integration and
interdependence, not protection and autarchy.