Excellency,
Mathieu KEREKOU, President of the Republic of Benin,
Honourable Ministers,
Excellencies Members of the Diplomatic Corps,
Ladies and Gentlemen,
It
is indeed an honour and a great pleasure for me to be here today to
share and further elaborate on some ideas that I had raised just over
a year ago, in Brussels, at the Third UN Conference on LDCs (LDC-III).
The Brussels Declaration and Programme of Action adopted at LDC-III
generated momentum and support to seriously tackle the challenge of
poverty in least-developed countries (LDCs).
This
is my eighth trip to Africa since I became Director-General of the WTO
three years ago, and I would like to thank President KEREKOU for
having made it possible by extending an invitation to me. I wish also
to express my gratitude to the Government and the People of Benin for
their warm welcome.
LDC-III
was timely, as there was need for concerted action to meet the
international goal of halving the number of people living in extreme
poverty by 2015. At the start of the 21st Century, 1.2 billion people
are living in extreme poverty with less than $1 a day to survive on.
Another 1.6 billion people are living on less than a $2 a day. Many of
these people are from the world's 49 LDCs. Recent estimates (by UNCTAD)
suggest that over 50 percent of the population of LDCs live in abject
poverty, and that on current trends the incidence of poverty in LDCs
will increase by about a third unless steps are taken to redress the
situation.
Redress
the situation we must. Poverty in all its forms is the greatest
challenge to the international community today. We will be judged by
our response to our most vulnerable members. Their appeal to the
international community and multilateral agencies to contribute in the
fight against poverty must not go unanswered.
In
this context, let me stress the importance of trade and the
multilateral trading system. All seven of the UN Millennium
Development goals – in health, education, poverty, etc — would
require about US $54 billion annually. This is estimated to be just
one third of the gains to be made by developing countries from trade
liberalisation. The trading system has probably done more to boost
living standards and lift people out of poverty than any government
intervention. The 17-fold rise in world trade since 1950 has gone
hand-in-hand with a 6-fold rise in world output. This has benefited
countries at all levels of development. History also reminds us that
countries that have done well over the past half-century, such as
those in South East Asia and some Latin American countries, have been
trade-oriented. Recent studies on trade and poverty have confirmed
that the poor countries that are catching up with rich ones are those
that are open to trade. The more open they are, the faster they are
converging. The message is clear: freeing trade boosts economic
growth, and so helps to alleviate poverty. Abolishing all trade
barriers could boost global income by $US2.8 trillion and lift 320
million people out of poverty by 2015.
Developing-country
governments increasingly recognize this. Their economic policies have
changed dramatically since the mid-1980s. Countries have realized that
trade and investment, not aid, are the engines of economic growth.
LDCs also are doing a bit better, though clearly, we do need to do
better. It is also important to stress that trade liberalization,
though important for growth and development, is by no means enough. It
will do little for a nation that is torn apart by war or that spends
all its export revenues on weapons. Nor will it be much use if good
governance is missing or if crippling debt is overhanging. Nor will
trade help those poor countries who have no domestic capacity or
infrastructure to take advantage of new market access opportunities.
Trade
liberalization must, therefore, go hand-in-hand with other reforms,
including domestic reforms. The first responsibility for solving the
problems of LDCs rests with the LDCs themselves. But the international
community also has an important role to play, and international
institutions, such as the WTO, can make significant contributions.
I
would call upon the international community to join the consensus in
support of the Bank/Fund Poverty Reduction Strategy Papers (PRSPs),
which are currently the best “development vehicles” for reducing
poverty because they combine the essential elements of national
ownership, participatory efforts by all sectors of domestic society,
within coherent and sound policy frameworks. National Poverty
Reduction Strategy Papers require a growth component. Trade is a
viable growth component. The WTO has been working with the other core
agencies to develop trade priority areas of action in the PRSPs
through the Integrated Framework (IF). Mention should also be made of
JITAP, another joint targeted project between ITC, WTO and UNCTAD that
has helped people advance their capacity and trading interests.
Let
me now turn to LDC-III.
The
Third United Nations Conference on Least-Developed Countries in
Brussels in May last year, gave the international community, and LDCs
themselves, an opportunity to respond to the challenges faced in the
globalized economy and to identify measures that can be taken to help.
The Conference focussed global attention on the plight of the poorest
of the poor.
WTO
Members contributed to the Conference with concrete 'deliverables',
that is, policies, programmes and initiatives to assist LDCs. The
'deliverables' presented to the thematic session on trade, and
reflected in Commitment 5 of the Programme of Action adopted in
Brussels, were in areas related to LDC's trade development. These
'deliverables' such as improving market access opportunities for LDCs,
the Integrated Framework, accession of LDCs to the WTO and initiatives
to assist LDC's participation in the multilateral trading system are
being followed-up by WTO members, most notably in the WTO
Sub-Committee on LDCs.
The
Doha Ministerial Conference has attached importance to building on the
results of LDC-III, and mainstreaming the relevant trade-related
commitments of the LDC-III Programme of Action into the work of the
WTO. This has been realised with the adoption of the WTO Work
Programme for LDCs on 12 February 2002.
The
WTO is ‘delivering’ in a number of areas.
First,
as a result of concerted efforts by our membership, there have been
significant improvements in market access opportunities for LDCs.
Twenty-nine WTO Members (counting the EC as one) have now pledged
market access improvements for LDCs. They join a number of other
countries who already provide open markets. The average un-weighted
tariff applied to LDCs exports in their main export markets has fallen
from 10.6 percent in 1997 to less than 6.9 percent today. The
improvements demonstrate that WTO members recognize the needs of the
weakest and most vulnerable members of the multilateral trading
system. Further improvements can be expected by the conclusion of the
multilateral negotiations launched at Doha, with Ministers committed
to the objective of ôduty-free and quota-free access” for LDCs.
This
brings me to our second ‘deliverable’, in cooperation with other
agencies, the successfully re-designed Integrated Framework for
Trade-Related Technical Assistance (the IF). LDCs need increased,
focused and sustained technical assistance and capacity building to
help them take advantage of existing and potential market
opportunities. At Doha, Ministers recognised the importance of
technical assistance – and placed emphasis on helping poorer members
to integrate into the trading system and participate fully in the
negotiations. Members have acted decisively by approving an increased
Secretariat budget for 2002 and pledging 30 million Swiss Francs to a
new Global Trust Fund for technical assistance. The re-designed
Integrated Framework will also help LDCs mainstream trade into their
national development plans and strategies for poverty reduction. It
will help ensure that trade, as an engine for growth, is central to
development and poverty reduction plans.
Our
third, ‘deliverable’ is a renewed commitment to give as much
assistance as possible to those LDCs in the process of joining the WTO.
We have to facilitate and accelerate negotiations with acceding LDCs.
LDCs acceding to our organization, however, also have to learn and
understand how the WTO works. They need to draft domestic laws that
comply with WTO rules. They need to establish mechanisms for enforcing
those rules. And they need to negotiate with existing members suitable
conditions of entry to the WTO. LDCs need more technical assistance in
this area. And WTO members need to be more flexible in their
negotiations with acceding LDCs. We are making some progress. We had a
useful Seminar on Accessions last month. And facilitating accessions
is a central element of the WTO Work Programme for LDCs being overseen
by the Sub-Committee. I expect some concrete recommendations to be
agreed to by Members in the coming months – this would greatly speed
up and ease the accession of LDCs into the WTO.
LDCs
already account for over 20 percent of WTO's membership, and this will
increase as more LDCs join the WTO. Another ‘deliverable’ is the
host of initiatives we have taken to help LDCs participate more fully
in the WTO and the multilateral trading system. Let me highlight some
of these:
-
We have launched activities for non-resident Members and Observers to
ensure that those countries not represented in Geneva can still follow
the daily business of the WTO and still be an integral part of our
processes. We have instituted 'Geneva Week'; this is now a bi-annual
event bringing together senior officials from Capitals and
Europe-based missions – to learn and exchange views concerning
critical areas of the WTO work.
- We
have supported LDCs participation in the work of the WTO by
servicing weekly meetings of the LDC Consultative Group and
meetings of other informal groups such as the African Group, which
has many LDCs as its members.
- We
have improved the WTO's Trade Policy Review Mechanism for LDCs; as
well as shedding light on a country's trade rules, it now helps
trade policy capacity-building and the mainstreaming of trade
priorities into national development plans and poverty reduction
strategies.
- We
have doubled our WTO training courses with the establishment of a
WTO Training Institute.
- We
have set up WTO Reference Centres connecting LDCs' capitals to WTO
sources of information through the Internet.
- We
have set up a new programme to fund interns within country
missions in Geneva.
- we
have supported increased participation of developing countries,
especially LDCs, in international standard-setting bodies.
The
WTO is not the only international agency working to assist LDCs in the
trade area. For example, WIPO is doing excellent technical assistance
work in terms of intellectual property issues. We are working to
better co-ordinate our technical assistance activities with
international standard-setting bodies, in order to improve LDCs'
capacity to make full use of international standards. I want to pay
tribute also to the splendid work of the International Trade Centre
(ITC).
The
‘deliverables’ I have mentioned are a start. But they are not
enough. In order to do better, we need to conclude the work we
launched at Doha last year.
I'd
like to say something about where the WTO is today with the “Doha
Development Agenda”. I believe a successful completion of these
negotiations is the best contribution that the WTO can make to foster
development and reduce poverty on a world-wide basis. For instance,
the gains to developing countries and LDCs alone may be about five
times all the overseas development assistance and eight times all the
debt relief granted thus far.
At
Doha, Ministers agreed that the removal of trade barriers should
continue, that their economies should continue to open up, and that
international trade should continue to be governed by multilaterally
agreed rules. Since Doha we have done well, but we cannot afford to
sit back. The challenges lying ahead of us are considerable.
On
the positive side, I can mention a few encouraging developments.
First,
we have put in place the machinery for the negotiations. We can now
count on an efficient negotiating structure, a dedicated set of
chairpersons and a clear plan of work for the future. The Trade
Negotiations Committee, which oversees the negotiations, and the
individual negotiating groups are up and running.
Second,
and more importantly, WTO members, including the 30 LDC Members of the
WTO, are fully engaged in the negotiations. We are witnessing
unprecedented participation by all countries - developed, developing
and LDCs. In the negotiations on agriculture, for instance, more than
150 proposals and other written contributions have been presented so
far. Half of these were tabled by developing countries, either
individually or in different groupings (such as the African Group). In
the negotiations on Trade in Services, it has also been the developing
countries and LDCs that have taken the initiative by tabling a large
number of proposals (including, for example, a recent LDC Group
proposal on negotiation modalities). This development is most welcome
and will be fully supported.
And
third, let me elaborate a bit on the support provided. As we move on
with the Doha negotiations, we are in parallel implementing our
extensive mandate on technical assistance and capacity building. In
doing so, we are seeking to support our LDC and developing country
members so that they can effectively engage in our work. Technical
assistance and capacity building, in coordination with relevant
organizations such as UNCTAD and the World Bank, has become one of our
core activities, and rightly so. Helping developing and
least-developed countries integrate into the multilateral trading
system and participate fully in the negotiations will be key to our
success.
The
Doha negotiations are raising a lot of expectations. We have to live
up to these expectations. Fulfilling the mandate Ministers have set
out for us will go a long way in stimulating economic growth and
reducing poverty.
Take
for instance, market access conditions for industrial goods. This is
one of the key issues in the Doha negotiations: studies have shown
that, despite low average tariffs, the products in which developing
and least-developed countries are competitive continue to attract
relatively high tariffs in major export markets. Even more negative is
the impact of tariff escalation as it affects their ability to move up
in the value-added production chain. Thus, properly addressing tariff
peaks and tariff escalation will go a long way towards meeting some
key concerns of developing countries and LDCs.
Or
take agriculture, which is the backbone of almost all developing and
least-developed economies. The poorest part of the population - living
in the rural areas — depend for their incomes on the development of
a sustainable and productive agricultural sector. Yet, massive
agricultural support in OECD countries undercuts the exporters from
poor countries and forces even the most efficient producers out of
markets where they would otherwise be earning their living.
Agricultural subsidies in OECD countries cost more than a $1 billion a
day and result in job losses for poor countries, as well as pollution
in rich countries due to intensive, subsidised farming inputs. Or, as
Callisto Moldovo, the Vice-President of the Africa Region at World
Bank has recently said, OECD agricultural subsidies, at approximately
$300 billion annually, are equal to Africa's total GDP. The Common
Agricultural policy continues to absorb around $46 billion per annum,
or half the Europeean Union's budget. Kofi Annan wants $10 billion to
fight AIDs pr year, that's just 12 days of subsidies. So, there is
little doubt of the benefits to be derived by the developing world
through reform of agricultural trade.
Protectionist
policies distort prices and therefore economic incentives, leading to
wasted resources and environmental degradation. Subsidies lead to
overproduction which drives prices down and provides incentive to dump
surpluses onto world markets, which in turn puts highly competitive
agriculture producers in the developing world at a severe, and deeply
unfair, disadvantage. Import restrictions push the domestic price of a
good above the world price, domestic firms produce more, while
consumers reduce their overall purchases and suffer a real income loss
as a result of the higher prices.
Last
year, U.S. farmers harvested a record crop of 4.38 billion kilograms
of cotton, aided largely by a U.S. government check for $3.4 billion.
West Africa is the third largest exporter of cotton and farmers in
Mali, the largest grower in the region, posted a record harvest last
year as well – 200 million kilograms. The difference was, that
without subsidies, the state cotton company lost money, largely
because prices have fallen by 66% since 1995 to ($0.88 per kilo) and
have fallen 10% this year alone.
The
World Bank and the IMF estimate that removal of U.S. subsidies could
lead to a fall in production, a subsequent rise in the global price
for cotton and a revenue increase of $250 million annually for the
countries of West and Central Africa.
But
in fact, subsidies for U.S. cotton farmers are likely to see their
support increase by 16%. This for a total of 25,000 farmers whose net
household worth averages about $800,000.
Agricultural
trade policies like those for sugar, coffee and cotton are not just
economically and politically inequitable; they prevent desperately
poor countries from exporting to rich countries. Alas, a similar story
could be told about the rice and fish subsidies kept in place by
countries like Japan and South Korea.
Agriculture
is a difficult subject in trade negotiations. But without significant
reforms in agricultural trade, poverty alleviation efforts will fail.
This is why the Doha Development Round is so important for many poor
countries and why we must conclude it.
There
is scope for some introspection as well. South/South trade in the
1990s grew faster than world trade and now accounts for more than one
third of all developing country exports, or about 650 billion US
dollars. The World Bank reports that 70 per cent of the burden on
developing countries' manufactured exports result from trade barriers
of other developing countries. The quicker these walls come down, the
quicker the returns to all developing countries, and the Doha
negotiations are an appropriate framework to make this happen.
The
Doha negotiations also offer us the best opportunity to craft better
WTO rules and to revise some of the existing ones. As witnessed during
the debates on “Implementation Issues” that took place in the
run-up to Doha, many developing countries and LDCs are of the view
that several WTO Agreements need to be adjusted to better reflect
their particular interests and concerns. So, there is a lot to
negotiate here to ensure that the rules preserve their underlying
rationale.
The
Doha Development Agenda offers great opportunities but to realise
these opportunities we must overcome big challenges.
First,
protectionist pressure groups continue to exercise their influence in
some of the world's leading economies. A rise in protectionism would
be a particularly worrisome development at a time, when, for the first
time in recent history, world trade is not growing as fast as it used
to.
And
second, we face a number of new, systemic challenges. The negotiations
will be conducted among an unprecedented number of sovereign
governments - the 144 WTO Members plus the some 28 acceding countries
for which a working party has already been established or may be
established in the future - thus, about 170 governments. As a result,
the differences between the participants, in terms of size, economic
development, trade interests and negotiating capacity will be greater
than ever. A lot of effort will be necessary to maintain confidence,
not least through prompt delivery on the extensive Doha commitments on
technical assistance and capacity-building.
I
remain optimistic that we will succeed. We know that we have to
urgently move forward, firmly resist protectionism, and fulfill the
Doha mandate, which contains the prescriptions of how to develop the
multilateral trading system further to the benefit of the poor.
I
believe the greatest threat to LDCs is not globalization, but
marginalization. Open markets can play an important role in lifting
millions of people out of abject poverty. This would go a long way in
meeting the development goals we had set for ourselves in the new
Millennium and that we had advanced through the commitments we made at
Brussels, Doha and Monterrey.
Thank
you. |
