Report by the Chairman of the Trade Negotiations Committee

As you all know, we had a formal TNC [Trade Negotiations Committee] meeting last Friday. In my view, this was a valuable exercise of transparency and inclusiveness, as well as a much-needed opportunity to exchange views, take stock of the latest developments and set the pace for our work in the coming months. 

The economic context in which we are operating continues to be difficult for global trade growth. As you all know, we have recently revised downward the forecast for world trade growth.  The slowdown has been accompanied by a marked deceleration in imports of developed countries and a corresponding weakness in the exports of developing economies in the first half of the year.

The Expert Group meeting on Trade Finance in October noted that, consistent with the deceleration in the growth of world trade, volumes in trade finance markets are growing only slowly and stress remains at the low end of the market. I cannot overemphasize what I have already said on various occasions: trade finance is one of the safest forms of finance and it has the advantage of promoting increased trade flows and development. So, it is important that we keep taking steps to ensure its availability and accessibility, especially for small businesses in poor countries. In this respect, I do believe it useful that the Board of the African Development Bank finalise their planned Trade Finance Facilitation Programme, which has been under work for some time.

This economic juncture continues to test the multilateral trading system. Despite a registered slowdown in the imposition of new trade restrictive measures, the new measures are in fact adding to the stock of restrictions put in place since the outbreak of the crisis. So far, the multilateral trading system has proven a reasonable degree of resilience, but at a time of continuous economic difficulties and with the recovery still far from sight, we need to remain vigilant and redouble efforts to keep markets open and resist inevitable protectionist pressures. 

Our experience with past crises shows that we need more trade and increasing numbers of trade-facilitating measures to counter this slowdown and restore stable levels of growth. In this context, we should make every effort to restore economic certainty and reinstate confidence in the multilateral trading system. Therefore, if I had to give you a simple piece of advice, it would be:  make sure that 2013 does not look like 2012 with regard to doing business in the WTO. 

Friday’s meeting showed that members are fully aware of their responsibility and the importance of what is at stake here. We had a pragmatic and constructive discussion about what is feasible for next year and I was pleased to note that the tone was one of caution, but also of realism and determination. I saw that members remain committed to achieving a credible outcome at MC9 [Ninth Ministerial Conference]. In one word, the discussion was encouraging, as I said in closing the meeting. 

From what we heard from the Negotiating Group Chairs and from members’ own assessment, trade facilitation, some items in agriculture and development are the areas where some progress has been made, with new proposals, intense discussions as of late and some positive developments towards closing the gaps. Some of you have indicated these areas as possible candidates for an outcome in 2013, but we cannot exclude that other areas of interest will emerge in the coming months.

What we heard on Friday is loud and clear: MC9 is not the end of the line, but rather a stepping stone on a longer-term roadmap leading to the conclusion of the Round, which now needs to be framed. 

I would like to take this opportunity to point to some other areas that have shown encouraging signs of progress.

Government procurement is one of them. In March 2012, the Parties to this Agreement adopted the results of the renegotiation of the GPA [Government Procurement Agreement]. The agreed results entail a significant expansion of market access commitments with resulting substantial gains in market access opportunities for businesses. Interest in government procurement issues has been growing and we cannot ignore the important benefits that this agreement can bring. After all, let’s not forget that, since a key element of the GPA is to ensure fair and transparent competition in public-procurement markets, these rules will help to achieve maximum value for money in public expenditure. This is certainly a significant outcome in a time of severe budgetary constraints for many governments. 

Members are also working on an expansion of the ITA [Information Technology Agreement].   The elimination of tariffs in the IT sector has played a crucial role in spurring innovation and providing affordable access to technologies. In addition, as IT products are often inputs into production, their trade opening contributes to the functioning of other sectors of the economy with significant spillover effects on countries’ overall economic performance. The Parties are now moving to a new phase of discussions to resolve differences and expand the list of products to be covered by the Agreement. The ITA 2 will ensure further benefits on all fronts and members — whether they are party to the Agreement or not — should look favourably to this outcome. 

You also know that a group of members is working in different configurations to achieve further services opening. The shape of an agreement remains open, but I think that you should all keep an eye on the outcome of this process because such engagement may be a positive starting point for further progress next year.

We should also not forget some of the other instruments of the WTO toolbox that are not directly linked to the negotiations, but that nonetheless have an impact on our core business of ensuring more open and more predictable trade flows. 

Trade capacity building remains an important complement to the negotiation agenda and the WTO remains committed to supporting efforts in this sense. Under Item 4 of today’s agenda, I will be reporting on the preparations for the Fourth Global Review of Aid for Trade and I look forward to a more comprehensive discussion on this later today. 

Accessions is another area where we have already achieved a significant outcome. Surely, 2012 will be remembered as another prolific year for accessions. You will hear my report on accessions later today, under Agenda Item 8, so I won’t go into details now, but I just want to share with you my hope that the same spirit of engagement and cooperation shown by members on that occasion will be replicated in 2013, hoping that we can harvest some more accessions next year.

All of these tools complement the WTO negotiating agenda and can prove valuable in our objective of delivering a significant outcome in Bali and in the broader task of updating the WTO rulebook to make it more inclusive, more balanced and with development at its heart. We should leave no stone unturned in our pursuit of a strong and credible multilateral trading system — one that is responsive to the needs and challenges that our traders face in today’s international trade environment.  We owe it to our constituencies, who are struggling with low levels of growth and too high unemployment rates, and we owe it also to ourselves to move fast and with determination early next year to ensure concrete deliverables for 2013.

The first international economic event next year will be the annual meeting of the World Economic Forum in Davos. On the sidelines of the event, I will have the opportunity to meet with some of your Ministers and report to them on the climate here in Geneva. I hope to sense from them the same level of engagement and pragmatism that we heard at Friday’s TNC. Of course, I will report back to you at the February General Council.