Your Excellency Prime Minister Snäil Hamdani. Ambassador
Vijay Makhan, Assistant Secretary-General, Economic Development and Regional Cooperation
of the Organization of African Unity].
Minister
Bakhti Belaïb, Chairman of the Conference of African Trade Ministers.
Distinguished
Trade Ministers of Africa.
Can
I at the outset pay tribute to Ambassador Mchumo of Tanzania, who is the first African
chairman of the WTO General Council, and who is doing a fine job. He apologises for
not being here. He wanted to be here but you need him at work in Geneva. He is at this
moment at work, shaping the work programme for the Ministerial Meeting in Seattle.
This
meeting is timely, nine weeks before the Seattle Ministerial Conference, that will launch
a new trade round. I thank the Government and People of Algeria and the General
Secretariat of the Organization of African Unity, for hosting this meeting and extending
to me the kind invitation to address this gathering. I am honoured.
This
is a historic occasion for me, because I understand that this is the first time the DG of
the WTO has accepted an invitation to address you. A week ago I was the first DG to
address the G77 and before that the first DG to address a gathering of ACP Ministers. This
is an honour for me; it also gives me a chance to explain my priorities and principles.
I
address this forum not just as the DG of the WTO, but as a friend of Africa, and a citizen
of a very small country which, like so many other small countries finds the door
closed to many of its products only because they are too competitive and unsubsidised.
It
is my firm belief that the international trading community and the multilateral trading
system have to intensify their efforts to accelerate the integration of developing
countries, particularly African countries, into the global economy. Unless we bring
African nations, most of which are least-developed, into the global economy, we will never
enjoy full economic and social justice.
Africa
is a great Continent. Its opportunities are infinite and its potential boundless. The
Continent is abundantly endowed by nature, but history has not been kind to the continent.
So much of the potential and the opportunities are yet to be realized. The Continent's
population of 700 million people is a huge potential market. Africa has a major stake in
the multilateral trading system. Of the 134-Member governments belonging to the WTO, 41
are African. Yet there has never been an African deputy Director-General. There should be.
I hope to fix that over the next few weeks.
The
major challenge of Africa is the timeless challenge of development, so we can reduce
poverty and provide for the citizens of the continent the basics of food, shelter,
clothing, education, healthcare and jobs. This can only be done if we increase national
income levels. This is a simple statement, but a complex challenge. Trade is an important
means of achieving these crucial goals of development, although it is not the only
means.
Trade
and an open trading system are central to economic success. In the past 50 years, open,
liberalizing economies have grown faster than closed, trade-restrictive economies. In
1950, the ratio of global trade to GDP was approximately 7%. By 1997, the ratio stood at
23%. In several individual cases of rapidly developing countries, trade accounts for over
70% of GDP. The lesson is that trade liberalization, implemented through the systematic
dismantling of trade restrictions both within economies and externally creates better
paying jobs and higher living standards for the people. Countries that liberalize,
develop faster because they function more efficiently and hence are more competitive.
It is an old truth that needs repeating.
In
the period preceding my appointment as Director-General, I spoke extensively with many
African Ambassadors and Representatives in Geneva regarding the concerns of African
Members of the WTO and the multilateral trading system. I have also noted the contents of
several reports designed to prepare Africa for Seattle: reports from conferences in South
Africa, Ethiopia, Kenya, Zimbabwe and Nigeria.
At
these meetings, and in conversation with me, Africa's concerns, have been expressed
honestly and with force and validity. They are:
-
uneven distribution of benefits in the multilateral trading system;
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apprehension of further marginalization;
-
desire for flexibility in the use of appropriate trade policy instruments;
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implementation problems;
-
insufficient capacity and supply-side constraints which have prevented Africa from fully
exploiting market access opportunities;
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inadequacy of technical assistance;
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weakness of Africa's participation in WTO policy-making processes; and,
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support for the regional integration process in Africa.
I
would like to address some of these concerns. Africa is deeply and rightly concerned that
the continent's share of global merchandise trade has been steadily declining, from 5.9%
in 1980 to 4.2% in 1985 to 2.3% in 1996. It is unacceptable that on this continent of
700 million people, between 250 to 300 million people live in poverty (below US$1 a
day). Average continental GDP growth rates of 3.5% are only just keeping pace with
population growth. Of the 48 countries, designated as Least-Developed Countries (LDCs) by
the United Nations, 33 are located in Africa. Standing still, in these terms, is
going backwards. This is a time bomb. I am asking developed countries and other members of
the WTO, to help resolve the problem by granting duty-free access to all products
imported from least-developed countries.
The
situation of enormous potential on the African continent stands in sharp contrast to the
reality of poverty and misery. This must not be allowed to continue. The concerns,
problems and challenges of Africa are under constant analysis in our Secretariat and every
other international agency. If we are not careful we will reach the stage of paralysis by
analysis. However, not all the problems are the fault of the trading system our the global
institutions. Many of the solutions must be found by Sovereign Governments. However, we
can help. We must; we will.
We
at the WTO are investing our efforts in several areas. I have appointed a special
Coordinator, a friend from Africa, whose sole focus over the next few months is to achieve
the objectives of duty-free access and improvements in the Integrated Framework for
Technical Assistance. Under the Coherence Work Programme with the World Bank and the IMF,
we must improve, sharpen and focus on the financing of technical assistance and on
improving our delivery of trade-related technical assistance. In addition, our estimates
for increasing the funding for technical cooperation in the regular WTO budget have been
submitted, not as an add-on, but as core business. In our relations with the World Bank,
the Fund and the G-7 countries we have expressed strong support for debt relief. An UNCTAD
report I read spoke of one African country that spent up to 9 times more in debt payouts
than on health. The heavy hand of history has its thumb on the windpipe of Africa.
Next week, when I travel to Washington to participate in the Annual IMF/World Bank
Meetings I shall again make this case. If we fail here, our critics will be proved
correct.
The
uneven distribution of benefits in the trading system and the risk of further
marginalization require action. To address these challenges, individual nations need to
intensify domestic efforts for adjustment and reform. Reforms involve a complex set of
requirements including fiscal stability, sound macroeconomic policies and a favourable
regulatory environment that create a positive domestic setting for both domestic and
foreign operators alike. National competition law, and commercial policies that are
transparent and predictable, are vital. Together with an effective enforcement agency,
they are indispensable in the complex process of adjustment and reform.
The
desire for flexibility in the use of commercial policy instruments is legitimate and
responds to a real need by countries. Scope for this flexibility is provided for in the 6
WTO categories of special and differential treatment provisions for developing countries.
These are the:
-
provisions for increasing the trade opportunities of developing countries;
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provisions for safeguarding the interests of developing countries;
-
provisions for the flexibility of commitments by developing countries in the use of trade
policy instruments;
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provisions for transitional periods;
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provisions for technical assistance; and,
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provisions for Least-Developed Countries.
Special
and differential treatment provisions recognize the differences in levels of economic
development. They recognize that sometimes a bit more time and "space" are
needed in the implementation of WTO commitments and obligations due to different levels of
economic development. Nonetheless, in a world that is rapidly globalizing and in which
countries and firms are innovating, reforming and adjusting to cope with the challenge of
competition, it is necessary for Members to be discriminating in the recourse to these
provisions. These provisions ought to be used with care and based on a real and defined
domestic need.
The
WTO is a rules-based system. The benefits of a rules-based system cannot be fully realized
if Members seek too many different standards, exemptions from the rules or lower levels of
obligations. Together, we have to work together and must work together, to modernize the
special and differential treatment provisions contained in WTO Agreements. In doing so,
our common objective would be to ensure that in their formulation and application, these
provisions should accelerate the integration of developing countries into the trading
system, and not delay it. The use of these provisions should focus on building the
necessary legal infrastructure, institutional and human capacity in Africa. They should
also focus on broadening the use of Information Technology and closing the knowledge gap
between Africa and the rest of the world. What Members should avoid in a
non-discriminatory rules-based system are exemptions from rules which, from available
evidence, produce the unintended consequence of slowing down the pace of integration into
the multilateral trading system. These will do the opposite of what their authors want.
Any delay in progress will slow down eventual job and community growth.
In
the reports from the various African preparatory seminars for the Seattle Ministerial, the
problem of the supply-side constraints for African countries in utilizing market access
opportunities has stood out. The WTO spends some 12% of its funds on the ITC
(International Trade Centre) for this purpose. Addressing this problem requires a
combination of policies of which trade policy is just one aspect.. These would include
improvements by developing Members in their market access and national treatment offers in
their domestic markets, particularly in those strategic sectors that are key to rapid
development such as communications, roads, financial services, health, education, tourism
(for many African countries) and energy. Improved, secure and bound commitments send clear
and strong signals to foreign and domestic investors on the policy of any government. In
turn, this has positive effects for integration and for more rapid development. Coupled to
trade policy solutions would be the application of sound macroeconomic polices, sound and
complementary regulatory policies and transparency in government, including in procurement
policies. A transparent procurement policy is one area where everyone wins immediately.
Technical
assistance is an increasingly important core WTO activity. Between 1995 and the present,
the demand for technical assistance has increased fourfold. Apart from our contribution to
the ITC, only about 10% (or about CHF716,000) of current WTO technical assistance is
financed from the regular WTO budget. The remaining funds come from voluntary (or
extra-budgetary) donations by very few Members. They should be thanked. I am working with
several WTO Members to include the funding of WTO technical cooperation in the regular
budget. I have submitted budget estimates to the Budget Committee for CHF10 million to
meet current annual demand. This would be a quantum increase over the present provision.
Furthermore, the priority in the WTO 3-year Programme is for technical assistance delivery
to Africa and other small, vulnerable economies. I, would like to appeal to Ministers to
support these proposals at the Seattle Ministerial. We need technical assistance, not just
up to Seattle, but beyond, during the Round and after. This is in the interest of
everyone, like the serious and real problems with implementation. This question will not
go away. Nor will you, nor will I.
One
point that should not go unmentioned is that of human capacity-building which is an
important aspect of WTO technical assistance, particularly in the trade policy courses. I
would appeal that those who are trained in trade policy by the WTO are appropriately
deployed. They can be used as trainers within various countries. The purpose would be
defeated if those who are trained in the high quality and resource intensive trade policy
courses are, thereafter, deployed to tasks unrelated to trade policy formulation,
negotiations and implementation.
There
has been a false separation of trade and development. UNCTAD and the WTO; we are brother
and sister, wings of the same bird. We serve the same people. UNCTAD's DG, Rubens Ricupero
is a great man and a great friend. We will work together to assist our people.
In
my first few days I appointed a respected, retired Ambassador from a small developing
country to assist me in a new project to assist the small countries that cannot afford
representation in Geneva. In November, we shall have a week of briefings for Non-Resident
Members (over 20 countries that cannot afford the cost of representation in Geneva). At
this Seminar, there will be briefings about the WTO and its work, as well as on the work
of other international organizations like UNCTAD, WIPO, the World Bank, the IMF, UNDP, the
ILO and others. This Ambassador will also audit our systems to ensure they are development
friendly and will consult you, our customers and owners, on how best we can improve our
play.
Arising
from the regional preparatory meetings is the expressed need by African countries for
support for the regional integration process in Africa. WTO Members are increasingly
influenced by regional agreements. These regional agreements are themselves subject to
specific conditions. However, even as we acknowledge the important contributions that they
make to economic development, I believe it is vital for us to re-affirm the primacy of the
multilateral trading system, and ensure that the regional integration process is
complementary and not harmful to the rules-based trading system. The WTO will continue to
give support to the regional integration process in Africa. Tell me what I can do to
assist.
Allow
me to raise with you a problem most Nations face which frequently escapes public scrutiny
namely, the costs that arise from protection. The cost of doing nothing is accepting the
status quo. Trade protection, either through tariffs or non-tariff barriers, imposes
significant and damaging costs on national economies. It leads to inefficiencies, delays
adjustments, and entrenches domestic distortions. If consumers and governments calculated
and evaluated the costs that arise from trade restrictions and protection, they would not
protect. The cost of protecting jobs or particular sectors in national economies is so
high and damaging, both in the short and long-term, that it is counterproductive and costs
jobs and wealth. In the rich countries of the Organization of Economic Cooperation and
Development (OECD), the cost of protection on consumers has been estimated at US$300
billion. In one country, the cost to consumers of the protection of one single job was
estimated at US$600,000. I would urge the countries of Africa to avoid the mistakes of
some of the "grandfather" industries in the developed countries. I also
urge the wealthy nations to reconsider their policies of subsidies. Subsidies are just a
battle over whose taxpayers have the most money to waste. Alas, that’s always the
rich nations. It's a way of exporting problems and domestic economic and political
conflicts.
Distinguished
Ministers, I would like to offer a few words on the preparatory process for the Seattle
Ministerial Conference. The process which began in the General Council, in September, last
year, is now in an advanced stage, thanks in good part to Chairman Mchumo. The
process of drafting the Ministerial Declaration has begun; and in the days ahead of us,
active negotiations will be underway on the substance of the draft. Seattle must be a
watershed and turning-point.
The
agenda of the new Round of Trade Negotiations is a matter for Members. Nonetheless, the
scope of much of what the Round would contain is suggested by paragraph 9 of the Geneva
Ministerial Declaration of last year. All Members have emphasised the importance of
implementation. Members are already committed to negotiation in agriculture and services.
There are also other issues. There is the Work Programme that arose in Singapore
containing the so called "new issues" of investment, competition policy,
transparency in government procurement and trade facilitation. There is the reality of
electronic commerce. There are issues that will be raised by Members, including
sustainable development which is one of the cardinal objectives of the Marakkesh Agreement
establishing the WTO. Members are deeply divided on what this means. They are worried
about the social and human costs of change. So they should be, our ultimate employers, the
people, are concerned even in the richest economies with the cost of change. There is
concern and anxiety.
The
agenda for new negotiations must be balanced and reflect the interests of all Members.
There must be something in the pie for every one. Not pie in the sky when we die, but pie
on the table. Now. As soon as possible.
I
urge the distinguished Trade Ministers of Africa to give their strong support for a new
Round of Trade Negotiations. It would maintain the momentum for trade liberalization and
hence growth, development and higher living standards for our families. A new Round would
keep protectionism at bay and assist the recovery of those regions recently stricken with
financial and monetary crises or undergoing recession. Imagine the implications if the
markets of the North had slammed closed during the recent Asian crisis.
Mr.
Chairman,
I
have spoken at length and I would like to conclude with the priorities that I have set for
myself as Director-General. It is on the basis of these priorities that I expect and want
to be judged. These priorities which I stated on my first day as Director-General are:
-
to facilitate and to assist all participants to get the most balanced outcome from the new
negotiations, and an outcome which benefits the most vulnerable economies;
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to be an advocate for the benefits to both great and modest nations of a more open trading
system, and one that can increase living standards and build a more prosperous, safer
world; and,
-
to strengthen the WTO and its rules, to build on and maintain its reputation for integrity
and fairness, and to reshape the organization to reflect the reality of its membership and
their needs.
I
know you will send a message to Geneva and Seattle. This is an historic opportunity
for all of us to move forward. We are all in the same boat. As President Nyerere said,
"We all depend on each other's ability to purchase." Where this was once true of
villages, it's now true of nations. Seattle is our best hope to advance. And the WTO is
just one of the sisters of multilateral institutions that can play a role in sustainable
development and in raising the living standards of our people. You have honoured me with
your invitation and attention. I am profoundly grateful. I want to be your Ambassador in
Geneva, your champion in the capitals and your advocate with the other international
institutions. Thank you. |
