WTO news: what’s been happening in the WTO

WTO NEWS: SPEECHES — DG MIKE MOORE

Paris, Tuesday 9 October 2001
Preparations for the fourth WTO Ministerial Conference
Commission des affaires étrangères
Assemblée nationale

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There are just 30 days until the 4th WTO Ministerial Conference takes place in Doha, Qatar. In terms of our preparatory process, this is where the rubber hits the road.

Ministers are resolute. They do not want a repeat of the failure of Seattle. Nor can we pretend this is a routine meeting where Ministers will simply discuss general economic trends. The context in which Ministers will meet ensures a decision will be taken, whether positive or negative, that will have long term implications for the WTO. Failure to get consensus on a forward work programme will lead many to question the value of the institution. It could condemn us to a period of hibernation.

I have made no secret of my conviction that a new trade round is necessary. The arguments are compelling and have been made cogently by many world leaders.

There is the development argument. 1.2 billion people live on less than $1 a day; another 1.6 billion people live on less than $2 a day. The first responsibility lies with Governments — development requires peace, good governance, sound economic policies, and investment in health care and education. But the international community can and must help. Poor countries need to grow their way out of poverty. Trade is a key engine for growth but currently developing country products face many obstacles entering rich country markets. By opening these markets, we can help lift millions of people out of poverty. And the most effective way to achieve these market openings is by launching a new round. Put another way, growth through trade can help us reach the UN Millennium Declaration targets of halving poverty, reversing the spread of HIV/AIDS, halving the number of people without access to safe drinking water, and ensuring children have access to primary education, by 2015.

In his call for a new round, which must be a development round, at the UN Conference for Least Developed Countries in Brussels earlier this year, the UN Secretary-General made a compelling case on behalf of the UN family. Mr. Annan reminded us that poor countries are caught in a vicious circle: they need foreign investment but can offer little to attract such investment. Mr. Annan reminded us too that in order to break out of the circle, poor countries need to export and need open markets in which their goods can compete. But those exports face formidable barriers, both tariffs and non-tariff barriers — hence the need for a new round. A new round will advance the gift of opportunity which is all that market access is. We should recall too the figures. By one study, developing countries would gain $155 billion a year from further trade liberalisation. That is more than three times the $43 billion they get annually in overseas aid.

There is the economic argument. If we cut by a third barriers to trade in agriculture, manufacturing and services, that will boost the world economy by $613 billion, according to one study from Michigan University. That is equivalent to adding an economy the size of Canada to the world economy. If we cut trade barriers completely, that will boost the world economy by nearly $1.9 trillion: the equivalent of adding two more Chinas to the world economy. To give another perspective to the economic argument; OECD agricultural subsidies in dollar terms are two thirds of Africa's total GDP. Think of the gains to the global economy if these subsidies were removed. Mr. Annan wants $10 billion to fight HIV/AIDS; that is just 12 days of subsidies in dollar terms. Nor can we ignore the fact that the world economy is looking decidedly vulnerable at present. There is no better way to address the problems of economic slowdown than by strengthening the multilateral trading system through new negotiations.

There is another argument, an historical one, for launching a round. Liberalization works. The multilateral trading system works. The last 50 years has seen unparalleled prosperity and growth and more has been done to address poverty in these last 50 years than in the previous 500. Since 1960, child death rates have halved in developing countries; malnutrition rates have declined by a third; access to safe water has improved dramatically. While the current UN Millennium Declaration targets show there is still a long way to go, and we need to keep in mind that the multilateral trading system is just one contributor to the progress that has been secured, we should not lose sight of the fact that the system has proved its worth repeatedly.

Of course, trade liberalization is just one ingredient in a cocktail of policies required for development. A new round 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 crippling debt overhangs. Nor will a round help those 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.

I believe there is another reason, more fundamental, more profound and more immediate, why we need a successful meeting next month. This meeting is a chance for the international community to reaffirm its commitment to common values of openness, sharing, peaceful exchange and rule of law rather than rule of the jungle. Leaders and Governments have long recognised the need for international and regional responses to problems we have in common. No single nation alone can combat AIDS, clean the environment, run a tax system and manage airlines without the cooperation of others. Nor can they deal in isolation with the threat of international terrorism. Institutions such as the United Nations, the World Bank, the IMF and the WTO are expressions of the international community's commitment to work together. 167 UN Members reaffirmed their commitment to international cooperation at last week's special UN plenary meetings on terrorism. There will be further opportunity next month when WTO Members welcome 1.5 billion people from China and Chinese Taipei into our rules-based system and also take decisions to determine, in the coming years, the contribution of the WTO to global economic development, peace and security.

The state of the world economy demands that we use the Ministerial Conference as an opportunity to boost global confidence. The alternative message would be damaging for jobs everywhere.

Just 2 weeks after the tragic events of 11 September, United States Trade Representative, Robert Zoellick, made a simple but profound statement about the importance of continued openness. It bears repeating;

“Let me be clear where I stand: Erecting new barriers and closing old borders will not help the impoverished. It will not feed hundreds of millions struggling for subsistence. It will not liberate the persecuted. It will not improve the environment in developing countries or reverse the spread of AIDS. It will not help the railway orphans I visited in India. It will not improve the livelihoods of the union members I met in Latin America. It will not aid the committed Indonesians I visited who are trying to build a functioning, tolerant democracy in the largest Muslim nation in the world….”

While the need for a successful Ministerial Conference is recognised by all and the arguments in favour of launching a new round are widely acknowledged, some players remain to be convinced. The divergence of views is reflected in the current discussions in Geneva and in capitals. But it is also significant that Members are prepared to continue talking on the basis of the draft negotiating documents the Chairman and I recently circulated. They are good documents. Members realise they represent a good faith effort to bridge gaps that have existed for years. They also realise these documents are a basis for moving forward. Much work remains to be done and I am under no illusions as to the difficulty we face. However, I have seen in recent days a spirit of cooperation and a realization of the importance of the task ahead. With hard work and political will, I am convinced Members can reach consensus.

The most sensitive areas remain the obvious ones — implementation, agriculture, environment, Singapore issues such as competition and investment, and rules. Some of these issues are unlikely to be resolved before the Ministerial Conference and will require hard political decision-taking by Ministers. In the meantime, the preparatory process will continue to focus on reducing the number of differences and narrowing positions on the key issues so that Ministers, hopefully, can put the finishing touches to our forward work programme at the Ministerial meeting.

The concerns of all players — rich and poor, large and small — must be addressed, but with a sense of realism. It is true some imbalances exist in the trading system. But the only way the system can be adjusted and the imbalances addressed is in a wider process of negotiation. It is true that many of the expected benefits of the previous round are yet to materialise for some Members. But it serves the interests of no one to delay further trade liberalization until all previous expectations are delivered upon. It also runs the risk that frustrated key players will turn away from the multilateral process in favour of bilateral and regional trade deals. It is true some poorer countries are marginalized from the trading system. But this situation will not change by opting for the status quo. That is just yesterday's compromise. It is true that some rules embodied in the WTO system may need updating so they reflect current economic reality. But all of the rules of our system are the product of past negotiation and can only be changed through further negotiation. Members want to see the momentum of the negotiations in agriculture and services sustained. But that can only happen in the WTO and in a process that allows for wider trade-offs.

I have said this many times before, but it is still true: what is in question is the launching of negotiations, not their conclusion. The agenda must be balanced and fair, and the principle of consensus must ensure the outcome is acceptable to all Members. All this is possible.

France has real interests in an effectively functioning multilateral trading system. To give some examples: In 1999, more than 40 percent of French GDP was related to trade in goods; France exported 7 percent of this GDP to non-EC countries and 14 percent to EC Member-states. Annual flows of inward and outward foreign direct investment represent roughly 9 percent and 12 percent of trade flows. France is the second largest agricultural exporter in the world. Since the conclusion of the Uruguay Round, France has increased its exports. Through new negotiations, additional market access opportunities will be created. Further liberalization of developing country markets and China in particular should also result in significant gains. As the world's third largest exporter of services, France is also a major beneficiary of our Services Agreement with great interest in further liberalization in this area. In 2000, France exported commercial services worth US77 billion.

The 4th WTO Ministerial Conference is an opportunity for Ministers to reinvigorate our processes, boost global economic confidence and strengthen the multilateral trading system. It is a chance to affirm the importance of the rules-based system governing trade amongst nations. It is a chance for all Members to participate in a process that is win-win and promises benefits for all.