Ladies and Gentlemen,
Let me start by thanking Mikuriya-san for inviting me to this meeting. The partnership between our two institutions has always been fruitful and we have managed to take it to a higher level thanks to his leadership. Given the important contribution of this organization to the work of the World Trade Organisation, my visit here is long overdue.
The World Customs Organization has played an important role in the activities of the WTO, both in its regular work as well as on the on-going Doha Development Agenda negotiations.
If you would allow me, I would like to say a word about the state of play in the DDA negotiations. Since 2001, WTO members have covered significant ground towards a comprehensive Doha agreement that deals with well over 20 topics ranging from services to fisheries subsidies. The negotiations in around 80% of the issues being discussed have reached a level of maturity that would allow us to conclude within a very short period of time. It is also a known fact that unfortunately progress has stalled because of disagreements in the key area of market access for industrial products among a few members.
Since April, I have been consulting members on the elements of a smaller package which could be harvested by the end of the year, to focus as a priority on the least-developed members of the WTO. It would be a concrete deliverable on the development dimension of the Doha Round. It would also be a signal of confidence in the rest of the package to come at a later stage, when the negotiating priorities of a few of our members would be better aligned.
One area which is being discussed as part of the December package is trade facilitation, which is felt as being of great systemic value to all our members, a true win-win agreement. And here I would like to pay tribute to the WCO for being an essential partner that offers valuable support to the WTO negotiations in this area as well as in the delivery of related technical assistance.
I would particularly like to recognize the WCO’s indispensable contribution to the WTO trade facilitation Needs Assessment program. Under this program technical assistance support was provided to nearly 100 developing and least-developed countries to enable their more effective participation in the negotiations.
And as a result of this support, we see in the negotiations increased and improved participation from developing and least-developed countries which, in turn, supports the overall goal of the Doha Round by helping to bridge the development gap.
I guess the WCO is a good place to discuss the tremendous value that a trade facilitation deal could have for our trading communities and in particular for many of our small and medium enterprises. According to a recent OECD study, implementation of the Trade Facilitation measures discussed in Geneva could reduce total trade costs by almost 10 per cent. It also shows that, successfully implemented, facilitation programs increase customs productivity, improve trade tax collection and attract Foreign Direct Investment. There is also a positive impact on government revenue with several countries having more than doubled their customs proceeds after introducing trade facilitation reforms.
The scope for improvement is considerable for all parties involved. For OECD countries it currently takes on average about four separate documents and clearing the goods in an average of ten days at an average cost of about $1,100 per container. By contrast, in sub-Saharan Africa almost double the number of documents are required and goods take from 32 days (for exports) to 38 days (for imports) to clear at an average cost per container of between $2,000 (for exports) and $2,500 (for imports). The overall world champion at trade facilitation is Singapore, where four documents are required and goods are cleared in, at most, five days at an average cost of around $456 per container. At the other end of the scale are many of the low-income developing countries, in particular the landlocked developing countries, whose trade-processing costs can mushroom as a result of the effort required to move goods in transit by road or rail through their neighbours to their nearest international port. According to recent research, every extra day required to ready goods for import or export decreases trade by around 4%.
Handicapping the world's least competitive producers and poorest consumers with additional transaction costs of $1,000 or more for each container of goods that they manage to export or import is clearly absurd. The trade barriers they face in their main export markets are, in most cases, far less significant by comparison. And for many of them the costs of poor trade processing has a bigger impact than their tariffs on the domestic price of imported goods. The trade facilitation deal is therefore one simple step to reduce the costs of trading and also to boost trade.
As we progress in the completion of a new WTO Trade Facilitation Agreement, we look forward to the continuation of our close co-operation. Currently, the WTO is developing a more focused technical assistance to help with the implementation. This program will also help countries to obtain better targeted technical assistance and support for capacity building appropriate to their own needs. Support from the WCO will be crucial to the successful and timely implementation of this program.
We will have an opportunity to further discuss trade facilitation and the related technical assistance at the Third Global Aid for Trade Review which will take place in Geneva on 18-19 July and to which Kumio Mikuriya has kindly accepted to participate.
I would also like to take this opportunity to encourage the Brussels-based attaches to consider how they can better support their respective countries in the WTO trade facilitation work. Their technical customs knowledge provides useful assistance during the negotiations and it will be invaluable in helping countries better sequence and implement their future trade facilitation commitments.
Chairman, let me also mention the Harmonized System (HS), customs valuation and rules of origin as other areas where our co-operation is extremely fruitful, both substantively and in the provision of technical assistance.
The HS is a very important instrument for the WTO. It is the nomenclature used by WTO members for the purpose of scheduling their concessions on goods. Substantive work has been generated both for WTO members as well as the Secretariat as a result of the regular updates of the HS which need to be incorporated into these schedules. In addition, the HS has been used in some agreements (for example the Agreement on Agriculture and the Information Technology Agreement) to delineate product coverage.
I wish to highlight one area of critical importance to our work, particularly in the context of the current phase of the DDA negotiations, an area in which the WCO has substantial technical expertise: preferential rules of origin.
The WCO has recently established a database of preferential rules of origin which covers only rules of origin of FTAs or other preferential schemes like the GSP and which I am told is simple and user friendly. This database allows users to compare different rules of origin of the same good. This has a significant potential to simplify the task of exporters in developing countries, particularly the least-developed. The latter have consistently called for a simplified system of rules of origin that would allow them to understand and comply with rules of origin requirements and this database is a positive step towards this goal. It is therefore our wish to see this database linked to the WTOs Non-Tariff Measures database being built.
To conclude, let me mention an area where I believe we could strengthen our co-operation, and that is in the area of measuring trade flows in value added, instead of gross numbers as is the case today. Business increasingly locates the different stages of its activities in a way that optimizes its value-addition chain. The “Made in a particular country” label on the back of a product should really read: “Made in the World”. This new global reality forces us to re-examine how we analyse and measure international trade. At present, international trade flows are computed by attributing the full commercial value of a product to the last country of origin. This needs to change. The numbers we have today do not fully reflect the real picture of international trade in a globalized world. I believe there is a lot that we can do together on this front. Let me here invite you to visit our website “Made in the World” and share with us your thoughts.
Mr Chairman, the WTO values its partnership with the WCO and towards this, we will continue to seek better ways to enhance and strengthen this relationship.