“Negotiations on the Doha Development Agenda: We Approach the Moment of Truth”

Ladies and gentlemen,

It is a pleasure to be here with you today to discuss the progress that the WTO is making in completing the Doha Round. As you know, the end date for the Round is soon approaching — it is the end of this year as a matter of fact. This is not a date that our membership has picked out of the blue; it is not a date that has fallen out of a hat. Rather, it is a date that corresponds to the expiry of the Trade Promotion Authority of the United States.

Our membership is conscious of the fact that if this deadline were to be missed, trade liberalization on the scale envisaged by the Doha Round would become impossible to achieve in the near future. And who would be the main losers?
  

— First would be the developing world. It is a well known fact that the main aim of this Round is “development” — in other words, its main objective is to redress the existing imbalances in multilateral trade relations. Were this Round to fail, developing countries would pay the highest price.
— Next would be the smallest and weakest economies, for which the multilateral process acts as an “insurance policy” against the pressures exerted by the strong in bilateral trade accords.
— The biggest loser, however, would undoubtedly be the WTO. In other words, the system that has served the collective interests of 150 different members, and that has ensured a trade opening that is adapted to changing realities and that is based on a consensus between us all.

I believe that this is a diagnosis that we all share. We now approach the moment of truth.

The WTO's Hong Kong Ministerial Conference led to progress on some fronts. It also set a series of important deadlines to pave the way for our work this year. Let begin by saying a few words about our achievements in Hong Kong, and then turn to what remains to be done this year in the various areas of the negotiation. Hong Kong represented a modest success. In fact, its outcome could have only been either a modest success, or a serious failure. Fortunately, our membership succeeded in making of Hong Kong an important stepping stone for the completion of the Round.

Agriculture has been, and continues to be, at the center of the Round. This will come to you as no surprise, of course, since the agricultural sector is various trade rounds behind industrial goods. The Agreement on Agriculture only came into force in 1995. In other words, the agricultural sector has not benefited from the 50 year process of trade liberalization that we witnessed in industrial goods.

In agriculture, Hong Kong secured a deal that involved all 3 pillars of the negotiations; namely, export subsidies, domestic subsidies, and tariffs. Countries agreed on the elimination of export subsidies by 2013, with the removal of a substantial part by 2010. Europe lived up to the unanimous demand that had been made of it in this regard by the developing world. In Hong Kong, members also agreed to make “effective cuts” in trade-distorting domestic support. This means that they will be making real cuts, and not just cosmetic ones. It was also agreed that the biggest subsidizers would cut their subsidies the most, with the EU, the US and Japan making the highest reductions. With respect to tariffs, there was limited progress. The size of the tariff cuts to be made remains outstanding.

However, in Hong Kong, developing countries were able to secure a number of their “defensive objectives.” It was decided that they would be given the freedom to themselves designate what are known as “special products.” These are products that would benefit from special treatment in the negotiations (i.e. lower reductions), in view of their importance to either the food security of a country, its livelihood security, or its rural development needs. It was also agreed that developing countries would be able to benefit from a new safeguard mechanism, triggered on the basis of both surges in imports and falling prices.

Important progress was also made on cotton, where the calendar for the reduction of export and domestic subsidies has been expedited, and where members have committed themselves to deeper than formula cuts. With respect to tariffs on cotton, rich countries, and developing countries in a position to do so, decided to provide duty-free and quota-free access to all LDC cotton exports.

So what then are the issues in agriculture that remain outstanding? First, is the magnitude of the reduction that will be made in agricultural subsidies in both Europe and the United States (needless to say, other members such as Japan will also need to make reductions). Second, is the magnitude of the tariff reduction that will be required for agricultural products, and the treatment of sensitive and special products for developing countries.

Therefore, it is now a question of agreeing on numbers. At the G6 meeting in London last week, countries started sharing the simulations that they had been working on. These are intended to help countries gage the effect of the various proposals that currently on the table and to determine the possible “land zone.” That discussion must now be taken forward. Just as we speak, agricultural negotiators are meeting in Geneva, to test these numbers.

On the export competition pillar of the negotiations, there are many issues that will need to be resolved. These do not involve numbers, but involve the creation of new disciplines. Issues addressed in this part of the negotiation include food aid, and how to prevent the commercial displacement that it sometimes creates. Of course, you can imagine how delicate this issue is. Commercial displacement has to be addressed, but without preventing the world's humanitarian needs from being met. The WTO must ensure coherence in this area between its rules and those of other international instruments, like the Food Aid Convention. But there are other issues too in this pillar, like export credits, and state-trading enterprises, for which disciplines will need to be devised.

We must not forget about geographical indications, a subject of great importance to the EU. At the negotiating table, positions continue to diverge on this subject.

In Industrial goods, which constitute 80% of world merchandise trade, there is an enormous potential for increased North-South and South-South trade. At Hong Kong, members agreed to reduce tariffs using a formula that would reduce tariff peaks and the tariff escalation that remains in developed countries, but which would also reduce tariffs in developing countries in a manner suited to their needs and interests.

The Hong Kong Ministerial Conference also succeeded in addressing a long-standing demand of 32 of our poorest members (the LDCs). Rich countries agreed to provide duty-free and quota-free access to 97% of all LDC products on a lasting basis; with a view to eventually extending this treatment to a 100% of their products.

Various simulations of different tariff cutting scenarios are also on the table at the moment on industrial goods, and are being discussed by negotiators. In this area, there are fewer numbers on which negotiators must decide, and the landing zone is clearer. However, it is important to remember that Hong Kong called upon countries to achieve a “comparably high level of ambition” in market access in agricultural and industrial goods. So, basically, both areas are tied.

In services, Hong Kong opened the door to plurilateral negotiations. In other words, it encouraged countries to start tabling collective requests in the services of sectors that are of particular interest to them. This process has taken off the ground quite nicely. At the 28 February target date, numerous requests came in, in areas such as financial services, construction services, telecommunications services, and so on. The requests are serious and are well founded. I hope that the offers that will follow on the 31st of July will be able to match them.

Hong Kong, in my view, was able to strike a careful balance between opening trade in services, and maintaining the right of countries to regulate this part of their economy. In fact, I would like to reassure you all that no commitments on services are mandatory in these negotiations. Each country has the right to choose the sectors that it opens to foreign providers. There is no obligation, either, upon a member to liberalize its public services — i.e. the services that are provided on a non-commercial basis.

Finally, Hong Kong has brought about an important agreement on the creation of an Aid for Trade package, to help developing countries address their supply-side constraints. The hope is that this will enable them to translate the market access gains they make from the Doha Round, from theoretical into real commercial possibilities. I have now created a Task Force in the WTO, consisting of a representative group of countries, to advise me on how best to operationalize this package. I am also in consultation with partner institutions, like the World Bank, the IMF, the UNDP, and UNCTAD, on this matter.

Aid for Trade will be of particular relevance to the on-going negotiations on trade facilitation — that is the name that is given to the ongoing process of reducing bureaucratic red tape and of simplifying customs procedures in the Doha Round. Numerous studies have shown that the cost of such procedures ranges between 2 to 15% of the value of trade. It has been estimated that if we were to halve those costs, we could save billions of Euros. I hope that these negotiations will continue to gain momentum. They were already in pretty good shape last year since most countries recognized their importance.

We are now faced with a difficult situation. The Hong Kong Ministerial Declaration has called on countries to complete the “modalities” for the agricultural and industrial goods negotiations by 30 April. In the services areas, the Declaration called for revised offers to be submitted by 31 July. The April and July deadlines are quickly approaching, and in particular the April ones. As I have said earlier, now is clearly a moment of truth.

However, for these deadlines to be fulfilled, all actors will need to move. While agriculture has been placed at the forefront of the Round, the Round is a “single undertaking,” and progress needs to be made on all fronts. To unblock agriculture, the US needs to move on domestic support, and the EU on market access. India, Brazil and other big developing countries, need to show greater flexibility on industrial goods. The services negotiations must continue to progress. Services are an extremely important contributor to today's economy, and the request and offer process must be stepped up. In this respect, allow me to remind this audience of the importance that the developing world attaches to “mode 4” of these negotiations – that is the temporary movement of professionals for the provision of services. This a priority area for many countries; one to which Europe will need to respond in the weeks to come.

Ladies and gentlemen, the brief overview that I have just given you can be summed up in one sentence: we have no more time to lose. The possibility of closing a deal – deciding on whether to succeed or to fail in the negotiations started over 4 years ago now — will be decided in the coming 40 days. We are only 40 days away from our end of April deadline. We all know what we must do to take these negotiations forward.

I thank you for your attention.