Ladies and Gentlemen,

It is a pleasure to join you all today to share views on how to save the Doha Round and deliver on development. As many of you are aware, the Doha Round journey has never been smooth or easy. In Doha, we celebrated joyful moments, when the Round was launched; we experienced the difficult moments at Cancun, Mexico in 2003, when many feared that the multilateral trading system had lost its sense of direction. In July 2004, after many sleepless nights, Members agreed on the July Framework and in Hong Kong the following year, a ray of hope again appeared in front of us. Last July we had to face up to the “suspension” and again the negotiations were thrown to the bottom of the valley. Fortunately, Members still have not lost confidence and now we are back into full negotiation mode again.

What have I learned from the past 5 years, from the ups and downs, from those joyous moments and bitter hours? First, I found that there has always been an underlying force that helps us get out of the most difficult situations and gives us hope at times of despair. It is our belief that a strong WTO reflects the widespread desire to operate in a fairer and more open multilateral trading system which provides a stable anchor to our economies as they become more intertwined. It is the acknowledgement that this system has contributed significantly to economic growth, development and employment throughout the past 50 years. It is the belief that international trade can play a major role in growth and poverty alleviation and all our peoples can benefit from the increased opportunities and welfare gains that the multilateral trading system generates. For a country like India which was a founding father of the WTO predecessor, the GATT, I am convinced this belief is clearly here today.

Secondly, it is important to realize that the negotiation process has moved forward, bit by bit, layer by layer, to its present stage when negotiators showed understanding of others' concerns, when negotiators not only thought about their own national interests, but also kept the value and good of the system in mind and made joint efforts towards compromise solutions. When all countries were ready to make their contribution, with richer countries making a bigger contribution than poorer countries. We witnessed this kind of cooperative atmosphere in the final stages at the Doha Ministerial, in Geneva in 2004 and in Hong Kong in 2005. I hope to see this happen again in the coming months, in order to open the way towards the conclusion of the Round.

Current Development and scope of Convergence

Since February the negotiations have resumed in full mode in all negotiating groups. Members are also working bilaterally, touching base and checking the impact of possible compromise numbers on products of their major export interests and main import sensitivities. There is also renewed engagement and support at the highest political level. Last week, the US, EC, Brazil and India held bilateral contacts in London and Geneva at Ministerial level. I had separate meetings with the four ministers and I was informed that some progress has been made in testing hypothesis, approaches and formulae. While this can be helpful in contributing to progress, it is taking place at too slow a pace. Time is not on our side and many WTO members are becoming impatient. The multilateral process of negotiations must therefore kick-in at full speed, and the Chairpersons of various negotiation groups must come into the centre stage. We need to speed up the process so as to grasp the window of opportunity which closes y the end of June with the expiry of the US Trade Promotion Authority.

The opportunities for Development in the Doha Round

Now let me turn to the core theme of this Seminar: “development”. The decision by WTO Members in 2001 to designate the Doha Round a development Round was a recognition that there remain, in today's multilateral trading system, rules and disciplines, imbalances that penalise developing countries — and that these must be corrected. The objective, therefore, is to improve the multilateral disciplines and the commitments by all Members of the WTO in such a way that they establish a more level playing field and provide developing countries with better conditions to enable them to reap the benefits of opening trade.

On industrial tariffs, through the reduction formula in this Round, we can, for the first time, address the tariff peaks, high tariffs and tariff escalation remaining in developed countries. Very often, these highest import tariffs are applied on products in which, as if by coincidence, developing countries have a comparative advantage.

For example, in 2005, the average applied rates on industrial products of the European Union was around 4%, but on Men's T-shirts the tariff it was 32%. In the same year, the average applied rates of US industrial tariffs was 3.9%, but the tariff on some sport shoes was as high as 48%. What could be the result of this tariff differences? Let me give you a concrete example. In January 1996, the US imported three billion dollars worth of French goods — and collected roughly 30 million dollars in import tariffs. In the same month, the US imported only 200 million dollars worth of goods from Cambodia — that is less than 10% of US imports from France — but the amount of import duties paid was the same — 30 million dollars! The nub of the problem is the type of goods that each country exports. Today, if a country exports low value-added products, like textiles, clothing and footwear — usually produced by poor countries — it pays high duties. This situation must be changed and this Round can do it.

In agriculture, in order to rebalance the multilateral trading system in favour of developing countries, we have already agreed that this Round has to deliver “effective cuts” in trade-distorting agriculture subsidies in developed countries. It will also deliver the elimination of the most damaging type of subsidies: export subsidies by 2013, with a substantial part of them gone by 2010. It also has to deliver improved market access, including on South-South trade, through the reduction of tariffs and removal of quantitative restrictions, especially on products where developing countries have a comparative advantage. At the same time, WTO members have recognised the right of developing countries to protect a number of special products on criteria of food security, livelihood security and rural development and to use a special safeguard mechanism to protect against import surges. All this has already been agreed. Now the question is “how much”.

On cotton, rich countries have already agreed to eliminate all export subsidies in 2006; they have also agreed to make deeper and faster reductions in trade distorting domestic subsidies for cotton than for the remainder of agricultural products.

For the poorest countries, there is already agreement 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 100% of their products.

There is also agreement to open services markets, an area of growing importance for many developing countries and with a huge growth potential as India itself attests. There is agreement to curb fishery subsidies which contribute to the depletion of our oceans, to facilitate customs procedures, to introduce greater transparency in anti-dumping procedures and to foster trade in environmentally-friendly goods and services.

Let me finally mention the new provisions on access to medicines, which have already been agreed, allowing for compulsory licenses by poor countries that do not have any manufacturing facilities, which can make an important difference in saving people's life or in ensuring that more people can afford minimum medical treatment.

All these are areas where a country like India which is progressively and steadily integrating into the world economy stands to gain from this Round.

New trade opportunities will not automatically convert into trade growth and development

As you can see, there are signs that this Round's achievements for developing countries are already much more powerful than the Uruguay Round, even if still not enough to close it. But are market access and new disciplines enough to promote development and to increase the level of development for the poorest countries in the world?

The answer is no. Trade openness and improved disciplines play a vital role in growth and development. But they are not a panacea for all the challenges of development. Development needs to be embedded in a supportive economic, social and political context and a coherent multi-faceted policy framework. Trade opening and improved disciplines are a necessary but not a sufficient condition for development. Governments need to ensure that a whole set of domestic conditions is put in place.

What are these conditions? First, sound macroeconomic policies. These are the basis for any successful trade policy. Second, markets that function reasonably well. If price signals are not transmitted to markets — in such a way that markets remain rigid, unresponsive and often monopolistic — then benefits from trade opening may be dissipated or appropriated, and in these situations trade opening can even be harmful. At worst, trade opening could end up impairing current economic activity and employment without opening up new and better opportunities. Third, the necessary infrastructure must be in place, be it human capital or physical infrastructure. Fourth, as usual, good governance and functioning, reliable institutions.

Trade opening can only be politically and economically sustainable if it is complemented by flanking policies which address, at the same time, capacity problems — whether human, bureaucratic or structural — and the challenges of distribution of the benefits created by freer trade.

Here the WTO Aid for Trade initiative comes into the picture. Aid for Trade is all about empowering developing countries to benefit from trade. It is about helping the private sector — entrepreneurs, traders, investors — to seize export opportunities. It is about building on results already achieved by civil society organisations in many countries, among which India. Above all it's about greater international cooperation and coherence — between the WTO, the World Bank, the IMF, and the UN at the global level, and between trade, finance and development ministries at the national level — because it is at ground level that policy coherence must begin.

Aid for Trade, is one part of the much larger challenge presented by the Development Round: ensuring that trade is not just an end in itself, but works to raise living standards and reduce poverty. We need to ensure that market opening translates into real gains and benefits to the people, by helping to put in place the necessary conditions for those gains and benefits.

This Round has a concrete potential to achieve much for developing countries. So will this Round live up to its name? Will there be a discussion on whether or not it has attained the objective of promoting development? In fact, we will only know the answer to these questions when the Round is concluded — or even later, when its results are implemented. To me, therefore, the main question about this Round of trade negotiations is not a Shakespearean one, a Hamlet dilemma of “to be or not to be” a development round. The main question is actually whether or not the results of this round translate into poor countries’ increasing their level of development.

Conclusion

This negotiation is about more than trade. This Round is more than a negotiation, it is also a test. A test of the credibility of the WTO, and its ability to deliver on its promises to developing countries. A test of the global community's willingness to turn their talk of international cooperation and policy coherence into meaningful results. And a test of whether or not we can construct a truly “global” trading system, where all countries benefit.

Thank you.