WTO NEWS: SPEECHES — DG PASCAL LAMY

The Doha Round at a Crossroad
Economic and Social Council 2007 High-Level Segment
High-Level Policy Dialogue on current developments in the world economy and international economic cooperation

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I am pleased to be here today to share with you views on current developments in world economy and international economic cooperation. I am glad to see that cooperation is the central theme of this panel. I have long believed that international cooperation is the only recipe for sustainable development and growth of all countries. This is especially true in the area of the environment, with cooperation needed to tackle climate change; it is also valid in the area of health, where we need global cooperation to fight pandemics such as HIV-Aids or malaria, to name just two; and it is also the case of trade, and in particular the on-going trade negotiations under the Doha Development Agenda.

Today there is a broad consensus that trade opening plays a vital role in growth and development. This is clear from the Report of the UN Secretary-General for this ECOSOC. Trade opening and rule-making are indeed major goals of the WTO. But today a number of the current substantive rules of the WTO do perpetuate some bias against developing countries. This is true for example with rules on subsidies in agriculture that allow for trade-distorting subsidies which tends to favour developed countries. This is also true when we look at the high tariffs that many developed counties apply on imports of agricultural and industrial products, in particular from developing countries. I often say that while the political decolonization took place more than 50 years ago, we have not yet completed economic decolonization. A fundamental aspect of the Doha Development Agenda is therefore to redress the remaining imbalances in the multilateral trading system and to provide developing countries with improved market opportunities.

But while trade is an essential ingredient, we also know that trade opening is not a panacea for all the challenges of development. Nor is it necessarily easy to accomplish or effective unless it is embedded in a supportive economic, social and political context.

My point is that trade opening is necessary but not sufficient in itself to ensure that the benefits of the negotiation bring positive results for the people in developing countries. In fact trade opening can only be politically and economically sustainable if it is complemented by flanking policies which address, at the same time, capacity problems — human, bureaucratic or structural — and the challenges of distribution of the benefits created by more open trade. This is where trade policy intersects with education and social security, with fiscal policies, with infrastructures. This policy mix must be carefully considered as noted in the UN Secretary General's Report.
If addressing this policy mix is a difficult task in developed countries, which have the necessary means to do it, it becomes a truly uphill battle in many developing countries. This is what motivated placing Aid for Trade high on the WTO agenda, together and in parallel with the Doha Round.
Aid for Trade aims at improving the capacity of developing countries to reap the benefits of more open trade. For some developing members this will mean setting up testing facilities and reliable institutions to help to ensure that exported products meet the technical, sanitary and phytosanitary regulations and standards of export markets. For some others it would mean larger-scale projects such as improving transport infrastructure and trade logistics.

The WTO has limited activities in this field, mainly focused on training, which means that the Aid for Trade initiative has been set up in collaboration with the World Bank, UNCTAD, the IMF, UNDP, regional development banks, the OECD and other agencies who have brought their expertise to bear. The WTO will provide the platform for monitoring and regularly reviewing whether Aid for Trade is being adequately funded and delivering the expected results. In particular, we need to make sure that donors translate their pledges to increase Aid for Trade into realty. We also need beneficiaries to ensure that trade figures prominently in their development assistance priorities. Finally, we also need to work on better coordinating the assistance provided by donors.

To this end, in the autumn we will hold three regional Aid for Trade reviews in Latin America, Asia and Africa, with the cooperation of the respective regional development banks and the World Bank. All this will lead to the first global monitoring and evaluation event which will be hosted here on 20-21 November.

In the meantime, I am also happy to note the progress achieved in the revamping of the Integrated Framework providing assistance to our poorest Members, under the leadership of the Canadian Ambassador Don Stephenson. Donors now need to focus on the upcoming funding meeting that Sweden has agreed to host in Stockholm in September and which will be a test of our collective promise to translate the promises of focused assistance to the Least Developed countries into realty.

But Aid for Trade must be a complement to, not a substitute for, ambitious results in the Doha Development Agenda. Increasing trade opportunities for developing countries and in particular the LDCs, remains far and away the most important contribution that the WTO can make to development.
The Doha Round has seen its ups and downs. It has seen agreements such as the July 2004 Framework and progress at the Hong Kong Ministerial in December 2005. But it has also seen setbacks and doubts, as evidenced in July 2006. Today the Doha Round is at a crossroad: the path towards success or the slow move towards a deep freeze.

WTO Members have pledged to conclude these negotiations around the end of the year, ahead of the start of the an intense political process in the US in 2008, which will be followed by changes in the European Parliament and in the European Commission in 2009. But if this is to be achieved, we need key progress in agriculture subsidies and tariffs on agriculture and industrial tariffs now.

Recently four WTO Members meeting in Germany failed to converge on these key elements. This was not good news but it could be fatal if these four members do not play a constructive role in the multilateral negotiations which are now entering into a crucial stage in Geneva under the guidance of the Chairs of the agriculture and industrial tariffs negotiating groups. The two Chairs will be issuing compromise texts shortly, on the basis of the numerous proposals and discussions held by the entire membership to date.

What remains to be done is small compared to all the proposals already on the table, which represents two to three times what was achieved in the last Round of negotiations. But it is also small compared to the potential benefits of rebalancing the multilateral trading system in favour of developing countries or the weakening of this insurance policy against protectionism if we fail in this last lap.

Indeed, today reaching agreement on subsidies depends on additional concessions from the US equivalent to less than a week's worth of transatlantic trade. It depends on an additional handful of percentage reduction in the highest agriculture tariffs by the EU and Japan. It depends on an additional handful of percentage reduction in the highest industrial tariffs by emerging economies such as Brasil or India. All this to be done, not by tomorrow, but over a transition period of several years to leave space for a smooth adjustment.

I hope all WTO members will bear the proportions in mind over the coming weeks when they will be called upon to make the necessary decisions. Today the challenge is less economic than political. It is about making the multilateral trading system deliver. About making international trade cooperation deliver. I urge you to remind WTO negotiators that there are billions of people who are counting on this deal to deliver on the Millennium Development Goals.

Thank you for your attention.

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