WTO NEWS: SPEECHES — DG PASCAL LAMY

CUTS International and Partners — New Delhi

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Collective efforts towards a shared future

With the adoption of the Millennium Development Goals in 2000, the world saw an unprecedented collective effort to pursue a shared future. It was a joint effort where North and South, East and West rich and poor collectively agreed to team up, to pool resources to attain a set of shared objectives.
Objective number eight, which Pradeep Mehta said is the leitmotiv of this conference, calls for developing a partnership for development and this where the title of this conference comes from.

The starting points are simple: we live in an interdependent world where go-it-alone policies and actions are not enough to achieve collective results; nor are they any longer sufficient to even achieve country-specific goals. As I said yesterday today's global challenges can no longer be met by individual action. Collective action is needed. And this collective action needs to be and to be felt as legitimate, ie all actors need to participate in its design in order to feel ownership.

This is the underlying philosophy of the WTO. It exists to serve all of its 153 Members, no matter how diverse their economies are or how well equipped they may be to take advantage of the trading system. The differences in levels of economic development are recognized in the WTO and are a part of its reality. No one contests that developing countries, and especially the least-developed countries, require greater flexibilities if trade and development objectives are to be met.

Hence developing countries have come to rely on the WTO as one which provides them with an effective set of rules which ensure that trade facilitates development, and provides them with a forum for discussing and negotiating their trade related concerns.

As the trade of developing countries gains in importance, it is necessary for the institutional aspects of the WTO to keep step. Developing countries must be assured that their efforts to expand and diversify their markets are backed by an organization which will protect their current and future interests.

While developed countries, and especially the markets of the United States and the European Union, still provide the lion's share of market opportunities for developing country exports, this situation is changing. South-South trade has grown faster than North-South trade over recent years. It has become increasingly evident that one developing country's trade policies can create opportunities for more trade with other partners. Much of the expansion in South-South trade has taken place in Asian developing countries, which are estimated to account for more than two-thirds of all intra-developing country trade.

So some developing countries have benefitted greatly from international trade. Unfortunately, there are many developing countries that have yet to reap real gains from trade. This is a concern of mine, and indeed is a concern of the WTO membership. This is why we continue to work in the WTO to help all developing countries enjoy the benefits of participation in international trade. Before I talk about current developmental issues in the WTO agreements, let me briefly turn back in history and outline how the multilateral trading system has evolved to take into account developing country issues.

Development issues in the early years of the multilateral trading system

The linkage between trade and development and the idea that export earnings gained from trade can help achieve development were recognized very soon after the General Agreement on Tariffs and Trade (GATT) came into being. Following some early initiatives to incorporate developing countries' concerns in the multilateral trade rules, GATT Contracting Parties attempted to address the broad array of development principles and objectives when including a Part IV of the GATT Agreement in 1964 under the chapeau of “Trade and Development”. This new section of the GATT Agreement reflected the needs and economic levels of development of the GATT's newest Members, or those states in Africa, Asia and Central and South America which had just recently obtained their independence in the early 1960s.

Part IV of the GATT contains three articles which address the principles and objectives of why a development dimension is needed, what kind of commitments the developed countries of GATT would grant their lesser developed partners and how both developed and developing countries would take joint action to further trade and development objectives.

We went a step further in 1979 when we adopted the so-called Enabling Clause which provided for the establishment of a “generalized system of preferences” allowing developed nations to grant tariff advantages to the developing countries as an exception to the Most-Favoured Nation clause. Also included under the Enabling Clause are regional or global arrangements entered into amongst less-developed or developing countries.

From the Uruguay Round to the Doha Round

The establishment of the WTO at the conclusion of the Uruguay Round was in many ways a great success for multilateral cooperation, and boded well for the global economy. It was a signal that the majority of the countries in the world wanted a wide a far-reaching global trade body to promote equitable and transparent trade rules — in goods, services and intellectual property. The WTO is a consensus-based organization, thereby providing the basis of a system in which each country — even the smallest — counts. And this is where its legitimacy lies. No Security Council in the WTO and no board of directors.

But the Uruguay Round was left with some “unfinished business”. For example, while agriculture was for the first time brought explicitly into the multilateral trading system under the Uruguay Round, no significant cuts in trade-distorting subsidies or agricultural tariffs were achieved. In developing countries, the amount of protection offered by some developed countries to their agricultural sectors is seen as a major obstacle to development, in particular as certain developing countries do have a comparative advantage in many agricultural products. This is the case of India in cereals, spices, coffee, tea, sugar or fish. India is a net food exporter. In 2007 its food exports were twice as large as its food imports.

On services, the opening achieved by the Uruguay Round was modest compared to the huge potential of this sector. For the sake of the global economy in general, and developing countries in particular, there is a need to further open global services trade.

I also do admit that the commitments taken on by WTO Members at the end of the Uruguay Round may have been burdensome for some developing countries. Implementing the WTO agreements was seen as being difficult for many.

For these and other reasons, the launching of the Doha Round was essential for countries' continued efforts to create a multilateral trading system which would address remaining imbalances towards developing countries and could thus benefit all.

The Doha Development Round

Almost seven years after the launch of the Doha Round what we now have on the table is at least two or three times greater than from any previous round of negotiations. Among the areas where developing countries in particular would gain, let me highlight the elimination of agricultural export subsidies, significant reductions in trade-distorting domestic support in agriculture and agricultural tariffs, with greater efforts needed on cotton, reduction of high tariffs and tariff peaks on industrial products of export interest to developing countries, and the opening up of services trade. Not to mention rules to simplify customs procedures and cut red tape or reduction of fishery subsidies to help preserve fish stocks.

Just on agriculture and NAMA current proposals on the table could result in savings of US more than 150 billion, with developed countries contributing two thirds and with two thirds of the benefits flowing to developing countries. A true development round.

You are all aware of the Ministerial discussions which took place in Geneva a couple of weeks ago to attempt to set up the Agriculture and industrial pillars of the Round. Intense negotiations probably moved the ball further forward in those 10 days than in the last seven years, to use the expression of one of the Ministers attending.

But the negotiations stumbled over the issue of the special safeguard measure and we did not get to discuss cotton or issues related to intellectual property such as geographical indications or the convention on biodiversity.

Designing a special safeguard measure to protect developing countries against import surges in food remains part of the “to do” list. Differences in positions over the volume of imports which would constitute the trigger for the measure and on the size of the remedy led to failure. Some members feared that the safeguard would lead to a disruption of normal trade and wanted as high a trigger as possible. some other members feared that the safeguard would not be operational if it was too burdensome and wanted a lower trigger.

It is ironic that the talks would stumble over a safeguard measure. Safeguards have been a permanent feature of the multilateral trading system. They were part of the GATT 1947 agreement in its Article XIX, which was developed in the Uruguay Round with the creation of the Safeguards Agreement.

Even if the use of safeguards has been limited and has only had a minimal impact on overall trade flows, it has always provided a political response to domestic fears about trade opening commitments. In fact trade opening in sensitive sectors has often been accompanied by “safety nets” to reassure constituencies about multilateral commitments to trade opening.

A special safeguard was created in the Uruguay Round to provide a safety net to WTO members agreeing to transform existing quotas on textiles into tariffs which they also agreed to reduce. Also in the Uruguay Round, a safeguard measure was created for those developed and developing countries which agreed to “tariffy”, ie convert agriculture quotas into equivalent tariffs, and then cut those tariffs. In fact, part of the discussions in July centred successfully around the request by many developing countries that this Uruguay Round special safeguard be eliminated for developed countries after a transition period.

If I have gone at length over this matter, it is because I do not think that the Doha Round should collapse over this issue. I am convinced that — as powerful and as important as this issue may be — the experience of the global trading community over this issue must be put at work to find a compromise. Genuine floods of imports, especially if these stem from unfair conditions, need to be tackled and the mechanisms to do so need to be workable. At the same time, safeguards should not be used to disrupt normal trade, in particular since many of those to be affected are other developing countries for whom Doha also needs to be a development round. Nor should they be used as a substitute for adequate domestic policies in the agriculture sector. A fine balance is required and the search for this fine balance requires that our negotiating resources continue at work.

After the failure to achieve modalities at the end of July, many were the voices of those who pleaded for what had been achieved to remain on the table. A lot of work had gone into issues such as tropical products, preference erosion, LDC related issues or bananas and members said it had to be preserved so that modalities could be built on that work. All members have committed to do so. There is now far too much on the table, particularly for developing countries, to give up on these negotiations.

As the dust starts settling, all Members will need to think about the next steps. I understand from my contacts here in Delhi that India wants to be an engine for commitment and engagement over the coming weeks. I know the quality and dedication of the Indian negotiating team led by my friend Kamal Nath. And I also know the commitment of India to a strong multilateral trading system, which Prime Minister Singh underlined once again in our discussions yesterday.

For as strong and big individual WTO members are, alone they will not be able to tackle the challenges facing our societies. Neither on trade and economic matters, nor on other pressing issues such as climate change or immigration to name a few. The world is interdependent and the solutions must be the result of a collective effort; all need to contribute to address our collective challenges.

The title of this seminar could not be any more timely: global partnership for development. And the test in front of us could not be clearer: moving the Doha Round to its successful conclusion remains a good test for our collective determination to a global partnership for development. Not to mention Aid for Trade, which although not formally part of the WTO agreements, is a field where the Organisation has been saddled with new responsibilities since 2005. But will come back to that later today in our afternoon session.

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