WTO news: what’s been happening in the WTO

European Parliament, Brussels, 25-26 November 2002

The Doha Development Agenda: Challenges Ahead

Fourth EU-ASEAN Think Tank Dialogue

It is my great pleasure to be here with you today. I welcome the co-operation, friendship and understanding that this forum fosters between Asia and Europe. Relations between both regions are vitally important, not only for those directly involved, but also for the world economy. In 2001, the EU was ASEAN's second largest export market and together with the United States and Japan, a key trading partner. EU exports to ASEAN were estimated at 42 billion Euros, while EU imports from ASEAN were valued at 66 billion Euros. Moreover, members of the EU and ASEAN, are individually and collectively, among the strongest supporters of the multilateral trading system.

This support is especially important as we face a weakening world economy. America, after a long period of sustained growth, has slowed considerably. Japan risks slipping back into recession. While in Europe, the world economic downturn is starting to bite.

The developing world is also not immune. Emerging economies continue to experience financial instability with the latest round of crises suffered by Argentina, Brazil and Turkey. In Asia, countries have only just recently managed to return to the path of growth, following the dramatic crises of 1997 and 1998, but the robustness of this recovery is still in question. And in Africa, the continent continues to struggle to find a way out of poverty.

Beyond the economic sphere, security and geopolitical concerns are on the rise. In this climate of economic and political uncertainty, I believe we need more than ever to support the cause of integration and solidarity. And the best way to do this is to foster greater multilateral cooperation. From the perspective of trade, the Doha Development Agenda is one key element of multilateral cooperation that has the potential to stimulate economic growth, to bring greater stability into international economic relations and help developing countries grow their way out of poverty. It was urgent to launch the Doha round, it is now even more urgent to conclude it successfully.

Today, I would like to provide you with my assessment of where we are with the negotiations. To highlight some key aspects of the road ahead and in doing so, to focus on the ever looming issue of the relationship between regionalism and multilateralism.

Why the Doha negotiations matters ?

The Doha Development Agenda, launched by WTO Members last year in Qatar, is the most ambitious and wide ranging trade negotiations ever taken. It includes negotiations on agriculture, services, non-agricultural goods, the environment, WTO rules, regional trade agreements and possible new framework agreements on investment, competition, government procurement and trade facilitation. Members will also be looking at enhancing technical cooperation; special and differential treatment for developing countries; links between trade, debt and finance; trade and the transfer of technology; and the specific circumstances of small economies. And all of this has to be completed by 1 January 2005.

I should recall that these negotiations are first and foremost, a “Development Agenda”. For the first time, development issues lie at the heart of the Round. Through these negotiations developing countries have the opportunity to achieve enhanced access for their products in developed countries. The DDA also provides an opportunity to reduce barriers to South-South trade. Market access is vital to development and poverty alleviation efforts. Simply put, market opportunities promise substantially greater benefit to developing countries than either development assistance or debt relief. As important as these latter programmes are, the World Bank estimates that reduced barriers to the flow of developing country goods could result in $1.5 trillion in additional cumulative income for developing countries between 2005-2015, far beyond what they receive in development aid. Ensuring that the Doha Development Agenda lives up to its name is an overriding challenge for these negotiations and we must not lose sight of this.

State-of-play of the Doha Development Agenda

Since Doha, negotiating bodies are up and running and in most areas, a critical mass of negotiating proposals is on the table. We have managed to avoid getting bogged down and Members have on the whole shown a willingness to get down to business. That is the good news. On the other hand, we have only 10 months until our very important Ministerial Conference in Cancún next year, which will effectively be the mid-term review of the Round. It will also be the point for some key decisions on its content and direction. Given this short time-frame, I am concerned Members are not moving forward quickly enough in all areas. Many difficult issues, where solutions are not immediately evident, still remain.

With such complexity, a deal cannot be put together at the last minute. And since the Round can only be concluded as a single undertaking, nothing is agreed until everything else is agreed. This means that progress in one sector has to be matched by progress in others. What is ultimately crucial is the overall balance of gains and concessions to be achieved. From this perspective, there is a degree of unevenness in the negotiations that is worrisome. Some parts of the negotiations are progressing well, while others are lagging behind. I am thus urging Members to keep the momentum going in all areas and to ensure that important negotiating deadlines on the way to the Fifth Ministerial Conference in Cancún are met.

In the coming weeks in Geneva, WTO Members will be taking some key decisions on the first batch of deadlines. In December, agreement must be reached by Members on three important areas, on the question of special and differential treatment for developing countries, on the difficulties faced by developing countries in implementing WTO agreements, and vitally, on how to address the issue of providing life-saving drugs in developing countries which lack the capacity to produce them domestically. Meeting these targets will be essential in sending the right signals to advancing the negotiations to the next stage and to give confidence to developing countries. Following the recent Australian sponsored meeting in Sydney, I believe that chances for reaching agreement by the December deadline are good but there is no room for complacency.

If we look further ahead, by March 2003, we will face deadlines in the negotiations on Agriculture, Services and Market Access for Non-Agricultural Products. By the end of May 2003, agreement on improvements and clarifications to the Dispute Settlement Understanding will be required. Meeting deadlines is of course much more than just a question of keeping an eye on the calendar and thinking ahead. Each of these stages represents a significant moment in a set of complex political processes and issues in the overall negotiations. Whether we meet these deadlines and how we do it, will impact on the rest of our process. And if the deadlines are not met, we run a real risk of overloading the agenda at Cancún, which is already very substantial.

The DDA and the challenge of regionalism

Clearly, one the biggest challenges in the negotiations is agriculture. Indeed, you could be forgiven for thinking the Doha Development Agenda is an agriculture negotiation, by the high profile press coverage this sector has received. No doubt, agriculture is the centrepiece of the negotiations and there are wide gaps in the ambitions of governments, from those seeking rapid and fundamental reform and liberalization of trade in agriculture, to those who are advocating a much more gradual approach. If we do not succeed in closing these gaps, we will not succeed in the Round.

But we should not forget that there are also other areas of great significance under negotiation in the Doha Development Agenda. Negotiations on industrial tariffs, for instance, is another fertile area which could provide substantial benefits for all participants, especially developing countries. The services negotiations covers all sectors – from financial and telecommunication services to distribution and transportation. The World Bank has estimated that welfare gains from a 50% cut in services sector protection would be five times larger than for non-services sector trade liberalization. Under the trade facilitation mandate, successful negotiation would go far to reduce the costs and delays at borders involved in doing international business. These are just some examples and the list could go on.

But let me focus instead on one of the big systemic issues in the world of trade today - the relationship between the multilateral trading system and regional integration. This is an issue which cuts across all negotiating areas. The traditional controversy of whether the conclusion of regional trading agreements (RTAs) complements or undermines the objectives of the multilateral trading system has been to a certain degree overtaken by recent developments. RTAs have become a major force in current global trade relations. Today, virtually every WTO Member is also a member of one or more RTAs. The WTO recognizes the merits of RTAs and their potential contribution, alongside multilateral efforts, to liberalize and facilitate trade world-wide. Regional and multilateral approaches can generate powerful synergies when RTA regimes are fully in line with WTO rules and when trade liberalization moves smoothly on both fronts.

Yet the present panorama of a criss-crossing web of RTAs, or RTA networks, raises questions about the workability of parallel regional/multilateral approaches, and about the sustainability of existing WTO/RTA relationships.

I have always believed that RTAs when properly constructed can be useful building blocks for multilateralism. However, I am concerned that the non-discriminatory “open regionalism” typically associated with APEC appears to be waning against an emerging pattern of discriminatory bilateral and plurilateral trading arrangements. We are seeing today in Asia a wave of preferential trade negotiations, with all Asian WTO Members now being engaged in, or actively negotiating RTAs with other countries in the region and further afield. Just last week, the international press reported that the US and Singapore has struck an FTA deal, that the EU and Chile have signed an ambitious trade accord, and that Japan and Mexico are seeking a meaningful FTA. These agreements are barely regional in nature.

The emergence of diverse and relatively complex regional regulatory structures can reduce trade policy options for WTO Members and seriously hinder multilateral trade negotiations. In a world of scarce resources, it is clear that the increased resources required for the negotiation and administration of agreements at the regional level, may divert attention away from efforts at the multilateral level. Also, as RTAs proliferate and their scope broadens to include policy areas not regulated multilaterally, the risks of regulatory confusion, distortion of regional markets, and severe implementation problems are likely. This will be to the detriment of all Members, but small countries, which already suffer from limited negotiating leverage and capacity, will be disproportionately affected.

A meaningful effort has to be made in the Doha negotiations to redraw the balance between regionalism and multilateralism. In the Rules negotiating group, the discussion on RTAs seems to be moving in a promising direction. Good progress has been made on priority issues for negotiations, particularly transparency. As you know well, the WTO Committee on Regional Trade Agreements has been moribund, partly because Members are not able to get full factual information on RTAs. There is now promising discussion on how this can be remedied. Hopefully, by Cancún already, with good will on all sides, we may be in a position to get a good result on this element of the negotiations.

However, we should be realistic. If the Round does not move ahead fast enough, a further flurry of bilateral and regional initiatives may be hard to avoid. This is why it is crucial for renewed and sustained efforts to be made in the Doha Round of multilateral trade negotiations.

Towards concluding the Round

To conclude the Round, we will need courage, leadership and flexibility on all sides. And above all we need the support of governments and citizens to the goal of multilateralism. The Doha Development Agenda is the concrete expression of this commitment. The Round is much more than just about enhancing market access. In a world composed of countries with a large diversity in respect to population size, political clout, income levels and cultural traditions, the stability in international economic relations fostered by multilaterally agreed rules and disciplines in international trade relations is beneficial for all.

The Doha Development Agenda was launched in a world economic situation which was widely regarded as being weak. It has not improved since then, and the outlook is uncertain in many ways. This is why it is even more important to deliver on this Round. The future prospects of many, many people depend on it.

Thank you.