10 October 2006

Lamy: Round failure would hurt developing countries more than others

Director-General Pascal Lamy, in his report to the General Council on 10 October 2006 as chair of the Trade Negotiations Committee, said that from his contacts with many trade ministers “it is now obvious that the cost of failure, and the missed opportunity to rebalance the trading system, would hurt developing countries more than others”. In a separate statement, he underscored the importance of moving forward on Aid for Trade despite the setback in the negotiations.

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Aid for Trade

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Thank you, Mr. Chairman,

Since my last report to the General Council last July and pursuant to the mandate given to me in paragraph 57 of the Hong Kong declaration, I have continued with my consultations with members, the IMF, the World Bank, relevant UN bodies and Regional development Banks, with the active support of DDG Valentine Rugwabiza. I also participated at the recent IMF/World Bank meeting in Singapore where Aid for Trade figured on the agenda. These consultations have been focussed on enhancing clarity on the resources pledged and on strategies for securing additionality to current aid for trade spending.

Taking into account the recommendations of the task force, I have also used these consultations to urge our partners to consider carefully how they can contribute to their implementation.

There are three points I wish to highlight concerning my consultations since July:

First and foremost, I am convinced that there is a strong and broad commitment to increasing aid for trade in the context of a projected overall increase in ODA. In Gleenagles in 2005, pledges were made to increase ODA to $ 50 bio by 2010. In Hong Kong, donors also pledged to increase Aid for Trade significantly by 2010. Since July I am working with the US, the EC and Japan to clarify the pledges made in Hong Kong both in its content, including what they compare with, as well as in the modalities for its implementation.

Second, there is a broad agreement that we cannot continue to do aid for trade in the same way we have done in the past. This therefore supports the view expressed by the majority of you that this initiative is not about replacing or duplicating existing mechanisms, but it is about making them work better, more effectively, with measurable results in a focused manner. In this context we are working with the OECD on possible ways to improve the effectiveness of Aid for Trade, in particular through building on our joint data base on trade related technical and development assistance. The OECD has been very cooperative on this issue for which I thank them.

A third observation I wish to make is that, there is a wide and diverse range of priorities that need to be met in order to promote regional and global integration, and to realise the developmental potential of trade opening. It is important to note that how these needs can best be addressed can only be determined by countries themselves, working closely with national stakeholders, particularly the private sector, and with their development partners. Ownership should not just be a buzzword, it is precondition for making aid for trade effective. This has been the focus of the meetings I have held since July with the African Development bank and with the Inter-American Development Bank, as well as with a large number of Finance Ministers in developing countries that I met in Singapore.

The recommendations of the task force have also highlighted key areas for follow up and these include the critical issue of monitoring of aid for trade.

In this respect the secretariat has already started reflecting on how the WTO's own internal mechanisms can best be utilised to monitor Aid for Trade. We are also in contact with some of our partners on this issue including the international financial institutions and the regional development banks, to see how they can contribute to this monitoring activity.

To conclude I wish to underscore that it is important to move forward on aid for trade, building on the progress and momentum that clearly exists despite the current temporary setback in the negotiations. Although Aid for Trade is not part of the single undertaking, there are obvious synergies with the Doha Round and it is clear that its benefits would be diminished without new trade opportunities that will flow from a successful Round.

Thank you.

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Mr Lamy's statement to the General Council as chairman of the TNC
listen (8 mins, 7.5MB)

DG statement on the Aid for Trade task force recommendations
> listen (10 mins, 9.5MB)