Report by the Chairman of the Trade Negotiations Committee
Thank you Mr Chairman.
Since my last report to the General Council in December, we have come back from the end-of-year break to increasingly sombre news about the state of the world economy. Today it is clear that trade has become one of the casualties of the economic crisis. We have already witnessed a sharp decrease in world trade. Our biggest challenge today, therefore, is to ensure trade is part of the solution as opposed to aggravating an already serious crisis which risks making the recession longer and deeper.
The world growth projections today are at 0 per cent, with developed countries posting a negative growth of -2 per cent and developing countries a positive one of around 5 per cent. The positive growth comes from emerging countries which are highly dependent on trade. Everyone needs to remember the lessons of history and keep this important engine of growth running.
The WTO's role in this crisis must go beyond
its function as a safety net of rules, vital though this is. As I
announced in December, we have started to act on a number of fronts to
assess and where possible be part of the solution to the current crisis.
Last week I issued my first report on trade-related developments as a result of, or in the context of, the financial crisis. We will have the opportunity to discuss it at the meeting scheduled to take place on 9 February. The information in the report should be regarded as work in progress. I will be providing members with further updates in the coming months to help you get a comprehensive and up-to-date view of the situation.
We are also working on trade finance. Last November I convened private banks, international financial institutions and regional development banks to assess the problem and look for solutions. The message that came from the WTO conference and the G-20 on trade finance boosted the mobilization of export credit agencies and regional development banks. Despite these efforts, however, the situation remains critical, with trade financing drying up, particularly in developing countries, in a situation of rapid deterioration of risk perception. This in turn risks accelerating the contraction of trade and output in the only part of the world (developing countries) that is expected to sustain positive growth in 2009. I have again convened the main actors in the area to a meeting at the WTO on 18 March to continue to do our utmost to mobilize all actors to ensure better access to trade finance.
Thirdly, we have Aid for Trade, which we must sustain and reinforce, particularly now that the crisis is hitting hard many of the most vulnerable members. On 6 and 7 July we will be hosting the Second Global Aid for Trade Review. Between now and then we must prepare the ground to show how Aid for Trade is working in practice and to review the fulfilment of the commitments to additionality. I look forward to working with the Chair of the Committee on Trade and Development and the membership to prepare this meeting.
Turning specifically to the negotiations, let me remind you that, at our December meetings, we heard many members call for a speedy conclusion of the Doha Round.
Since then, we have continued to hear similar calls coming from all regions, and political and business leaders alike.
I believe the fundamental reasons why this Round is needed are now even more compelling and urgent than they were at the end of last year. Trade with its multiplier effect must be an integral part of the stimulus packages that are being adopted. A successful outcome of the Doha Development Round can therefore be part of the solution to the economic downturn. It will also send the political signal that in harsh and difficult times, governments are capable of working together to provide the kind of global answer which is so desperately needed.
Considering recent developments in government measures to cope with the crisis, I believe it is now clear that:
the trade side of the reaction cannot be seen in isolation from the stimulus packages
international cooperation and coherence is indispensable across the board. Stimulating internal demand has an impact on imports, and there is a danger that discrepancies in the size and the injection of public funds may generate pressures to reserve their benefits for domestic operators. Such a “go-it-alone” would no doubt make the situation worse. To paraphrase Mahatma Gandhi, who said “an eye for an eye makes the whole world blind”, today we could say that “if it is a job for a job, then we will have massive unemployment”.
Since the beginning of the year, we have
resumed work in all areas of the negotiations, with the Chairs
undertaking work according to the plans they set out to members at the
December TNC. I would like to thank delegations for the commitment they
are giving to this work.
Several members have recently gone through political changes and others have elections coming up. This cannot be a reason to sit on our hands, although it does not help us look ahead with certainty at particular timings for this year. But, as many delegations noted in December, we still have a lot of work to do across the board to prepare for both our immediate goal of establishing modalities in Agriculture and NAMA and our longer-term one of successfully concluding the negotiations under the Single Undertaking. We must, as of right now, prepare everything we can, so that when the moment is right for political decisions, we are ready.
Last week, on the sidelines of the World Economic Forum in Davos, the Swiss Minister, Doris Leuthard, hosted an informal gathering of Trade Ministers. The aim was to examine the impact that the economic crisis is having on trade and to take stock of where we are in the negotiations and outlook for the year.
At the gathering, Ministers present recognized the dangers of sliding into isolationism and tit-for-tat measures, which have proven so devastating in the past. They also underlined the necessity to preserve and maintain the integrity and openness of a rule-based multilateral trading system, which is at the heart of economic growth, furthering jobs and prosperity. They continue to attach the highest priority to a successful conclusion of the Round and they recognized the major progress made in 2008 towards finalizing modalities, which they believe provides a sound basis for an early resolution of the remaining differences.
With this continuing commitment at ministerial level, I will of course continue to ensure that the Round is kept at the forefront of the issues facing leaders at the worldwide level in the coming weeks. We look also to the leaders of the G20 to provide further impetus to our work here when they meet in London in April.
Here in Geneva, I will continue to work with the Chairman of the General Council and the Negotiating Group Chairs to ensure that we take the negotiations forward, across the board, as rapidly as possible. We are working not only under time pressure, but also under the pressure of the need to make a positive difference to the global economy.
That concludes my report today, Mr Chairman. Thank you.
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