WTO: 2009 NEWS ITEMS
Thank you very much Ambassador Major.
I am pleased to introduce to the TPRB my third Report on recent trade and trade-related developments associated with the financial and economic crisis. I intend to spend a few minutes speaking about recent economic developments and then briefly introduce the monitoring Report.
Since we last met in this same Body on 14 April 2009, the world economy remains fragile and the economic outlook is still uncertain. There have been a few encouraging signs recently of better-than-expected performance here and there. Some are interpreting this as an indication that we may be turning the corner with the prospect of a return to previous patterns of economic growth.
I would caution against excessive optimism. Although financial markets are showing signs of stabilizing, the crisis is far from over, in particular in many developing countries that are only now starting to feel its full force on their trade and economic growth. The collapse of aggregate demand is still working its way through the global economy while unemployment continues to increase. We should not forget that this crisis is unprecedented in its deepness, wideness and global impact. We must remain vigilant and act collectively to send the right signals and establish the appropriate environment conducive to a sustainable recovery for all.
The global economy continues to contract, by a forecast 2.9 per cent in 2009 according to the World Bank. As far as trade is concerned, the latest WTO Secretariat forecast is a contraction of merchandise trade of 10 per cent in 2009 in volume terms, down from our previous estimate of 9 per cent; a 14 per cent decline for developed economies, and a 7 per cent decline for developing countries.
Certain sectors of trade in services appear to be holding up better than others, and better than merchandise trade overall. This is of course welcome news, although not enough in itself to alter the prospect that the world economy will probably remain in a recessionary or low-growth mode for some time to come, and that the recovery, when it arrives, is likely to be much slower than we would like it to be.
As I said at our previous meeting, this is a global crisis which requires global solutions. We have seen that no economy in the world is immune. The crisis is being felt hardest by the majority of developing countries that do not have any margin of comfort to help them absorb its impact. They do not have the financial means to provide fiscal stimulus packages to help re-boot their economic growth, nor subsidies to help their farmers or businesses ride out the contraction of their markets, nor social safety nets to help protect their populations from declining incomes or prevent families from being pushed back under the poverty line.
The global community needs to act together to help developing countries, especially the poorest among them, to mitigate the worst effects of the global crisis. The meeting hosted by the WTO last week for the Second Global Review of Aid for Trade provided a unique opportunity to evaluate our multilateral efforts in this regard, and assess how to move from commitment to implementation. Aid for Trade is essential today, as it is the investment that will allow many developing countries to prepare their exit from the crisis by enhancing their trade capacity.
I was also encouraged by the signals emanating from the recent G8 + meeting which I attended and where leaders recognised the importance of keeping trade open and pledged to conclude the Doha Round next year.
The new monitoring report presents a mixed picture of recent trade policy developments.
On the one hand, there has been further slippage towards increased restriction and distortion in certain tradable goods sectors of the world economy.
On the other hand there have been some signs of improvements as more governments have introduced trade-opening and facilitating measures in the last three months. This is exactly what is needed from trade policy-makers in current circumstances, to reaffirm their commitment to, and confidence in, open markets.
And there is no indication yet of governments more generally unwinding or removing trade-restricting or distorting measures that they imposed early on in the crisis.
I am not suggesting that this represents an outbreak of high-intensity protectionism, involving widespread resort to trade restrictions and counter-retaliation. We can continue to take heart from the fact that the WTO's multilateral trade rules continue to provide a valuable insurance policy against protectionism spiralling out of control. But as long as we continue failing to pay the premiums on that insurance policy, by delaying the conclusion of the Doha Development Round, we are leaving ourselves no room for complacency about the future.
At a time when the global economy is still fragile worldwide and in face of the unprecedented decline in trade flows, we must send a clear and credible message that protectionism is not the answer. We have had that clarity, from the G20 leaders in April and from other WTO members who followed with a similar initiative at our General Council meeting in May. As I already mentioned, we have also heard this message from G8+ leaders meeting in Italy. For credibility, there is no better guarantee than to conclude the DDA, and I am pleased to say that we are witnessing the renewal of high-level engagement in the DDA negotiations and a genuine desire to finally bring these talks to a successful conclusion.
I would like to make a few final comments on the monitoring process itself. I hope that you will agree the Secretariat has responded constructively to your comments at our last Informal TPRB meeting on 14 April, when you asked for enhanced coverage and accuracy of the exercise. That depends also, of course, on you, the members, playing your part to the fullest extent possible to increase transparency. I am appreciative of the contributions received from delegations in response to my request to all of you for information on your trade and trade-related policies and measures, and for your constructive engagement in the process of verifying the information contained in the annexes to this new Report. At the same time, I must note that there is still room for improvement and I would urge all delegations to play their part in this collective undertaking.
The Secretariat has continued to try to track as best as it can the trade-related elements of recent fiscal stimulus programmes and industrial and financial support measures. This continues to be a particularly challenging part of the exercise because of the difficulties of collecting hard data in these areas. Without that data, it is not possible to asses the impact they are having on trade flows. G20 leaders recognized that such large injections of public money into the economy coupled with government influence over how it is to be spent do have the potential to distort markets and competition, and they agreed to minimize their negative effects. At the Global Review of Aid for Trade, the Managing Director of the IMF called attention to the dangers of financial protectionism. This is an area of the monitoring exercise where I think we must all recognize that there is still scope to raise our game.
At the request of the General Council Chairman, all WTO Councils and Committees are examining possible ways to improve the timeliness and completeness of notifications and other information flows on trade measures falling within their specific areas of responsibility. It is my intention to include a summary of these developments in my next monitoring Report. There is one area I would like to mention specifically today: it is improving the supply of applied MFN tariff rates and import statistics to the WTO's Integrated Data Base (IDB). Collecting and disseminating this type of information is a core responsibility of the WTO. I know that the Committee on Market Access is discussing this matter. I would like to urge all delegations to cooperate fully to improve the value of the IDB, for the benefit of all members.
I would like to inform members that it is my intention, in cooperation with the heads of the IMF, OECD and UNCTAD, to report to the next G20 Leaders Summit in Pittsburgh in September on the adherence of G20 members to their undertakings on trade and investment measures, in line with the G20 request made at their London Summit in April. Naturally, a copy of this report will be made available to all WTO members.
Finally, in the interest of transparency, and as was the case with the previous Report, my latest Report to the TPRB will be placed on our website only after we have had an opportunity to discuss it in today's meeting.
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