WTO: 2011 NEWS ITEMS
WTO PUBLIC FORUM
It is a great honour for me to be here with you at this inaugural session, which over the years has become one of the most important events on the calendar of the international community. I thank Mr Pascal Lamy, Director‑General of the WTO, for kindly inviting me to open these discussions on the challenges facing international trade.
I take this honour of addressing you as a mark of recognition of Costa Rica, a country of modest size which bears faithful witness to the benefits of international trade for the development of nations, particularly when it also involves human development and democracy.
Since the creation of the WTO, our discussions have rarely been as decisive as they are today, with the world experiencing one of the most complex economic, political and social episodes of its history.
I. The international crisis and trade: free trade as a historical and moral imperative.
It is precisely the nature of the times we are living through that inspires me to begin my address on a note of optimism. I see this as an obligation: because it is my responsibility to inaugurate this debate, I feel duty‑bound to reaffirm the particular confidence that the world should be feeling at this moment, in spite of the circumstances.
Let us not forget that at other times in the history of our world, international trade was one of the first victims of financial problems. The crisis of 1929 spelled the end of an ambitious global market‑opening scheme: countries turned inward, and the resulting decline in trade fuelled nationalist and authoritarian movements that humanity paid for with devastation and suffering.
This time, the economic crisis has not led to any massive resurgence of protectionist policies or barriers to trade; in fact, there is every indication that we are moving towards a strengthening of international institutional frameworks. The difference between the attitudes of yesterday and those of today can be attributed to the lessons learnt at such cost from that traumatic past, reinforced by the existence of this great Organization, the WTO.
In the midst of this crisis of confidence that has afflicted the financial institutions, the WTO stands out as a pillar of international legal security, a legitimate multilateral decision‑making framework which contributes to an international governance founded on the premise that trade is essential to global prosperity.
Trade continues to be the engine of world economic growth, and as long as we are clear on that point, we have reason to hope. Nowadays, we share the benefits and the challenges: national problems take on an international dimension and regional crises are globally linked. Indeed, the global nature of the crisis we are experiencing reminds us that the days of isolated unilateral decisions are over, because the welfare of each one of us concerns us all, and we are all responsible.
We are living under the sign of world trade, which has become an essential development tool. You know better than anyone how much the world has changed over the past few decades under the driving force of trade. Trade has fed on rapid technological and scientific progress, and has become, in turn, the driving force behind that progress. Information and communication technologies have helped to revitalize trade by reducing the distances separating us, both physical and cultural.
Whether we like it or not, we are living in a technology‑based and trade‑driven world. Technology has radically changed the way in which we produce goods and services. The expansion of global value chains reflects the new dynamism of the world economy. In today’s world, a considerable share of production is organized into value chains, substantially altering the geopolitics of trade in the knowledge society. This phenomenon is becoming a powerful development tool for countries, opening up new opportunities to share the benefits of international trade.
However, we must not allow our relative optimism to obscure the dangers threatening free trade. The kind of circumstances we find ourselves in today are once again testing our positive assessment of international trade. We are living through a protracted period of trouble and uncertainty. In some cases, our development index was just reaching its peak when we were surprised by the worst financial crisis in generations — and when we were just beginning to breathe again, we were rudely awakened by the high level of indebtedness of the developed countries and the inevitable return of generalized volatility on the financial markets.
Financial insecurity slows growth, leading to a decline in exports, a fall in the demand for raw materials, a growth in unemployment and increased poverty and hunger in the world.
We must remember that any economic crisis will almost immediately be followed by a social crisis, and that means political conflicts that often undermine the very principles of civilized cohabitation. As crises develop, the illusion of populist nationalism begins to cloud the vision of certain people, and the well‑established vocation of free trade as a powerful tool for economic growth can easily be forgotten. In the resulting confusion, our leaders and their countries might give into the temptation of focusing entirely on obtaining benefits and preferences at all costs. This is contrary to the very essence of the multilateral trading system, which is based on a more comprehensive, more global, more systemic, and longer‑term approach to the collective task of development. Today’s recipe consists of more opening up, less protectionism, fewer subsidies and fewer barriers.
We need to reinforce the role of trade policy in the international economic recovery. This Organization really comes into its own when dark clouds are gathering on the horizon. It is then that its voice emerges as a beacon, calling people to their senses. Its very existence upholds legal security in the midst of financial uncertainty, because its history is one of cautious but firm steps forward. There are no quick fixes for the world economy. The answers we are seeking lie in decisions that lead to more trade in goods and services, more trade facilitation, more investment, more legal security and more innovation.
The eve of the Uruguay Round was full of great promises: production would surge, employment would grow and poverty would diminish. In the 25 years that followed, these promises of 1986 were fulfilled. Never has the world economy grown so much as during those years. Never have so many people crossed the poverty threshold and so many countries embarked on the path to development. We were transformed by the engine of world trade, and to switch that engine off would be to end any hope of economic recovery. What we need to do, then, is to see what further steps are needed to spread the benefits of free trade, and then find the necessary will to implement them.
II. Costa Rica and Free Trade: A Success Story.
But it is not only at the global level that we can see the importance of international trade: we also have the examples of countries that resolutely decided to embrace trade and are now benefiting from that decision. My country, Costa Rica, is a case in point.
Costa Rica is an example of successful integration into the world economy that resulted in unprecedented economic growth, development of production and improvement in the welfare of its citizens. Trade paved the way for our successful integration in the world, thanks to a number of correct decisions on various aspects of our development. As a result, Costa Rica is now a bastion of human development, democracy and environmental sustainability.
As befits a small republic founded 190 years ago by teachers, education became our main tool for generating wealth and social mobility. In 1869, earlier than many other countries, we declared education to be a universal right, financed by the State. Today, we devote 7 per cent of GDP to public education. Eighty per cent of our schools have IT laboratories, and by 2017 we aim to provide English as a second language to 100 per cent of our secondary school students. We are currently promoting technical education, so that we expect to double the number of technical graduates over a period of four years. We have matched these high standards of human development with the establishment of strong democratic institutions and the strengthening of the rule of law. By abolishing the army as a permanent institution in 1948, we guaranteed a lasting climate of peace and stability, and transformed the country into a solid and stable Latin American democracy.
Thus, our investment in human development and political and social stability became the pillars of our development, which we were able to stimulate by embracing the free trade option with similar enthusiasm. We believe in trade with clear and transparent rules, with a level playing field in which all nations can compete in the great global market. We would not have been able to achieve our current level of development if we had not steadily and decisively opened up our economy over the last 30 years. We opened it unilaterally when our economic agenda did not coincide with that of the multilateral trading system. We opened it up bilaterally or regionally when our agenda coincided with that of our friends. And in any case, we opened it up multilaterally, with the entire membership of the WTO.
The history of Costa Rica is split into two phases: before and after the opening up of its economy and trade. Until almost three decades ago, our economy was essentially based on the exportation of coffee and bananas. At the end of the 1980s, the Latin American external debt crisis came as a rude awakening. Like today’s crisis, it was essentially a financial crisis, but our dependence on two agricultural products made us particularly vulnerable. This was our opportunity to open up to the world. Our recovery depended on increased investment to diversify our production. We began by unilaterally reducing our tariffs, and we joined the Uruguay Round as an observer. Then, in 1990, we became the 100th GATT contracting party.
Today, although with a mere 4.5 million inhabitants we are a small country, we have been able, thanks to the trade agreements concluded thus far — including with the United States, Europe and China — to guarantee preferential access to markets soon totalling more than two billion consumers and representing approximately 70 per cent of the gross world product.
Our export supply is now highly diversified, with more than 4,000 products. We are present on world markets, not only with tropical fruit and exotic flowers, but also with computer chips and heart valves. If we exclude minerals and fuels, since Costa Rica has moved away from the highly polluting extractive industries, we are now Latin America’s leading exporter of goods in per capita terms, and the leading exporter of high‑technology products.
We have also learned to place our products on more demanding and advanced markets and to be part of international production chains. In 2009, more than 40 per cent of Costa Rica’s exports were already associated with global value chains, in particular medical devices and electronic, automotive and aeronautical products. Some 40 per cent of the value of these end products is added by Costa Rican production. I can say with a certain amount of satisfaction that Costa Rica is moving from “made in Costa Rica” to “created in Costa Rica”.
In spite of the economic climate, in 2011 Costa Rica attracted the equivalent of about 4 per cent of its GDP in foreign direct investment, an amount exceeding total investment in the country during the first half of the 1990s. New investments supplemented the already established ones, like Hewlett‑Packard, Intel and Procter & Gamble, which paved the way for the development of a large high‑technology cluster that is attracting giants like IBM.
The free trade that Costa Rica is promoting would not have been possible without the WTO. This Organization provides the legal and institutional framework that enables us to meet our aims. At the WTO, my country found itself shoulder to shoulder with the richest countries — sometimes in disputes that led to the restoration of our rights, and sometimes in negotiations involving interests that were difficult to reconcile. However, more often than not we were participating in alliances that sought to obtain common benefits in a context of greater liberalization.
Thanks to the WTO, a small country like ours is also able to speak on an equal footing with the larger countries, and we have not hesitated to do so. Pursuing our vocation and acting in accordance with the law, we found a place where we could defend ourselves, where we could use our comparative advantages and where we could claim our rights under the WTO Agreements. Because this is a legal environment that reaffirms the confidence of peoples in public international law, we must not waiver in the face of the tasks that await us as we seek to further strengthen multilateral trade and investment institutions.
III. Ensuring the sustainability of the multilateral trading system: Building a new basis for confidence and progress
In times of uncertainty like the present, we look for solutions to the issues currently facing us. At the same time, however, we must take careful stock of what has been achieved so far. The WTO has an enormous amount of work left to do, and meeting this challenge is one of the main topics of current international debate.
There has never been a more pressing need to restore confidence and to reach an agreement that will break the deadlock which is trying the patience of many of the world’s nations. The slowness characterizing the close of the Doha Round is weakening confidence in the system and accentuates the centrifugal tendencies of regionalism. States, businessmen and citizens the world over are longing for the increased security and confidence that the WTO can only provide by overcoming its remaining stumbling blocks.
During the ten years in which we have been bogged down negotiating the Doha Round, the world has continued its course and changed our agenda. The least we can provide, after a decade of talks, is sense and flexibility. Holding pointless discussions on extreme positions is of no help at all. We can no longer limit ourselves to discussion of the original issues, since the world is no longer the same. Our needs have changed and we cannot ignore new trade-related aspects such as climate change, global value chains, currency exchange rates and new investment conditions.
Despite all the difficulties involved, the Doha Round is a task that remains pending and one that we cannot avoid. And here lies the greatest obstacle on our agenda. The Doha Round should not be viewed as a unilateral concession by the developed countries to the developing countries. On the contrary, the opportunity that it presents must be extended to each and every nation, so as to promote greater mutual benefit. So far, we have all benefited from the established rules, but we must acknowledge that some have benefited more than others. For the multilateral trading system to be sustainable, all the nations represented here must have not only a seat, but the same opportunities.
The world would undoubtedly survive without a successful conclusion to the Doha Round, and yet our aim should not be simply to survive, but to move forward and progress. We must build a new basis for confidence, which is in very short supply in today’s world. Failing to reach an agreement would have many practical implications, and yet the worst of these would be that we would be giving the world the message that our leaders were refusing to move forward and make changes and that they had not been able to find reliable solutions to the problems we currently share.
We cannot remain as we are. Times of crisis provide an opportunity to build consensus. I am sure that the differences separating us will one day be overcome by what we have in common. The question is when, because time is short.
No one is exempt from responsibility; we are all responsible for finding answers that will dispel the storm clouds. I am confident than many of these answers will stem from this forum on the basis of the exceptional framework provided by the WTO and international trade. History must go on; we have a right to hope.
Thank you very much.