Speakers are members of the Director-General’s Panel on Defining the Future of World Trade.
Director-General Lamy opened the discussion by asking two questions: Is multilateralism in crisis? And if it is, how is that affecting your work and objectives?
Ms Sharan Burrow, Secretary-General of the International Trade Union Confederation, said that there was no doubt that multilateralism is in crisis, as shown by current economic indicators, including record unemployment and the falling income share of working people. She pointed to growing despair among workers and surveys indicating that two-thirds of the people believe their children will be worse-off in the future. She said capitalism is not working, and that trade and economic institutions must be reformed.
Former President of Botswana Festus Gontebanye Mogae said that while African countries have been experiencing the crisis for a long time, they are not glad that big nations are finally experiencing it. He said that 40 to 60 per cent of African youth remain unemployed. He said big countries are withdrawing from multilateralism and engaging in bilateral trade deals where they can gain more concessions over smaller countries. This is the reason, he said, why African countries prefer the multilateral approach where the rules apply equally for everybody.
Mr Frederico Fleury Curado, President and CEO of Embraer S.A, Brazil, said that multilateralism has been important for Latin America’s recent economic growth. He said the proliferation of regional trade agreements is a threat to private industry and urged a conclusion to the Doha Round, even if it does not cover the entire package. He said businesses need multilateral institutions to ensure a level playing field.
Mr George Yeo, former Foreign Minister of Singapore and Vice Chairman of Kerry Group Limited, said that people do not really want a global government, which can create even bigger problems. He said people also want big powers to lead but not to dominate. He commended the WTO for helping move economic policies in the right direction.
Mr Talal Abu-Ghazaleh, Chairman and founder of Talal Abu-Ghazaleh Overseas Corporation, Jordan, said the WTO rules go back some 50 years ago but the world has changed since then. He called for revisiting the function of the WTO as a negotiating forum, including finding an alternative to decision-making by consensus. More attention should be given to making the WTO a knowledge organization like the World Bank, and to enable direct participation of the private sector. Finally, he urged making accession into the WTO less difficult, noting that half of the Arab world was still outside the organization.
Mr Fujimori Yoshiaki, President and CEO of JS Group Corporation, Tokyo, said that private industry has been working in an environment of protectionism for a long time. Businesses have to adapt to the exchange rate issue, the rise of RTAs, new non-tariff measures, and various national laws and regulations. He said that the WTO must have a mechanism that would allow participation of private industry in its work.
Mr Pradeep Singh Mehta, Secretary-General of CUTS International, India, said that multilateralism has to deal with issues other than trade that cross borders, like climate change, energy issues and security concerns. He said that the Doha Round is at an impasse because of differing levels of ambition, and this is sending very negative signals. Finally, he said that despite all these factors, multilateralism is still the way to go.
The questions from the floor included one that asked if poor countries should wait for multilateral solutions that would be a long time coming, or go for bilateral agreements instead. A member of civil society urged changing WTO rules to promote employment.
Mr Festus Gontebanye Mogae said that bilateral agreements are not the answer, and that multilateral agreements are better, especially for small countries with little bargaining power.
Ms Sharan Burrow urged changing trade rules to allow policy space for governments to help people and sectors in need of help. She emphasized that labour must have a voice in the WTO.
Mr Pradeep Singh Mehta said that the WTO has to take on board the concerns of farmers and workers.
Mr Talal Abu-Ghazaleh said that the WTO should develop a mechanism that would directly involve traders, businesses, workers and consumers in its work.
Mr Fujimori Yoshiaki said that from his experience, companies thrive if they contribute directly to the welfare of communities. Thus, multilateral institutions should always be cognisant of providing benefits on the ground.
Director-General Lamy welcomed the discussions as interesting and useful, noting that there can be no easy solutions. He urged participants to send comments and suggestions to panellists through a special facility on the WTO website.
Session 14: Labour Rights: Value Chains, Labour Rights and Development
The session discussed the various implications of global value chains (GVCs) on labour rights, wages and development. Some panellists shared the view that trade does not have direct implications on labour conditions. Others argued that labour standards should be brought into trade agreements. The panellists shared the view that GVCs are not a novelty, but their expansion has created new trade flows that were not predicted by traditional trade statistics. What is new is that, in terms of development, trade has lifted millions of people out of poverty.
Mr Hubert Escaith, Chief Statistician of the WTO, explained the concept of global value chains and how trade is measured in value added. He highlighted that progress in technology led to global outsourcing. In GVCs, it is difficult to measure “who produced what”. GVCs’ impact on jobs is that high-skilled workers have increased.
Mr Douglas Lippoldt, Senior Economist and Trade Policy Analyst at the OECD, argued that as an impact of the GVCs, the industrial perspective and comparative advantage have changed. Tasks that go into the production of a finished product — for example, services — are increasing, leading to increased specialization. GVC expansion has made things less predictable, demanding policy responses. These responses include open markets, avoiding protectionism and simplifying ways of doing business.
Ms Jenny Holdcroft, Policy Director of IndustriALL Global Union, highlighted that 90% of workers in Export Processing Zones are women. Employment conditions are not optimal and not stable. She emphasized that there should be a transfer of economic upgrading into social upgrading and that the benefits of global trade be passed on to workers. She concluded by stressing the need for integrated industrial policies that encourage freedom of association and collective bargaining to enable workers to be more involved.
Ms Emily Sims, Senior Specialist at the ILO, underscored the importance of helping governments in the enforcement of labour rights protection and legislation. Complaints mechanisms should be put in place and labour standards should be embedded into trade agreements. Businesses need to discuss with each other a culture of rule of law and employees’ protection. She concluded by saying that workers should be treated as a critical component of an effective trade regime.
Mr Anthony Miller, of UNCTAD, presented a study on corporate social responsibility. He argued that countries have the responsibility of legal compliance with human rights and labour practices and standards. The study recommended that hard laws should be implemented and become more regulatory rather than voluntary. There is a need to raise the capacity of governments in issues of labour, human rights and environmental practices. International investment agreements are also a promising area where labour issues should be addressed and incorporated.
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Session 15: New Models for Trade and Development in the 21st Century: An Opportunity-Driven Approach to Building African Regional Markets and Increasing Trade and Food Security
This session focused on the challenges facing the African agricultural sector, and the implications for trade in agricultural products. The panel provided a largely economic analysis, which was illuminated by anecdotes and real examples of how such impediments affect different economic actors across the continent.
The panel identified different obstacles to the development of a healthy agricultural industry in Africa. All speakers identified barriers to trade — be they regulatory barriers or impediments created by poor infrastructure — as significantly affecting the growth of the industry.
The panel also highlighted that responses to food crises — such as, for example, export restrictions — may have deleterious effects to which poor farmers in Africa are particularly vulnerable.
The panel questioned the extent to which regional trade agreements are genuinely assisting the development of the industry, concluding that they may not be affecting domestic farmers and entrepreneurs in the manner envisaged by the drafters.
While there was support for liberalization of, and growth in, agricultural trade through the multilateral system, one of the main conclusions of the panel was that empirical research, informed by the experiences of farmers, investors and other private actors, should form the basis of identification and analysis of impediments to the development of the industry. Such empirical research could help remedy what Ms Katrin Kuhlmann, moderator of the session and President of TransFarm Africa, described as the “missing middle”; that is, the lack of local entrepreneurialism and investment required to develop a functioning agricultural sector in Africa.
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Session 16: Gridlock: Why Global Cooperation is Failing When it’s Most Needed
The session’s three principal questions were: Why is global cooperation failing? Why is it failing now? And what are the possible solutions? The session was framed by a forthcoming book by Mr Thomas Hale, Mr David Held and Mr Kevin Young.
Mr Hale, Postdoctoral Research Fellow at Oxford University, launched the discussion, describing the transformation of the global environment since 1960. The necessity for the creation of a liberal, stable economy after World War II put the world on a new trajectory; however, the process has now reached an intensity that impedes its own development. The major global players have changed; institutions tend towards institutional inertia; there is an expanding range of problems; and there is fragmentation in many areas of global governance. Three possible solutions are institutional innovation, new leadership and systemic shock.
From the viewpoint of international environmental negotiation, for Mr Mark Halle, Vice President of the International Institute for Sustainable Development, problems are more easily solved at a regional level, when there is a common problem and a number of different stakeholders at the negotiating table. Difficulties arise when problems are tackled at the global level, governments are expected to solve the problems alone, economic restructuring is required, and the solution requires a shift in the equity balance between richer and poorer countries.
For Mr Thorsten Benner, Associate Director of the Global Public Policy Institute, from the perspective of global security, multilateralism has had both successes and failures. Major systemic war has successfully been avoided in the last seven decades, and we have not therefore needed to rethink our institutions, a factor in the current gridlock. Building regional global security communities could be the best second-best solution.
Ms Caroline Deere Birkbeck, Senior Researcher at Oxford University, spoke from the context of international trade negotiations and negotiations in intellectual property. She argued that gridlock is not always a problem, but may merely be a manifestation of multilateralism, when all parties do not agree. Deals must be fair, sustainable, timely and implementable. Often a major cause of gridlock is that the parties involved do not agree on what the problem is, and that time is required for impact assessment.
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Session 17: A Menu for Renewed WTO Relevance: Natural Resources and Preferential Trade Agreements
The session revolved around the relationship between the WTO system and preferential trade agreements (PTAs). The panel shared the view that there is a boom in PTAs in the last decades, especially after the rise of emerging economies, such as the Asian countries, particularly India and China, and the BRICS. The main question of the session was how does the WTO system deal with these agreements? Or what is the capacity-building needed by the WTO system to deal with these changes in the economic powers?
The panellists agreed that the WTO has to find or create a new system which can achieve coherence between the old rules of the WTO and the PTAs because up to now the WTO system has not been involved in these agreements.
The session was divided into two parts, the first hour was for the speakers’ interventions and the second was for questions and comments from the audience.
Mr Pablo Heidrich, senior researcher at NSI and the moderator of the panel, started the session by asking what contributions can the WTO provide to PTAs?
Ms Sandra Polonia Rios, Director of Centro de Estudos de Integracào e Desenvolvimento (CINDES), sees that the problem of multilateralism as shown in the Doha Round impasse is just a symptom of other problems. The great recession, the deep changes in the global economy and in the balance of power and the surge in the international prices of resource-intensive commodities during the last decade reveal two important questions: 1) how to guarantee access to essential and scarce resources? and 2) how to better distribute the extra rents resulting from this context? Concerning natural resources and security concerns, WTO rules have been designed to deal with import restrictions and ban quantitative restrictions but do not discipline export duties. All these factors reduce the capacity to define a common agenda for international trade and consequently reduce the role of the WTO.
Professor Debra Steger, Senior Fellow of the Centre for international Governance Innovation (CIGI) and Professor, Faculty of Law, University of Ottawa, stated that it is not clear what the mandate of the WTO is: is it trade or development? This is the main problem facing the conclusion of the Doha Round. This is also the reason why the WTO cannot move to new issues e.g. the financial crisis, climate change, etc. Since 2011, a lot of not only PTAs have been notified to the WTO but also bilateral investment treaties (BITs) and plurilateral agreements, which are discussed outside the WTO. The WTO has to find an institutional way to deal with PTAs in terms of Article XXIV of the GATT. This institutional mechanism could be assumed as follows: 1) As some of the PTAs go further than WTO rules (e.g. competition rules, environmental issues…etc.), a working party or a committee allowing the members to discuss these new issues or PTAs is a must. 2) Article 24 of the GATT recognizes PTAs so the dispute settlement mechanism should have jurisdiction over these PTAs. The WTO and PTAs are part of the broader multilateral system.
Mr Eduardo Bianchi, Co-chair of FLASCO-WTO Chair and former Secretary of Industry of Argentina, said that the increase in prices of natural resources will continue after the emergence of Asian countries and especially China. There has to be a new agenda for the WTO for dealing with the impact of China and India’s emergence. There is a demand for more complex rules at the multilateral level, linking PTAs, regional trade agreements (RTAs) and the WTO system. There should be a WTO+ where new areas are discussed and implemented, such as capital movement, competition rules. etc.
Mr Rolf Traeger, Economic Affairs Officer at UNCTAD, started his presentation by asking about the consequences of the South’s emergence in natural resources, particularly least developed countries (LDCs) and low-income countries? What is the attitude of LDCs vis à vis bilateral relations? In one sense, they are happy. It means a new market for these countries but at the same time, they face a huge challenge because of the asymmetry between the economies of the parties. LDCs will not be developed by an increase in its raw materials prices as there are a lot of other issues on the technological side which also have to be considered. That is why the WTO will maintain a very important role for the development of LDCs.
During the Q&A with the audience, it was asked whether the WTO should intervene or have the capacity to intervene in scientific issues. A representative from the University of Colombia commented that China exploits the lack of rules in the WTO by concluding these agreements.
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Session 18: Panel of Multi-Stakeholders
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Session 19: Better Jobs through Trade: Presenting the Results of the ICITE Project
The session presented the results of the Collaborative Initiative on Trade and Employment (ICITE). ICITE is a joint undertaking of 10 international organizations. Launched in 2009, it aims to seek a better understanding of how trade interacts with employment, to promote discussion on these issues and to develop policy-relevant conclusions.
The main findings of ICITE, overviewed by Mr Douglas Lippoldt, OECD, are the following:
- Openness is associated with growth and better labour market outcomes. However, the adjustment costs can be substantial.
- Complementary policies, especially on the labour market, are needed.
- Protection is costly because it impedes the ability to reap gains from trade.
The WTO has cooperated with ICITE with a research paper on offshoring and migration and with active participation in regional conferences. More generally, the WTO is concerned about the relationship between trade and employment, as argued by Mr Marc Bacchetta, WTO.
Other international organizations, including UNCTAD and ILO, have also actively researched the issue of trade and employment. Notably, Dr Marion Jansen, ILO, discussed some recent ILO work, the results of which can be summarized as follows:
- Trade unions are instrumental in assuring the distribution of gains from trade.
- Labour protection is not racing to the bottom; rather it is converging across countries.
- The possibility to establish social protection systems is not confined to high-income countries. The supply response to trade opening is crucial for employment. Investment in human capital is a key trigger of such a response.
The discussion focused on two main issues. Firstly, data availability problems, especially on sectoral employment and on education, limit the possibility to conduct research and produce firm policy recommendations. Secondly, some commentators expressed the view that some sub-Saharan African countries are experiencing “export-led jobless growth”. Higher export diversification could mitigate the lack of job creation.
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Session 20: Moving towards a Demand-Driven Agricultural Sector: Implications for Trade Policy
The seminar addressed the implications of the changing agricultural reality (from supply to demand-driven) for progress on agricultural trade policy-making. Topics touched upon were agricultural price hikes, biofuels, GMOs, sustainable development, export restrictions, subsidies and the Doha Round. The discussion revolved around the causes of the price hikes and the possible solutions. Export restrictions, biofuels and speculation on commodity prices were seen by some as exacerbating factors, although disagreement existed on the role of speculation. Also, export restrictions were criticized from the perspective of developing countries. Flexible mandates for biofuels were agreed to be one of the solutions.
One of the panellists, Mr Tim Yeend, Ambassador and Permanent Representative of Australia to the WTO, promoted the Doha Round as the framework in which to improve agricultural trade policies, whereas Mr Manzoor Ahmad, Senior Fellow at the International Centre for Trade and Sustainable Development, warned “stay away from the Doha Round”. Mr Yeend argued the relevance today of key elements discussed in the Doha Round, like market access, reducing subsidies, and development.
From the public the question was raised if the changing agricultural sector might lead to openings for concluding the Doha Round. Another member of the public said that negotiators seem to have maintained similar positions, even though the sector has changed. One member of the audience asked if biofuels had not relieved pressure to cut agricultural subsidies. These points were not extensively followed up. Mr Yeend agreed on the need to bring back pressure on the EU and US to lower subsidies. Panellists disagreed on the US or China and India being the main ’problem’ in concluding the Doha Round.
The concept of food security was discussed. Is food security the right concept to use? “Isn’t is too much linked to self-sufficiency?” was a question raised from the audience. This, however, was regarded as an old-fashioned concept. Nevertheless, food security appeared in the discussion to be addressed from two different angles: achieving food security through keeping food stocks or export restrictions (why export your own products as a developing country while having to buy back expensively in the world market and often facing a lack of foreign exchange to do so); or achieving food security, and to which everyone agreed, as a way to sustainably develop agriculture and agricultural trade. Producing where there is enough water and where the pressure on the environment is the least, producing in an environmentally friendly way. Or as Mr Yeend put it, “food security is providing food where it is most needed. In this last scenario, trade plays an important role.”
GMOs will provide a danger to human health and are expected to be further regulated in the future, argued Mr Sun Zenyu, former Chinese Ambassador to the WTO, whereas Professor Tim Josling, Senior Fellow at Stanford University, predicted that GMOs will not be a big issue in the future. GMOs, it was agreed, raise concerns as well as provide opportunities for the development of healthy products. It was mentioned that rice with extra vitamins promoted the health of people in India. The use of GMOs should be considered on a case-by-case basis.
A main part of the discussion centred on the question of what causes food prices to rise. A growing population, climate problems, agricultural subsidies, biofuels, export restrictions and other trade-related issues were mentioned in this regard. The rising prices affect net food-importing countries and create social instability, which could create momentum in addressing this topic. Food reserves, flexible mandates on biofuels, and restricting speculation on commodities were suggested as possible solutions, although only the flexible mandate on biofuels seemed to garner general agreement.
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Session 21: Does the Multilateral System Address Farmers’ Real Concerns?
The session brought together a wide variety of views on how agriculture has evolved from a largely excluded issue during the early GATT years to its explicit inclusion following negotiation of what would later become the Agreement on Agriculture during the Uruguay Round.
Ambassador John Adank, Permanent Representative to the WTO for New Zealand and Chair of the Doha Round negotiations on agriculture, reiterated that the multilateral system and international trade in agricultural goods will mean different things for different farmers as there is no such thing as a singular “global farmer”. He acknowledged that significant imbalances remain, particularly high tariff barriers, high levels of domestic support and export subsidies.
Ms Shelby Matthews from Copa-Cogeca, an organization representing EU farmers and cooperatives, stated the importance of multilateral negotiations to EU farmers, while recognizing the WTO’s limitations in addressing all of their issues. She emphasized “green growth” as a means to tackle important challenges related to climate change, while also balancing the need for greater productivity.
Mr Charles Ogang, President of the Uganda National Farmers Federation, brought the perspective of farmers from his country and from Africa generally. He focused primarily on the difficulties they face in competing in world markets, particularly in light of high levels of domestic support and export subsidies in the developed world. He also highlighted the issues African farmers encounter in complying with phytosanitary measures, some of which he contends amount to protectionism.
The issue of food security featured prominently throughout the session. Ambassador Adank expressed the need to differentiate between security and self-sufficiency, a goal he believes would decrease overall economic efficiency. Ms Matthews emphasized the need to reconcile environmental concerns with productivity goals, ensuring that regulations do not become excessive.
Mr Enrique Dominguez Lucero, Agricultural Counsellor for the Permanent Mission of Mexico to the United Nations in Geneva, noted that Mexico has increased its focus on food security during its leadership of the G-20. He emphasized the need to focus on key grains, such as rice, wheat and corn, as well as the needs of small and medium producers.
The discussions largely concluded that a multilateral approach to agriculture is important for helping to level the playing field, despite the fact that Doha remains stalled and will probably remain so for the near future.
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Session 22: Global Value Chains: Implications for Trade Policy
Ms Arancha González, Chief of Staff, Office of the WTO Director-General, said global value chains are not a new issue, but they are a pattern of trade which has grown enormously in scale in the past few years to the point that today more than half of international trade is in intermediate goods and the import content of export is 40% . As moderator, she asked about implications of global value chains for trade policies and trade politics.
Costa Rica’s Trade Minister H.E. Ms Anabel Gonzalez looked at how trade policy — tariffs, non-tariff measures, red tape and trade facilitation, investment and services — can affect global value chains and vice versa. Plugging developing countries into global value chains can help growth and development. Raw materials or a strong manufacturing base are no longer essential for countries to become part of the chains. Today, Costa Rica exports more services than coffee and bananas. Trade policies can be important in enabling countries to participate in global value-added.
She identified five key drivers for her country’s success in global value chains:
- designing a long-term strategic vision on the importance of attracting foreign direct investment
- creating a sound business environment
- building a strong export platform including WTO agreements (e.g. the Information Technology Agreement) and free trade agreement
- a focus on logistical and supply management.
In a nutshell the key is addressing a country’s economic weaknesses.
Mr Ken Ash, Director of Trade and Agriculture at OECD, said that the measurement methods used to analyse trade flows are inadequate because they do not take into account the components of exports and imports that come from the value chain. It is important to measure how much value is added in the chain because as goods and services cross boarders multiple times, trade-related values are compounded. In this situation, protectionist policies make less sense. Everyone understands the benefit of trade opening on the export side. What is not fully understood is the benefit of trade opening on the import side. Businesses need access to high-quality inputs to be able to compete efficiently. He announced an OECD database on value-added trade among 57 countries by end 2012.
Mr Karan Bhatia, Vice President and Senior Counsel on International Law and Policy at General Electric (GE), said that for a company like GE, value chains are embedded in everything it does and are key to its comparative advantage. The factors that it takes into account when it decides to outsource are: the size and attractiveness of the market itself, human resources, physical infrastructure, and the legal and policy environment.
He stressed two trends on GE investment policies: 1) low cost is not a deciding factor, in fact labour market flexibilities are getting some of GE activities back to the US for example; 2) the old tradition of innovation in the West and production in the West/South no longer holds, GE innovation is done through a network of excellence involving a mix of developing as well as developed countries.
Mr Peter Draper, Senior Research Fellow with the South African Institute of International Affairs (SAIIA), challenged the idea of an easy plugging into global value chains. He said that in sub-Saharan Africa the absence of industrial tradition seems to be a handicap. Many of these countries suffer from the resource curse as well, although the resources are the initial step in global value chains. African countries need to move up the ladder of global value chains and really capture value. Poor infrastructure is a real problem in many African countries and a deterrent for many multinational corporations (MNCs) when they make up their minds about investing somewhere. However, with labour costs rising in China, there is a niche to be captured by African countries if they get their trade and economic policy story right. Reducing transaction costs are key for MNCs. Therefore, trade facilitation in a broader sense is key. He raised a very interesting idea about some of the local industry lobbies not really welcoming policies aiming at connecting African countries to global value chains. They would rather push for protectionist policies to capture domestic and regional markets only. He wondered how to sell the global value chains story to these powerful lobbies.
Mr Bernard Hoekman, World Bank Trade Director, speaking about how to make trade policies relevant to global value chains, said that we need to rethink how we go about discussing various trade policies. For example in the WTO, trade issues are often dealt with in silos, but from a business perspective, these issues cannot be disentangled. We need to connect the dots and give an integrated solution. Another way of making trade policy relevant to value chains is to try and identify what is not on the table. At the moment, there is a static, outdated Doha negotiating agenda — how can it be made more flexible and more relevant?
WTO Chief Economist Mr Patrick Low summed up the session by listing some of the questions that remain open:
- How do we align governments and firms in the trade policy discussion?
- Don’t we need more analysis of the role of services when for many types of global value chains, services are 75% of the story?
- Is the WTO doing the right thing in policy clustering?
- What kind of policies is more effective: enabling policies or assisting policies?
These and other issues will be food for thought in the months to come for global value chain analysts.
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Session 23: Water and Agricultural Trade
The panel focused on describing current challenges related to water resources and identified linkages between policies in the area of agriculture and trade and outcomes for water resources. The panel had an excellent balance of views represented, including an OECD subsidy analyst, a water scientist, a World Wide Fund for Nature (WWF) environmental policy officer and a water expert from a water-stressed country, Morocco. The main points raised were as follows:
- One of the main challenges for national water policies is that irrigation subsidies create distortions in the allocation of water. Since these subsidies are often deeply embedded in the national policy context, changing them will be difficult.
- The concept of “virtual water” can be useful to raise awareness regarding how much water is embedded in traded products, and what this implies about the movement of water around the world. Virtual water advocates are looking to labelling strategies (like carbon footprint labelling) as one way to encourage sustainable water use. Some critics of this approach argue that labels can be misleading. For example, information is also needed regarding the water situation in the country of production.
- Sustainable water resource management requires a multi-stakeholder approach. This approach recognizes that upstream and downstream water users hold different positions along the value chain. Thus, successful management strategies must include effective coordination. The private sector has an interest in ensuring the sustainability of water resources when these inputs are crucial to their production. The multi-stakeholder approach ensures that all actors in the chain share both the risks and the opportunities.
- The direct link between available water resources and agricultural production implies that threats to water resources also create risks for food security. Trade can be an effective way to share water resources and to allow countries to manage food security risks.
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Session 24: Liberalization, Predictability and Trade Facilitation in 2012: What can the WTO Still Deliver to Economic Operators?
This session’s main message was a unified plea for a future agreement on trade facilitation. The panel comprised business representatives and government officials mostly from the European sphere.
Mr Ralph Kamphöner from EuroCommerce and Mr Pierre Michael Gröning from FTA introduced the topic of trade facilitation, stressing the benefits that trade facilitation can bring for both developed and developing countries. In this regard, the speakers cited a recent OECD study that found that further trade facilitation has the potential to reduce total trade costs by up to 10% and stressed that delivering on trade facilitation is a simple and efficient way to boost economic performance and enhance welfare. Accordingly, business advocates an early harvest on trade facilitation.
The Chair of the Committee on International Trade of the European Parliament, Professor Vital Moreira, reinforced the business plea for a trade facilitation deal, citing a number of economic figures and highlighting the importance of trade facilitation for enhancing predictability and transparency as well as its potential to unblock the Doha Development Agenda. He said this is particularly relevant for developing countries as trade facilitation could help these countries move up the global value chain and attract more investment.
Mr Olivier Ganne, Head of the International Customs Department at Oxylane Group, offered a practical insight into the importance of customs regulations for internationally operating enterprises. He highlighted two problematic areas: complicated customs classifications and border inspections.
The questions and comments from the audience diversified the debate on trade facilitation as participants cautioned that the EU should not force its agenda onto developing countries and said there was a need for a more honest dialogue, taking into account the priorities of developing countries.
Russia’s accession to the WTO was stressed as another topic of great interest to the business community. Mr Ruslan Kokarev from the Association of European Businesses in the Russian Federation stressed the importance of trade facilitation for Russia and particularly the establishment of the customs union with Belarus and Kazakhstan.
Concerning the interaction between trade liberalization and trade facilitation, the panellists stressed the importance of keeping the two issues separate as trade facilitation is an important goal in itself and should not be made conditional upon liberalization of particular sectors. This view was debated by some members of the audience.
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Session 25: The WTO: Staying Alive — The Quest for Coherence in Challenging Times
The session revolved around the issue of how to ensure the centrality of the WTO as the forum for multilateral rule-making in the context of the languishing Doha Round. The discussion in particular assessed whether preferential trade agreements (PTAs) and plurilateral agreements were a hindrance or if they could be coherently integrated into the multilateral trading system and used as viable mechanisms to keep the WTO alive. Panellists agreed that although the WTO was more than the Doha Round, the failure to reach agreement would affect the functioning of other WTO pillars, such as the Dispute Settlement Mechanism and trade monitoring. The panel was also of the opinion that the rise of PTAs and plurilaterals was inevitable and what was necessary was to minimize their damage.
All panellists agreed that substantive challenges existed in the current multilateral trading system and reforms were needed. Some of the commonly identified problems included: (i) the proliferation of PTAs and the need to maintain coherence with WTO rules; (ii) the inability to update WTO rules in line with 21st century issues, such as climate change and currency valuation; (iii) the need to improve monitoring and implementation of existing WTO agreements; (iv) the continued rise of protectionism; (v) the increased strain on the dispute settlement system from the increase in the number of complex cases.
A panellist mentioned the “paradox” of the dispute settlement system, whereby the enforceability of WTO agreements may in fact slow down negotiations. Another participant noted the imbalance between the dispute settlement system which was functioning rather well and the weak rule-making aspect of the WTO. She noted that this imbalance would not be sustained and inevitably rules would need to be updated to ensure the efficient working of the dispute settlement system. Another panellist noted that deep Economic Integration Agreements, such as the Trans-Pacific Partnership, could be a foreseeable threat to the WTO and the multilateral system. A question was also raised as to whether dispute panels should take PTAs into account.
Some of the ideas for reform put forward, particularly on how to keep the negotiating and rule-making aspects of the WTO moving, included: (i) revisiting the principle of the “single undertaking” (the possibility of separating market access from rule-making); (ii) revisiting the most-favoured nation principle (“discrimination may be necessary to move ahead”); (iii) negotiating and institutionalizing plurilateral arrangements within the WTO framework; (iv) reforming the decision-making process, particularly the consensus principle; and (v) engaging more proactively with PTAs and ensuring that the WTO remains at the core of the system.
The panel in general recommended not maintaining the status quo but rather delivering on what was possible.
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Session 26: How Can Trade Promote Development?
The session began with a viewing of the winning video submission for the Youth Ambassador video contest . Its director, Ms Karina Hehs, student of agricultural engineering at the University of São Paulo, reminded the audience how important it is for the idealistic voice of youth to be part of the discussion on trade. The process of developing new ideas should be advanced by ensuring all voices are heard so that we come up with the best ways forward for trade and development.
The Youth Ambassador essay contest winner, Ms Ankita Mishra, MBA student at the Institute of Business Management, explained her key concept of “soft trade”. It is her belief that the driving forces of trade should be changed. Instead of being driven by pure materialistic motives, trade should be a tool to lift up developing nations. The sharing of knowledge and capacity building could be paths to accomplishing this. Ultimately, bridging the gap between change-loving youths and decision-makers is a good way to progress.
Mr Andrew Bauer, student of land economics at Cambridge University, looked at economic history to understand the different stages of development and trade interest inherent in these stages. He used this to explain the many different positions within the WTO and the difficulty to reach consensus. Andrew looked towards regional blocs as a potential way forward in opening trade.
Ms Marina Murina, former student of the Graduate Institute of International and Development Studies, offered an interesting perspective on Russia’s recent WTO accession. Regardless of the current global turbulence, the WTO is still the forum which countries strive to join. The organization itself provides an incentive for countries to make positive developments within their domestic policies. The WTO is neither good nor evil; it is a mechanism that is proven to work. We must ensure it continues to work for all.
Finally, Ms Eloise Johnston, student in international relations at Macquarie University, presented her preliminary research on trade and development between Australia and the Pacific islands. She offered a less optimistic view by indicating that the two concepts may be incompatible. Trade tariffs represented an important source of revenue for governments, and liberalization sometimes caused the provision of public goods to be unattainable. Negotiations between the two parties showed an unfairness that is indicative of the global problem at large when large nations negotiate with smaller ones.
Questions from the audience offered interesting perspectives on a number of other issues. These included the use of information and transparency to encourage companies and the public to think globally instead of just in terms of their own interests, the inability of growth to be the sole indicator of development but the difficulty in identifying other metrics, the use of trading blocs and South-South co-operation to help least-developed countries, and the importance of including the environment and green economies in the trade discussion.
The panel closed with the two Youth Ambassadors explaining how they will use their positions to foster the programme’s goals. Both planned to spread information and awareness of the WTO and trade issues among the youth: Ankita through forums and lectures with universities in India and Karina through a blog and discussion forum in Brazil.
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Session 27: ICC World Trade Agenda: Business Priorities for 21st Century Multilateral Trade Negotiations
A panel of transnational corporations’ top managers and international trade experts – all members of the International Chamber of Commerce (ICC) – presented the business world’s trade agenda before a lively debate took place. They affirmed their support for the conclusion of an agreement on trade facilitation and services as well as an expansion of the Information Technology Agreement (ITA). The speakers also raised concerns about the complexity of rules of origin (ROOs) defined in preferential trade agreements (PTAs).
As stated by Mr Geoffrey Gamble, Chair of the ICC Commission on Trade and Investment Policy, an agreement on trade facilitation could lower average customs fees from 10% to 5% and would hopefully be signed at the next WTO Ministerial Conference in Bali in December 2013. He presented the benefits of this agreement for developing countries, recalling that the price of globalization is borne by consumers in developed countries. He added that transparent trade was all the more beneficial as it was an antidote to security measures.
Mr Ulf Pehrsson, Vice-Chair of the ICC Commission on Trade and Investment Policy, stressed the need to extend the coverage of the ITA and to conclude an agreement on services. To illustrate the growth potential of the information and communication technology (ICT) sector, he pointed out that the number of mobile phone subscribers would grow from 6 billion today to 9 billion in five years. The ITA, signed in 1997 by 28 governments and now including 75, should cover more products and include new members, he said.
On services, he claimed there was an untapped source of possible agreements. He highlighted the need to address new sectors such as cloud computing and digital goods. Mr Pehrsson also expressed his attachment to multilateralism through global value chains, explaining to what extent the products of his company were “made in the world” as opposed to a specific country.
All the participants and more specifically Mr James Bacchus and Dr Jan Atteslander, members of the ICC Commission on Trade and Investment Policy, underlined the difficulties that companies and particularly small and medium-sized enterprises (SMEs) meet in complying with the necessary ROOs to take advantage of the benefits of PTAs. The reason invoked was that goods now have multiple origins. However, this argument was vigorously countered by a participant, a ROOs expert, who said that big companies bore a share of responsibility on that point because they were unable to find common ground for negotiation on standards.
Dr Atteslander also reported on the concerns of the business community regarding delays in the Doha Development Agenda. He referred to the Trans-Pacific Partnership as an example of how PTAs could re-energize multilateralism in the long term.
Questions were raised by the audience about sustainability, development issues and the food crisis. On development, the panellists suggested that imposing local contents in production in least-developed countries would be a disincentive for investors. On the topic of the food crisis, the panellists pleaded for the elimination of subsidies to agriculture. Some panellists also suggested the elimination of restrictions on the use of GMOs.
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Session 28: Investment Provisions and Agreements: What is the Right 21st Century Approach?
The session was about the effect that investment agreements and dispute settlement dispositions have on the economic, health, environmental and development perspectives of countries, and how the current investment framework can be modified to promote development.
Some of the points brought out in the discussions were:
- Treaties protect and grant rights to foreign investors, but no obligations are imposed on them. Fair and equitable dispositions can be used by foreign investors in an abusive manner; in most cases, where a violation is claimed, host countries are found to have violated their commitments.
- Expropriation dispositions impede host countries from enforcing their own laws, including their own constitution; exceptions for the protection of health and environment should be included in all bilateral investment treaties (BITs).
- The number of BITs has sky-rocketed in recent years as well as the number of investor-state disputes. These procedures are being used not only as a means to resolve disputes, but also as a coercion tool and many times even as a business model where companies do not wish to invest but to create a situation where they can claim compensation.
- Arbitral procedures allow annulment when the investor loses but do not allow for appeal when the investor wins the case; high amounts are being paid as compensation by host countries to foreign investors.
- Some countries are reviewing their BITs, with a view to terminating them as no evidence can be observed that BITs attract foreign direct investment into host countries. Arbitration dispositions tend to be fragmented and complex and there seems to be no consistency in rulings and interpretation by arbitral tribunals.
Technology transfer, and research and development dispositions need to be crafted into BITs and not taken for granted. UNCTAD is aware of the situation and has created tools to move from freedom of investment to investment for sustainable development.
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Session 29: Plurilateralism Against Multilateralism? A Multi-Stakeholder Perspective
The session involved a large panel of speakers offering different views about the benefits and disadvantages of plurilateralism in achieving the objectives of the WTO. Panellists were divided about whether plurilateral agreements supported or disrupted multilateralism and the role of plurilaterals in the context of the struggling Doha Round.
Some speakers outlined the argument that plurilateral negotiations fragment and disrupt the larger multilateral process, encouraging breakaway groups rather than members coming together to decide common issues. In particular, Mr Lu Xiankun, Permanent Mission of China to the WTO, said that to turn from the Doha process to plurilateral agreements was “like serving dessert before the main course”. Some speakers argued that plurilaterals were not new and represented a way to achieve welcome progress, citing in particular the successful renegotiation of the Government Procurement Agreement. Some speakers, such as H.E. Mr Yonov Frederick Agah, Ambassador and Permanent Representative of Nigeria to the WTO, acknowledged the paradox these views represented. The general sense of the discussion was that multilateralism needs plurilateralism and that plurilateralism works best within the multilateral framework.
Professor Robert Wolfe, Queen’s University, Canada, said that plurilaterals were a solution in search of a problem, and that as in the medical world one should “first diagnose, then prescribe”. Other speakers noted key players’ lack of trust as a challenge to multilateralism rather than any disrupting effect of plurilateralism.
Those who spoke in favour of plurilaterals, including Mr Nicholas Niggli, former Chair of the WTO Committee on Government Procurement, considered that levelling blame at plurilaterals for disrupting multilateralism was directing criticism at the “wrong scapegoat”. Rather, plurilaterals were a reaction to an inability to achieve multilateral results with the whole membership. They could help rather than hinder broader agreement, and while there may be few parties to plurilaterals in the beginning, membership tended to grow representing a gradual multilateralising effect. They were thus a stepping stone rather than a stumbling block.
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