Excellency, Ladies and Gentlemen,
I would like to thank the Government of Kazakhstan for the invitation to participate in this Forum and for the opportunity to address this distinguished audience today.
Against the backdrop of growing tensions, uncertainties and unpredictability surrounding the global economy today, the Astana Economic Forum this year is providing a timely and much needed opportunity to discuss how the global community can work together to meet the challenges of the 21st century. During these two days, we have the chance to hear from renowned specialists, coming from a range of disciplines. Face-to-face discussions and direct engagement among senior policy makers can contribute in making the world a better, more inclusive, and hopefully, safer place.
I have devoted my career to international trade, having first served as government official in a number of US administrations, then as a private lawyer specialising in international trade, and now as Deputy Director General of the World Trade Organization. Today, 164 Members of the WTO, like many other multilateral institutions, are confronted by multiple challenges, ranging from the threat of protectionism and unilateralism, the risk of a trade war, to the inability to forge consensus on core issues, some of which have underpinned the world trading system for decades since the end of the World War II. But, this challenging time also provides opportunities, of great benefit to the world trading system if we can act together and decisively to seize them.
This morning, I have been asked by the organisers to give remarks on the following topic: "Does the WTO remain a key engine for a country's transformation and integration into the global economy?" Frankly, among all the different parts of the world that the Organization is dealing with, I cannot think of a better place than Kazakhstan, the heart of Central Asia, to discuss this topic.
Let me start with a brief background. The WTO and the GATT before it are primarily about transformation of acceding Member economies and their integration into the world economy. In 1947, the General Agreement on Trade and Tariff started out with 23-member countries called at that time Contracting Parties. The GATT was one of the key pillars of the global economic governance, together with the IMF and the World Bank, they were tasked with smooth flows of goods between countries to ensure post-war economic recovery. The effort was a great success, as trade was one of the main drivers of the unpreceded levels of economic growth in human history, associated with increased prosperity, improvements of people's lives, the spread of welfare and technology across the globe.
By the time Contracting Parties decided to transform the GATT into the WTO in 1994, 128 countries, it was also trade that played a large part in shaping the economies of most of the world’s countries. The WTO, now equipped with a broader set of international trade rules covering goods, services and intellectual property, has had profound impact on newly independent states emerged from the Soviet Union, and other formerly central planned economies, such as China, Laos and Vietnam, that have used their accessions to the WTO as a vehicle to shift toward market-based economies.
WTO accessions also have impact on all other members’ economies - big and small, rich and poor - from Saudi Arabia to least developed countries and island economies from the Atlantic, the Indian Ocean to the South Pacific (i.e. Cabo Verde, Seychelles, Samoa, Tonga and Vanuatu) Oceans, to serve as an instrument for structural reforms and economic diversification.
Since the establishment of the WTO in 1995, a total of 36 economies joined the WTO. And WTO accession has served as a key engine for their economic transformation and a key driver for their integration into the global economy.
WTO membership is unlike any other membership of multilateral institutions. By acceding to the WTO, governments and their behaviours are pledging themselves to abide by the Organization's core values of openness, transparency, good governance and the rule of law. Therefore, accession negotiations are a tough and often long process, as involve economy-wide reforms. But they deliver.
This is an entirely voluntary effort, although also an intense series of negotiations. A country wishing to foster its own interests. It is not compelled to do so. The WTO will do everything it can to assist in the process.
There is no better place to demonstrate the dividends of a long and hard WTO accession process than in Kazakhstan. It was a long journey of nearly 20 years for Kazakhstan to join the Organization in 2015. But, it has helped transform Kazakhstan from a poor country with GDP per capita at USD 1,350 in 1996 to a modern economy, with sophisticated management based on knowledge and skills, with GDP per capita peaking at nearly USD 14,000 in 2013.
Another difficult accession process as that of China, because of its size, and the complexity of the modifying tens of thousands of laws and regulations to qualify for WTO membership is. Through a 15-year accession process, China did integrate substantially into the world trading system. That integration was and is a test of the world trading system due to the degree of transformation required and the dramatic growth of China as a strong participant in world commerce.
Research shows that countries undertaking the reforms required to join the WTO tend to grow at around 2.5 percentage points faster than others once the process is completed. And on average, those countries have grown 20% faster than the overall world average for the last twenty years.
Today, WTO membership has reached 164, with its rules covering over 98% of world trade. But 22 accessions are still in the pipeline. In this region, these include Uzbekistan which started the accession process in 1994, and Turkmenistan which Azerbaijan has been in this process since 1997 and Iran since 2005. I trust that Kazakhstan's positive experience can serve as a model and encouragement for others to make necessary but tough reform decisions.
This brings me to my second thought on the WTO as an engine for transformation and global integration: even after gaining membership, a country within the context of new WTO agreements continues engaging in trade reforms. In recent years, the WTO has shown that the multilateral trading system can produce a new set of rules which support and deepen its members' trade reforms.
In 2013, WTO members delivered on the Trade Facilitation Agreement. This agreement has huge economic significance, potentially cutting trade costs globally by an average of 14.3 per cent. This is a bigger impact than the elimination of all remaining tariffs in the world today.
Then, two years after that breakthrough, Members delivered the WTO's biggest ever agriculture reform, with the decision to abolish agricultural export subsidies. In addition to that, a large group of members, accounting for the 90% of world trade in IT products, agreed on the expansion of the WTO's Information Technology Agreement. This deal eliminates tariffs on a range of new generation IT products, trade in which is worth around 1.3 trillion dollars per year. Afghanistan and Kazakhstan are members, and they joined for their own economic benefit, for their boost to their own economies.
And these deals did not just stay on paper but turned into reality. Last year, the Trade Facilitation Agreement and the TRIPS amendment, which eases the access of essential medicines for the poorest countries, entered into force, following the ratification of these new rules by over two-thirds of membership.
More recently, at the Eleventh Ministerial Conference in Buenos Aires at the end of 2017, there was a resurgence of dynamism. In addition to the commitment to secure a deal on fishery subsidies that will deliver on the Sustainable Development Goals 14.6 by the end of 2019, a large group of members agreed to launch discussions that could eventually lead to new global trade rules in e-commerce, investment facilitation and micro, small and medium enterprises.
This is to say that the WTO is a dynamic organization that is ready to respond to the evolving needs of its members to modernise and transform their economies, by updating global trade rules that promote greater integration into the global economy. I am happy to note that Kazakhstan is part of the "modernizers" and her voice is important to advance these conversations in the coming months and years.
I heard that there is a saying in Kazakh, which translates roughly as “where there is togetherness, there is a progress". I believe that the WTO remains a forum that brings together all players to pave the way forward to the development of the global trading system assisting in ongoing transformations of domestic economies for their own benefit and to continue to improve the net benefits for all.
The WTO is not a cure all. There will still be difficulties between members, and the WTO does not address all questions. It does not rule out corruption for most trade, for example, but perhaps one day it will attack this sort of problem, as it has making it easier for trade to cross borders through the capacity building and commitments of the Trade Facilitation Agreement, and as it is seeking to do with respect to E-Commerce, Services and Investment,
None of the newly acceding countries take the WTO for granted. It is imperative that the all members demonstrate their continued commitments as well. As one trade minister of a major trading country said “If the WTO did not exist, it would have to be created.”