ECONOMIC RESEARCH AND ANALYSIS
Good morning everyone.
Welcome to the WTO and to this economic conference on 'Updating Trade Cooperation'.
Let me say a particular welcome to World Bank Chief Economist and Senior Vice President Penny Goldberg.
It's great to have all of you with us today.
This is the first conference of its kind at the WTO, looking at pressing issues in international trade cooperation today from an economic angle. I'd like to thank everybody who was involved in organizing this initiative, especially the Economic Research and Statistics Division.
There is no question that this is a momentous period in global trade. We face a wide range of challenges. But also I believe that this is a once-in-a-generation opportunity to renew cooperation in global trade.
Trade has proven to be an engine of growth, productivity, innovation, job creation and development. The multilateral trading system makes a huge contribution to that end.
We have to ensure that the system continues to play this positive role, and that it helps members deal with the challenges of the modern world.
Events like this can make a huge contribution to this debate.
The aim of this conference is to call on the academic community and trade policy experts to look at how research-based analysis can help us find ways to strengthen and improve the trading system.
Of course, one way in which we can strengthen the system is by making the case for trade, with strong evidence and data. Economic research is vital here. And so I hope that this will be on your minds today as well.
To consider these issues, this conference is bringing together economists, academics, policy-makers, delegates and decision-makers. Everybody has a contribution to make. There is a great deal of brainpower in this room.
And I should be clear, these titles are not mutually exclusive! I can think of many colleagues who qualify as economists and delegates and decision makers. Some of them are joining the great line-up of speakers that we have for you today.
So let's make the most out of this opportunity.
To help focus these debates, the discussions today will be divided in four sessions.
The first session looks at the value of international cooperation.
The benefits of cooperation on trade issues are many.
The multilateral trading system provides a platform for a myriad of economic gains to be realised. And underpinning everything, it provides stability and predictability.
The system effectively provides the constitution for global trade, establishing shared principles which underpin trading practices around the world. It provides the only global forum for discussion and debate on trade issues. It provides the mechanisms for countries to monitor and review each other's trade policies. And it provides the means to settle disputes when they arise.
However, the tensions that we are seeing in the global trading environment pose a big risk – both systemic and economic.
Our team, led by Bob, has mapped the economic impacts.
They have been assessing a variety of possible scenarios to illustrate the effects, including the impact of a full, global trade war.
By this we mean a breakdown in international trade cooperation, where instead of tariffs being set cooperatively in the WTO or in other trade agreements, they are set unilaterally.
Under this mindset, tariffs would rise sharply. We would see a reduction of global trade by around 17%.
This would cause a very significant slowdown in GDP growth, and bring major disruptions for workers, firms and communities as they adjust to this new reality.
Clearly, we can't afford to go down this road. We must find ways to reverse gears.
We need to find ways to ensure that the system remains resilient, but also to ensure that it is fully responsive to members' needs and priorities.
That is what the second session will explore. It will look at the design of trade agreements and at how they can remain sustainable over time.
In recent years the WTO delivered major deals which promise significant economic gains, including: the Trade Facilitation Agreement, the expanded Information Technology Agreement and the deal to abolish export subsidies in agriculture.
These deals all follow quite different approaches – and as such, they offer us some important lessons in how to move forward. Flexibility is a key feature.
We have flexibility in geometry, for example in plurilateral initiatives like the Government Procurement Agreement, which applies only to the signatories. Or the Information Technology Agreement, which is signed on what we call a Most Favoured Nation basis, so the benefits apply to all members.
And we have flexibility in substance. We saw this with the multilateral Trade Facilitation Agreement, where members may decide how fast they can implement each specific commitment, and may ask for technical assistance to help them to do so.
Some members are now also exploring new forms of flexibility.
This includes the joint initiatives launched by groups of members on a number of issues of growing economic importance, such as electronic commerce, investment facilitation, MSMEs, and the economic empowerment of women. Whether and how these initiatives will evolve is up to members. And, not surprisingly, they have different perspectives here.
Ultimately, in a system with 164 members of different sizes, different priorities and different stages of development, flexibility is one key element of avoiding fragmentation and charting a productive way forward.
We need the system to be able to respond to members' needs in a way that is faster and more agile.
We have to ask ourselves – is the global trading system equipped for the challenges we face today? And if not, how should we respond?
This leads me to our third session on how to address the fast-changing nature of the global economy.
The world is changing before our eyes. New technologies are challenging our conceptions of international trade.
We could not stop this evolution even if we wanted to – but we can shape it. Indeed, we have a duty to shape it in a way that is helpful for all of us.
If we do not, it is inevitable that many will be left behind. This will create new social problems, new sources of unease and unrest. We need to spread the benefits of trade as far and as wide as possible.
This is why inclusivity is so important – and that will be the focus of the fourth session today.
It will discuss how policies that help workers adapt to new economic realities are essential to build a trading system that works for everybody.
Domestic policy is key here. However, international organizations can also support this debate by offering a platform for discussion, and by helping to inform these conversations.
We often join forces and pool our expertise to put the spotlight on particular issues. And I am pleased that today we can showcase an important example of this kind of cooperation.
The WTO has joined forces with the World Bank to produce a new publication entitled "Trade and Poverty Reduction: New evidence of impacts in developing countries". This publication builds on a track record of collaboration between our two organisations – and on our first publication on this issue, which we published in 2015.
I'd like to thank the WTO team who worked on this report – specifically Roberta Piermartini, Robert Teh and Mustapha Sadni-Jallab.
And, let me thank Penny and the World Bank team for your work here as well.
This report looks at the challenges the poorest face in joining global trade flows. It also highlights the fact that, in a scenario of heightened trade policy uncertainty, the poorest stand to lose the most.
In doing so, this publication gives governments food for thought on policies that could help maximize the overall positive gains of trade for the extreme poor. It also helps to highlight the importance of international cooperation to ensure that everybody can benefit.
So I urge you all to take a look. The publication will be available on our website today.
I'm afraid I can’t stay with you for today's session – I have to leave in just a moment. But let me conclude on this point…
I think it's clear that we have many challenges before us today. But we should keep a proper perspective on the problems that we face. The trading system has been under pressure before, and each time it has emerged stronger.
In 2008, faced with the worst economic crisis for many decades, the system proved its value, preventing an outbreak of protectionist measures.
In 2013, after years of deadlock, we proved that we could deliver negotiated results.
Today, we must rise to the challenge again, and turn this crisis into an opportunity to renew and strengthen the system for the future.
Developing sound economic analysis on the key issues before us is vital in this effort. So I wish you a very productive discussion today. And I look forward to hearing the results of your deliberations.