SPEECHES — DG NGOZI OKONJO-IWEALA
Thank you so much, Chair, and good morning to everyone. It's wonderful to be invited to talk to you.
Welcome to the 100th session of the Committee on Regional Trade Agreements.
I am pleased to be able to say a few words to you today and to commend the Committee for its work over the past 25 years in scrutinizing RTAs and considering their systemic implications for the multilateral trading system.
Let me start by recalling a few key points and dates:
First, the CRTA was established by a Decision of the General Council on 6 February 1996. Its first session was on 21 May 1996, with Ambassador John Weekes of Canada as Chair.
The establishment of the CRTA led to a substantial change in the manner in which the membership examined regional trade agreements (RTAs). Instead of setting up working parties to look at individual regional trade agreements, all members could examine all such agreements in the Committee, which provided a standardized opportunity to obtain information on RTAs and their trade implications.
For the first ten years of its existence, between 1996 and 2006, the Committee examined 66 RTAs, including NAFTA and some of the enlargements of the European Union.
In 2006, members established a Transparency Mechanism for Regional Trade Agreements, which has significantly enhanced and standardized transparency and information-sharing for the more than 190 RTAs that have been reviewed in the CRTA since then.
I should note that the Transparency Mechanism is provisionally applied, as it technically represented an early harvest from the Negotiating Group on Rules that was adopted by the General Council. At an appropriate time, members may wish to consider making the mechanism permanent.
Over time, RTAs have grown in number and evolved in terms of complexity.
Before the WTO was established, on average approximately three RTAs were notified per year to the GATT.
Since 1995 that average has grown to around 16 per year. Today, every WTO member, at every level of development, is party to at least one RTA.
Taken together, RTA partners covered almost 50% of global merchandise trade in 2019 compared to just over a quarter in 1995. I should note that more than half of trade among RTA partners took place on an MFN-zero basis – that is, in products for which all WTO members received duty-free access. It is worth remembering that over 75% of global trade occurs on MFN terms, duty-free or otherwise, underscoring the continuing commercial importance of WTO commitments. Still, our estimates suggest that close to 20% of global merchandise trade occurs between RTA partners on the basis of preferential tariff rates.
The nature of provisions in RTAs has also evolved. In 1996, most of the RTAs notified included commitments to liberalize tariffs and, in some cases, trade in services.
In comparison, RTAs today go beyond market access in goods and services and related WTO rules and include provisions on issues such as investment, competition, government procurement, environment, labour, electronic commerce, small and medium sized enterprises, and gender related issues. What is interesting about these provisions is that they tend to be non-discriminatory.
The work of the Committee in considering these more complex trading relationships is especially valuable. Indeed, today you will be considering one of the largest and most complex RTAs, the CPTPP.
There has always been a close relationship between RTAs and the multilateral trading system.
Several WTO rules, for example, are based on ideas first developed in RTAs. Similarly, many RTA provisions build on existing WTO rules and, increasingly, go beyond them.
The work done by the Committee helps us understand how this relationship is evolving, and is a regular reminder of how important it is for RTAs and the multilateral trading system to work towards the same goals.
We must also not lose sight of the overall objectives of the WTO, to use trade as a means to raise living standards, create jobs, and promote sustainable development and human wellbeing.
RTAs can complement multilateral efforts, and their success in tackling new and traditional issues provides lessons that WTO members can apply in the multilateral context. But despite their benefits, RTAs cannot be a perfect substitute for the multilateral trading system. In a multipolar world economy, with multiple problems of the global commons, such as we've seen with the pandemic, we need effective multilateral governance. Attempting to solely rely on trade agreements with selected partners is a recipe for suboptimal outcomes.
In closing, it would be remiss of me not to refer to the importance of transparency for the CRTA's work. Alongside the almost 350 RTAs that have been notified to the WTO, the Secretariat estimates that there are over 50 RTAs in force that have not yet been notified. Around 90 RTAs still need to be considered by the CRTA.
For the Transparency Mechanism to keep delivering useful results, it is imperative that members stay engaged, including by notifying their RTAs in a timely manner and providing relevant data and comments so that the Secretariat is able to prepare the necessary background documents.
Thank you so much for listening. I wish you a wonderful day and a productive 100th session.