SPEECHES — DG NGOZI OKONJO-IWEALA
Ambassador Makaila, Ambassador Li,
Ladies and gentlemen,
I am delighted to be with you this evening — and to see you in person. The LDC constituency is very special to me and throughout my career as a development economist I have had the privilege of working on LDCs in Asia, Africa and LAC. A majority of you come from Africa, like I do, so I have lived first-hand the development challenges you face.
Your interests remain an important priority for the WTO. This Dialogue, now in its fourth edition, is a reflection of that. Initiatives like this one can help forge common positions on matters of interest to LDCs and their partners. I therefore wish to thank the Government of China for its continued support and collaboration in our common endeavour to strengthen the participation of LDCs in the multilateral trading system.
The focus of this year's Dialogue is our upcoming Ministerial Conference. This is appropriate because a successful MC12 — one that delivers concrete results for people in LDCs and elsewhere — is critical for reinvigorating the WTO and demonstrating to the world that we are back in business. MC12 is an opportunity we cannot afford to miss.
Last week, together with GC Chair Ambassador Castillo, co-host Kazakhstan, we issued invitations to ministers to attend MC12 in person. In light of the COVID-19 situation, we were compelled to cap the size of delegations at four. This makes it even more important for us to advance on necessary technical work in Geneva in the coming weeks so that we are as close as possible to agreements before ministers gather on 30 November.
We have much to discuss this evening, but I would like to focus my remarks on three issues: recovery from the pandemic, MC12 deliverables, and some wider reflections on enabling and empowering LDCs to benefit more from global trade.
Before that, however, I want to congratulate you on the recent decision by the United Nations General Assembly proclaiming 7 October as World Cotton Day. This has its origins in action LDCs took at the WTO to raise awareness of the importance of cotton. And it will now be commemorated around the world.
Turning now to the three themes I want to discuss.
First, the pandemic has dealt LDCs a serious economic blow, setting back progress towards the Sustainable Development Goals.
This setback has come at a time when many LDCs were taking important steps forward economically, reflected by the seven of you that are on track to graduate by 2026. Your progress is worth celebrating as a reflection of your hard work and development-oriented policies.
Unfortunately, the economic crisis caused by the pandemic has pushed more than 100 million people into extreme poverty, mainly in LDCs in South Asia and sub-Saharan Africa.
LDCs, which are collectively home to nearly a billion people, saw merchandise exports shrink last year by nearly 12%, in value terms, compared to the contraction of over 7% for the world as a whole. LDC exports of commercial services fell by 35%, compared to the global decline of 21%, reflecting the disproportionate share of tourism and travel to LDCs.
The pandemic has wiped out a decade of progress for LDCs in global trade: by the end of 2020, the value of LDC goods and services exports was 0.7% below where it was in 2011.
LDCs are struggling to maintain the 1% share of global trade they achieved a decade ago — it was down to 0.91% last year.
On top of declining export revenues, LDCs have less fiscal and monetary firepower than other countries to fight the economic effects of the pandemic.
We continue to see a K-shaped economic recovery, in which LDCs and many developing countries are being left behind. There are two avenues to end this bifurcation. The first is convergence downwards, as new variants of the virus begin to weigh on growth even in countries that had seemed on the road to recovery. In fact, we are unfortunately starting to see some signs of this with the Delta variant. The second is convergence upwards, by ensuring swift and universal access to COVID-19 vaccines. IMF economists have estimated that vaccinating 40% of people in all countries by the end of this year, and at least 60% by the first half of 2022, will bring a US$ 9 trillion boost to the global economy by 2025.
But many LDCs, especially in Africa, have yet to vaccinate even 1% of their population, even as vaccination rates in developed countries are at 57%.
Because trade is essential for vaccine production and distribution, the WTO has an important role to play in vaccine scale-up efforts.
I am pleased to see Ambassador Walker steering the discussion on what we could do at the multilateral level. By reducing export restrictions, facilitating trade, addressing supply chain bottlenecks, and finding pragmatic solutions on intellectual property, we can help end this crisis and put all WTO members in a better position for future ones.
As you may be aware, the Secretariat has been monitoring COVID-related trade measures and doing excellent analysis of trade in vaccine inputs. Along with my counterparts from the WHO, the IMF and the World Bank, we have been working with vaccine manufacturers to enhance production, including new investments in emerging markets and developing countries and ensure equitable access to vaccines for all. Our joint task force has a website with vaccine data and news — COVID19taskforce.com.
Turning now to my second focus, delivering results at MC12 will reinforce the multilateral trading system and help LDCs and others use trade to drive their economic recovery.
This Dialogue will help to shed some light on where we are in key areas of our work and where we might have some landing zones. I am therefore very happy that it opens with a session on MC12 at which the discussions will be led by the Chair of the General Council, Ambassador Dacio Castillo.
Beyond Trade and Health, or Response to the Pandemic as we termed it, we must conclude a credible agreement on harmful fisheries subsidies, achieve reasonable outcomes on agriculture, and work hard to ensure MC12 delivers for development. Of course, special and focused treatment for the LDCs must be an integral part of all these discussions. We have been grappling with some of these topics for 20 years. We owe it to the people we serve to deliver results. This is also essential to reinvigorate the WTO and to start to rebuild trust among members.
With regard to fisheries discussions, let us remember it is not just about fish but about the livelihoods of our people. Ministers have provided us political momentum in July. Ambassador Wills, who is with you this evening, has intensified efforts and can update you on the progress made this week. We must make every effort in the coming weeks to reach the finishing line. The WTO cannot continue to miss the deadline to deliver SDG 14.6.
There has also been active engagement of members on agriculture following the summer break. I am also glad to see Ambassador Peralta joining you today. She has issued a text on her own responsibility, which members are now considering. The issues surrounding agriculture are not easy to reconcile. But I would urge you to work closely with Ambassador Peralta and strive for outcomes at MC12, bearing in mind that there is potential to continue good work post MC12.
On special and differential treatment, we should not allow continued divergence of views to penalize potential support for the development aspirations of our weakest members.
I have been stressing the need for an LDC package at MC12. I know LDC Graduation is a priority issue for the Group. There is increased understanding among the wider membership about the challenges that graduating LDCs could face. The main issue seems to be of the transition period for support measures for helping graduating LDCs, under the aegis of the WTO. I would urge LDCs to reach out to members to explore feasible options and transition timeframes.
In addition, groups of members, including some LDCs, are moving forward on issues of their interests, such as investment facilitation, services domestic regulation, e-commerce, and a range of sustainability issues.
To deliver results, we need to show realism, pragmatism and flexibility.
This brings me to my third point, about integrating LDCs more fully into global trade and supply chains.
On the policy front, there has been good progress over the years. Today, LDCs enjoy preferential access to markets of key trading partners — developed and developing — with improved origin requirements. LDC services and service suppliers are also making inroads, to an extent. More recently, WTO members extended LDCs' transition period to fully implement the TRIPS Agreement.
Nevertheless, on the ground, the quality of integration of LDCs in global trade leaves much to be desired. Since the establishment of the WTO, most LDCs have remained primary commodity exporters. Only a handful have ventured into manufacturing, and that too at the lower end of the value chain.
But there is cause for hope. Lead firms in global value chains are shifting operations to new places for various reasons — to lower production costs, diversify risks, and be closer to customers. We see more activity moving to LDCs like Lao PDR, Cambodia, Bangladesh and Ethiopia. I like to think of this as “re-globalization” — and we need more of it. We need it to encompass more countries in Africa in particular, to bring hitherto poorly integrated parts of the world into the multilateral trading system and the global division of labour.
We can and must do more to support LDCs. We need to reflect on the ways we can make trade and the trading system a better instrument for their inclusion. We need to look at the evolving needs of LDCs and at how we can better support them in the years ahead — to 2030 and beyond. This could involve better implementation of existing decisions; it could be better design of an architecture for trade capacity building and supply side support. It could be a combination of both. As we have seen, MC12 decisions on LDCs could take a valuable step in the right direction.
Looking beyond MC12, the international community is shaping a new global action agenda for LDCs which is likely to be adopted at the UN LDC5 Conference next January. I received the UN Undersecretary General Mr Courtenay Rattray. Trade is one of the top items on the agenda. We must work closely with him and his team to ensure our LDC issues are well understood and well represented. Enabling LDCs to become more resilient and more integrated into the global economy is critical for meeting international development goals and for building a trading system fit for the 21st century.
So, I encourage you to make the most of this dialogue.
I hope your deliberations will positively contribute towards achieving results when ministers meet in November.
I look forward to hearing from you at our next informal TNC on 30 September. In fact, this event was a key consideration in my decision to reschedule the TNC meeting to the end of the month. At that meeting, I hope to hear directly from you as to what should be done — and what you yourselves are prepared to do — to ensure a successful MC12.
I wish you a very productive dialogue.
Thank you very much.