UNCTAD, Palais des Nations, 6 October 2005

Lamy: Trade is “fundamental tool” in fight against poverty

Review of Developments and issues in the post Doha work programme of particular concern to developing countries

Mr President,

At the outset, I would like thank my good friend Dr Supachai for this invitation to speak at this session of the Trade and Development Board of UNCTAD on the important topic of reviewing developments and issues within the DDA that are of special interest to Developing countries. This meeting coincides with intensive consultations within the WTO and outside of the WTO by members to try and reach convergence on some of the key negotiating issues of the agenda.

Let me begin by sharing with you my view on development within the WTO context. I consider development to be a horizontal issue which should be integrated across all levels of the negotiations. The key focus should be on maximising the development value of every sector and of the Round as a whole.

Developing countries as you know, account for over 75% of the WTO's membership. They therefore have a central role in all trade negotiations in the WTO; a fact recognised in the DDA, which has placed development at the centre of the new Round of negotiations.

Mr President

The role that trade can play as an engine for growth and development has long been recognized. A large body of empirical studies suggest that trade helps global allocation of resources, enhances output and productivity and increases overall welfare gains. Trade allows countries to concentrate on what they can do best and translate the individual advantage that countries enjoy into maximising productivity, which in turn can lead to development. Consequently, trade and trade policy have today become fundamentally important tools in the fight against poverty and achievement of the Millennium Development Goals.

Even though perceptions differ as to what is really meant by 'development' and what should be the means to achieve the end goal of 'development' - trade and development are increasingly perceived as being inextricably linked to each other. It is in such a complex and evolving environment that the role of trade in fostering development needs to be constantly assessed and analysed, including through the very important deliberations of the Trade and Development Board of UNCTAD.

I am convinced that more than 70% of the development outcome of the Round will come from each area of under negotiation. This includes agriculture, services and non agricultural market access

Needless to say progress in all these areas will have to be made and results which adequately reflect the concerns of developing countries achieved, in order for us to fulfil the development dimension of the Doha Agenda.

Agriculture is an extremely important area for many developing countries with the potential for providing enhanced export opportunities. I am confident that the decision to eliminate export subsidies will go a long way in reducing the existing distortions in global trade in agriculture and will help in fulfilling some of those potentials as will disciplines in all other forms of trade distorting export support. However, Members have still to agree on a realistic date for the elimination of export subsidies, as well as on concrete figures for slashing trade distorting farm support. At the same time, we have to strive for a package of equivalent ambition on market access; all of which I hope will improve market access for developing countries.

An issue of particular importance to developing countries is that of cotton. Part of the problem lies in the WTO and will be addressed in as part of the agriculture negotiations. Another part relates to the implementation of the recent panel decision by the US. In the meantime, we need to make sure that bilateral and multilateral donors urgently focus their efforts on resolving this problem.

In the non-agricultural market access negotiations, the challenge is to find a formula that is effective, transparent, equitable, and incorporates appropriate special and differential treatment for developing countries. Since 70 per cent of developing countries' exports are accounted for by manufactured products, they have a positive interest in enhanced market access, including by seeking the reduction of tariff peaks and escalation that could lead to higher value addition in these countries.

As far as the other work programmes of special interest to developing countries are concerned, let me restrict myself to that of special and differential treatment. I know this is a key area for developing countries and many of them have spent a lot of time and effort in trying to take forward the work in the Special Session of the CTD.

I recognise the need to make the existing provisions as effective as possible and will do all that I can to take this work programme forward so that, in spite of the many challenges that remain, we can achieve a credible result by Hong Kong. However, at the same time, developing and least-developed countries also need to concentrate and focus their efforts in ensuring that the areas being currently negotiated include S&D provisions that are “precise, effective and operational”.

Mr President,

I would also like to make a special mention of the needs and concerns of the LDCs. These are the countries that deserve maximum attention so as to ensure that they benefit most from the Round, and that their adjustment problems are minimized.

I would also like to underline here that since Doha, sufficient flexibility has been granted to LDCs in undertaking commitments. Moreover, considerable progress has been made in providing improved market access to them to developed country markets. I also recognize that the benefits of market openings do not accrue automatically. That is why, I am stressing for assistance to developing countries in particular to LDCs to strengthen their supply-side capacity, to increase trade efficiency as well as support to solve practical trade problems so that they can take advantage of the improved market access opportunities created by the multilateral trading system.

In this context I very much welcome the endorsement of the Aid for Trade initiative at the recent meeting of the Development Committee of the IMF and the World Bank. This is crucial for developing countries. I hope that by Hong Kong we can also reach consensus on how to enhance the Integrated Framework for LDCs, including expanding its resource base.

Clearly, the gains from world trade will need to be measured in quantifiable terms, whether this is in terms of per capita income, or export revenues and improved terms of trade, or foreign direct investment flows, or employment generation, or transfer of technology. The bottom line will have to be that trade must act, and deliver, as an engine of GDP growth and development, just as it has been emphasised in the Doha Work Programme.

As I said recently in Washington, there is a growing recognition that part of the challenge of fulfilling the development dimension of the DDA, lies outside the WTO. A lot of coordination would be required amongst the international organisations, if we are to translate improvements in market access into realities for developing countries. Building the capacity they need to take advantage of open markets or helping them to adjust is now part of our common global agenda. This is where we need the active support of our partner organizations and where I believe that UNCTAD and other development-oriented agencies will have an important role to play.

Let me at this juncture, also add that market access is not just a North-South issue. It is an equally important South-South issue. Today, developing countries account for a very significant share of world trade, and are participating in multilateral trade negotiations to an extent never seen before. I have therefore been particularly encouraged to see several proposals that reflect the importance of South-South trade. Indeed, while a North-South dialogue on trade issues is of fundamental importance, the importance of strengthened cooperation amongst the developing countries cannot be over emphasised. I believe that through strengthened cooperation, huge possibilities exist to substantially increase trade between developing countries as a whole, both within regions and across regions. The dynamism we have observed in this form of trade is testament to the important role trade can play in advancing the development possibilities of participating countries. I am sure that the ongoing GSTP (Agreement on a Global System of Trade Preferences Among Developing Countries) negotiations in UNCTAD will lend further impetus to South-South trade.

In conclusion, Mr President, I am convinced that the economic interests and development needs of developing countries lie at the heart of the Doha Agenda. We have to continue to seek an active and constructive participation of all Members in the fulfilment of this agenda. It is equally important to ensure a balanced outcome that meets the aspirations of all WTO Members. This opportunity to evolve a development-oriented multilateral trading system must not be missed.

We are precisely 68 days away from the Hong Kong Ministerial Meeting, four years after the Doha Round was launched, and well past the deadline set for its completion. Hong Kong is not just another checkpoint in the negotiations. It is our best chance to move this Round to a successful conclusion by the end of 2006. It is now a question of days, not months or years. If we manage to get two thirds of the way by Hong Kong, we still have a chance of concluding this Round by 2006.If we fail, we would all have lost a unique opportunity to rebalance the world trading system to the interests of developing countries. You can all be sure that over the next days I will be actively working with all WTO members to make this Round come true.

Thank you.