22 October 2005

Annual Conference of the Parliamentary Network of the World Bank

Interactive video conference from Paris.

Ladies and gentlemen,

Let me begin by thanking you for the invitation that you have extended to me today. I would have very much liked to have been with you in Helsinki, but due to the demands of the Doha Development Agenda have been unable to do so. Nevertheless I was committed to at least sharing a few moments with you through this video conference.

I have had an opportunity to speak to Parliamentarians in my first few weeks in the WTO at a meeting of the Inter-Parliamentary Union in Geneva. I am grateful that today presents yet another opportunity to interact with parliamentarians on the state-of-play of the Doha Round. I am convinced that regular dialogue with parliamentarians strengthens the democratic foundation of the WTO.

As you know, the Hong Kong Ministerial Conference of the WTO is just around the corner. For the Doha Round to be successful in my view, that Conference must take us 2/3ds of the way. If it does not accomplish that target, we may very well miss the end 2006 deadline that we had set for these negotiations. That deadline corresponds to the end of the negotiating mandate of one of our Members — the United States, when the authority of the Administration will be expiring. If I have repeated the 2/3ds message on a number of occasions, it is to stress that WTO Members have to be mindful of the fact that a tremendous amount of “technical work” will need to start after Hong Kong. Hong Kong is not the end of the way. We will need to make use of each and every day of the negotiations, from the 1 st of January to the 31 st of December 2006.

The Doha Round of trade negotiations, which was launched in 2001, represents — of course — an important opportunity for economic growth. The Round is above all an agenda for “development” — an issue that I will be addressing in this talk.

Development is in fact a component of each and every subject under negotiation. In fact, 80% of the developmental gains of the Round will come from these different subjects, be they agricultural, services, industrial tariffs or trade facilitation-related. Furthermore, through the Special and Differential Treatment provisions of every pillar of the Doha negotiations, developing and least-developed countries can be allowed to make lower reduction commitments and to benefit from longer implementation timeframes. While every country benefits by opening its own market and not just that of others, Special and Differential Treatment is designed to “ease-in” that opening and to adjust it to the capacity and the needs of the developing world.

On top of these results I am convinced that a solid Aid for Trade package will be essential to ensuring that the new market opening opportunities offered by the Doha Round, and the new rules that its creates, are translated into real possibilities for developing countries. I am working hard with other international institutions like the World Bank and donors to develop this idea, and am consulting the beneficiary countries.

The July 2004 Framework that was adopted by WTO Members was an important step forward in the Doha negotiations. In agriculture, the Framework was key to defining the contours of the negotiations — or the architecture of the final deal. It was agreed that all forms of agricultural export subsidies would be eliminated — these have long been considered the most unacceptable kinds of subsidies from a trade point of view.

It was also agreed that ceilings for authorised trade-distorting domestic support would be reduced over time, with a 20% reduction in the first year of implementation. This immediate “down payment” was a clear sign of members' serious WTO engagement. Moreover, members with higher levels of domestic support committed themselves to bigger cuts.

With respect to agricultural tariffs, members decided to cut higher tariffs the most, but developed Members maintained the right to nominate certain “sensitive products” that can continue to enjoy special protection. And developing countries have maintained the right to protect “special products” which are essential to their livelihood.

The objective for Hong Kong is to insert “figures” or “numbers” into the Framework. The goal would be to agree on an “end date” for export subsidies; to now reduce ceilings for trade distorting domestic support and on the rates at which tariffs and domestic support will be reduced.

Due to the importance of cotton as a commodity for developing countries, cotton was treated as a specific and urgent issue within the agricultural chapter of the 2004 Framework. There, members agreed to deal with trade distorting policies both “ambitiously and expeditiously.” This particular aspect of the negotiations will need to deliver in Hong Kong. I also hope that building on recent decisions by the Administration and Congress progress will be made by the United States in the implementation of the results of a recent WTO panel decision on cotton. In the meantime, we need to make sure that bilateral and multilateral donors urgently focus their efforts on helping the African countries that are now suffering from the declining world price of this commodity. here again, the World Bank has to step in, in my view.

Agriculture is undoubtedly an extremely important component of the Doha Round. This can be of no surprise to anyone, since some of the world's poorest countries are amongst the most economically dependent on agriculture. After all, over 70% of the poor in developing countries live in rural areas.

With respect to industrial goods, the 2004 Framework was key to identifying the elements that would require additional work by members. Most important amongst them are the rates at which tariffs would be cut; the flexibilities that would be required for developing countries; and the possibility of sectoral accords.

While average customs duties are now at their lowest levels ever after eight GATT Rounds of trade negotiations, certain tariffs continue to restrict trade, especially vis-à-vis developing country exports. Also significant is the problem of tariff escalation, that discourages industrialization in many developing countries where raw materials originate. All of these issues are being discussed at present, and the goal for Hong Kong — as for agriculture — is to agree on numbers.

Services negotiations are an equally vital component of the Doha Round. Compared to the Uruguay Round, we have moved from a situation where most developing countries were reticent, if not outright opposed, to negotiating services trade, to a situation where a number of developing countries have become strong proponents of the negotiations. The availability of world-class services has enabled exporters in developing countries to capitalize on their competitive strength, whatever the goods and services they have to offer.

To date, over 90 members have tabled offers for opening trade in services. However, the quality of these offers remains poor. Given how vital the services sector is to the international economy, I intend to urge members to aim higher. Trade in services is not only important because of the value of the actual services being exchanged, but because the existence of efficient and competitive services (like telecommunications and banking services) is an indispensable foundation for any form of development.

The 2004 Framework also launched negotiations on “trade facilitation,” an issue that is high on the agenda of developing countries. In these negotiations members are looking at expediting the movement, release, and clearance of goods that cross borders.

So where, then, do we stand today? To sum up the situation, we are faced with mountains of work and very little time. While we have seen some progress in the agriculture dossier last week, positions are still too far apart on agricultural market access to allow the negotiations to progress. We need to see movement on this particular issue for the entire round to gain steam. This is the message that I have sent to the group of ministers which I met in Geneva before coming here. Developing countries are waiting for the US and the EU to demonstrate flexibility on agriculture. There are very few days left.

Let me end here, and take your questions. Thank you for your attention.