“The Value of the Multilateral Trading System”

> Pascal Lamy’s speeches


Ladies and gentlemen,

It is my pleasure to inaugurate the WTO Public Forum 2010 — our annual rendez-vous with civil society and the public. The goal of the Forum is to enable the Multilateral Trading System to respond to the hopes and aspirations of all segments of society. Its goal is to promote a frank and open exchange between all actors in the trade sphere on what is working, and what is not, in the global trading system at large.

This year's forum is devoted to debating the Forces Shaping World Trade. What are these forces? Are there new forces? Are there old forces? What form do these forces take, and are they of equal weight?

It will explore the role of the emerging developing world in impacting the Multilateral Trading System, of new technologies and innovation, and of growing concerns to do with issues such as climate change, energy, food security, and human rights — to mention but a few. What we have before us is a rich menu of sessions that will take us all the way up to Friday. A menu that has been set by civil society itself, making this truly a Forum that belongs first and foremost to you.

Ladies and gentlemen, this is your Forum. And on behalf of all WTO members and myself, let me say that we look forward to learning from you, and interacting with you. We hope that the Forum will enable our members to take the Multilateral Trading System forward based on the ideas that it generates.

Allow me first to comment on the context in which this year's Forum convenes. A context that hardly needs elaboration, since many of you may be experiencing it first-hand. One of a global economic downturn, albeit a crisis that is beginning to ease. The downturn has brought to light the real value of the Multilateral Trading System, if I may say so.

The Trading System has acted as an insurance policy against protectionism. In fact, a WTO “Radar Screen” was created shortly after the crisis to flash all the new trade restrictions that government would impose, with the aim of preventing them from spiralling — helping prevent the beggar-thy-neighbour policies of the 1930s. And I am pleased to say that we have, by and large, avoided a repeat of past mistakes. WTO disciplines have acted as a “containing force” of governments' worst instincts; which is to shut the foreigner out, or to blame the crisis on the foreigner — often, an all too easy path to take. And the good news is that trade volumes are picking up again nicely, after having fallen dramatically during the crisis.

Let me now comment on the topic of this Forum — The “Shaping Forces.” The Multilateral Trading System is clearly one of the most advanced engines of global governance, serving as a precursor for international legal regimes in many other domains. The richness of the programme that you have created demonstrates the wealth of expectations that we have of the WTO. Expectations that we can only afford because of the level of sophistication that the system has reached.

In a number of other international institutions, we see battle-lines still being drawn between the North and the South over their governance structure. In other words, over their “democratization.” The G20 has signalled that the institutional reform of some international organizations, which it has listed by name, is required. The WTO was not amongst them.

That governance battle has already been fought in the trade sphere, and the outcome is a fairly democratic institution where the voice of the small cannot be ignored. No board, no quotas. One member, one vote, is the background rule against which the WTO forges its consensus.

The very fact that “agriculture” is now at the centre of the WTO's Doha Round of trade negotiations also speaks to the enormous power that the South has gained. In addition, the WTO has a dispute settlement mechanism that has, and can, allow members to peacefully settle their trade differences. In that mechanism what matters is not the size of a country or of its GDP, but the strength of the legal and economic arguments that it succeeds in putting forward.

But, if I have a message for you today, it is this. There are other battles to fight in the WTO. They may not be of an institutional nature, but they must nevertheless be fought. I refer here to the need to rebalance the rules of the Multilateral Trading System in favour of the poor, through the completion of the Doha Development Agenda; and of the need to climb ever higher mountains, by tackling emerging issues such as energy, climate change, and electronic commerce. We cannot afford to rest on our laurels in the WTO until our rule-book becomes outdated. Nor can we afford to misdiagnose the impasse in current negotiations as being “institutional.”

As we collectively reflect on what will (quote unquote) “shape” the WTO system in future, I also ask that we recognize the new context in which countries trade. Most products today are not “made in country X, Y or Z,” most products are (quote unquote) “made in the world”.

This means that the boundaries of the nation-state are no longer the only relevant boundaries to take. Countries that impose tariffs on imported products may be imposing tariffs on none other than themselves. Countries that hand out subsidies domestically to certain sectors may be subsidizing none other than their competitor if that competitor is based on their home turf. The globalization of the manufacturing process is such that it makes even less sense now, than it did before, to obstruct trade.

This new reality requires that we go back and think about what it means to actually “trade” in today's world. It also speaks to new methods of “measuring” trade. We can no longer measure trade by counting goods services crossing our borders. We need to look at where has the value been added to these goods. And the same goes for job creation. Jobs lost at home may simply mean jobs created for our very own citizens abroad. In fact, the very calculation of job (quote unquote) “losses” would itself need to take account of this new reality.

Updating the WTO rule-book, in my view, must bring with it new concepts and new understandings of international trade. As country X sits opposite country Y at the WTO negotiating table, it must realize that it is no longer totally independent of it. Its products may be produced and re-exported from abroad, and its citizens may be residing elsewhere. Facilitating trade in this new world is what we must turn our minds to. We must also turn our minds to the accompanying policies of world trade; environmental and social policies alike, since we can ill-afford having trade run in a vacuum.

Greater clarity on these issues, as well as on the rich menu of topics that you have put on the table, will help take us forward. I look forward to meeting as many of you in person as I can over the course of the next few days.

Thank you for your attention. I now turn the Forum over to you.

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