WTO NEWS: SPEECHES — DG PASCAL LAMY
“Trade in Services and Economic Recovery: Tuning the instruments of growth”
Let me start by thanking the Coalition of Service Industries and its partners for organising this gathering. At the Services Summit last year I told you a story of a crisis and a casualty. Today, the casualty, which was trade, is back on its feet.
Global trade on the recovery
The WTO estimates the volume of world
merchandise trade to be up by 13.5% in 2010, up strongly from the same
period last year. Services trade, which was resilient throughout the
crisis, is contributing to this positive trend. US exports of commercial
services have been rising since November last year and for June 2010 was
11 per cent higher than at the same time last year.
Foreign direct investment, through which much of services trade is
conducted, has also rebounded. This is good news as foreign direct
investment has the dual role of creating opportunities in new markets,
as well as bringing capital and know-how. Ingredients that are so vital
for growth.
We are seeing light at the end of a long and very dark tunnel. But for
this light to be brighter, we need to sustain the emerging recovery, and
for that the economy needs to grow. It is only through growth that jobs
will be created. Trade expands the size of the economic pie by creating
new opportunities and not by exerting greater strains on national
budgets.
True, trade opening can cause resources and employment to shift to the
most productive industries. No people should be left behind. Adequate
domestic policies should be put in place.
In the US, the service sector accounts for more than 75 per cent of the
economy. According to the US Bureau of Labour Statistics, in 2009 90
million people were employed in a service sector industry, compared to
19 million in the goods sector. It is a dynamic and efficient sector
whose fortunes are closely linked to the international marketplace and
trade. Opening new trade opportunities in services makes sense for
growth and it makes sense for job creation.
Back to basics: Why the GATS matters ?
In terms of the recovery, trade in services
will continue to play a key role.
When you look at the latest personal computer, laptop or mobile phone,
you are looking at a wealth of services. Services underpin every part of
the production process, from research and development, design,
engineering, financing, transportation, distribution and marketing.
Without services, there would be little value-added and innovation. And
I would not be too surprised if pretty soon someone will invent an
iphone for concluding the Doha Round !
“Trade in services” is not “trade” in the conventional sense of a
product being transacted across a border. It represents the whole range
of international economic transactions, including those involving the
movement of companies and people, both as suppliers and consumers of
services.
In this larger picture, the WTO agreement on services — the GATS
[General Agreement on Trade in Services] — plays a catalytic role in
bringing economies closer together and in unleashing their productive
potential. Even though governments can initiate reforms of services
unilaterally, the GATS is the only multilateral instrument that we have
for binding these reforms and for resolving disputes. Utilising this
framework, governments can do three things — reform, regulate and
liberalize. These are not mutually exclusive but complementary actions.
Often in order for reforms in a sector to be effective, new regulatory
frameworks are required and the GATS recognises the important role of
regulation.
Greater openness to trade in services can also contribute to the fight
against climate change and the protection of the environment. It can
also contribute to greater energy efficiency. These are just some of the
“emerging sectors” which deserve the attention of negotiators.
Strengthening the GATS foundation in the Doha Round is therefore
critical to keeping economies on the path towards global recovery. Even
though regional and bilateral trade agreements increasingly include
services, binding commitments under the GATS remain the best way to give
credibility to reform and to support the international opening of
services. There is no substitute for commitments underpinned by
multilateral agreements.
Doha Development Agenda: A symphony for growth
Those of you who are keen followers of the
trading system will have noticed that I sounded a different beat at the
end of July. I sensed that we have a “new dynamic emerging” and that the
various sections of the orchestra in Geneva are not only tuning their
instruments but slowly starting to play from the same music sheet.
It is not often that the Doha negotiations are likened to a symphony,
but there are indeed many similarities. As you know a conventional
symphony has a four movement structure. In the classical style, the
movements are usually in the order of fast, slow, dance-like, fast.
Sometimes, a booming score interrupts the harmony and in more modern
variations discordant notes jar the ear, but all parts when heard as a
whole are linked.
The Doha Development Agenda may well be an unusual symphony and further
fine tuning and harmony is certainly still required. But when all
principal sections of the orchestra, from agriculture, industrial
products, services, trade facilitation, fishery subsidies, come
together, the performance will certainly have been worth the wait.
In the classical configuration, a symphony ends with the same allegro or
sonata which it began with. As you know, the services negotiations
preceded the launch of the Doha Round and if we keep to that score, it
will feature prominently at the end.
At the moment a number of bilateral contacts as well as small groups are
rehearsing to bring concordance to the sounds that we are starting to
hear. We should give space and time for this “new dynamic” to mature.
All of these inputs will have to feed into the multilateral process and
help bring the engagement to an equal music. And somewhere around end
October should be a good time to evaluate our progress.
The services negotiations
Overall the services negotiations have
progressed as well as can be expected given the impasse on a few other
remaining issues. That being said, important milestones were registered
with the 2008 Signalling Conference, which showed that members were
willing and able to move forward in this area when the right conditions
were in place. For further progress to be made in services, we need the
other parts of the negotiations to move too. In fact all these elements
need to be woven together so that the contours of the final market
access package can appear.
More specifically on the services market access negotiations, recently
we have seen some new thinking in finding new and more creative
negotiating configurations. This ideas should now be actively pursued if
we are to make progress.
In fact a lot has happened since the services negotiations were launched
in 2000. Many countries have unilaterally opened services sectors to
competition, and have ensured that proper regulations are in place. With
now quite some years of experience, it may be the right time to bind
this opening in the WTO. This would ensure greater predictability and
security, the value of which has been proven in the recent crisis.
Getting there implies each delegation has full knowledge of existing
market opening in each of your economies.
And as I have said above, there are many emerging sectors which are now
essential to help countries combat climate change, preserve the
environment or ensure greater energy efficiency. Or to adjust to the
changing patterns of world trade with global production chains triggered
by the dissemination of information technologies. Some of these sectors
are now even part of bilateral trade agreements discussions. Should we
not think of opening up these sectors in the on-going Doha negotiations?
Adding these suggestions would result in binding existing market access,
plus new openings, in particular in some emerging sectors. Could this be
considered as a minimum level of ambition for the Doha Round? Up to
members to decide. But in my view, such a broadly defined course of
action would greatly help you all mobilise the forces behind more
stable, predictable and available services.
We should also continue the negotiations on the draft text for a waiver
in favour of least-developed members. One which will give members the
possibility to extend preferences to services and service suppliers from
LDCs [least-developed countries].
We should also move forward on the rule-making front, as well as in the
areas of emergency safeguards, subsidies, and government procurement.
On all of these fronts, aspirations expressed in 2000 may not be
identical to those currently on the table. The world of business and
regulation has changed, and strategic objectives may need to evolve as
well. There is no point in fighting battles that have already been won
or in refusing to concede points that are no longer meaningful. I am
keenly aware that trade negotiations can only progress as quickly or as
far as the political realities will allow. But as in any negotiation,
all actors must come with a mindset to give and take.
Ladies and gentlemen,
We may not be able to make a prediction on when the economy will fully
regain its confident stride, but we can be sure that trade, especially
with the conclusion of the DDA [Doha Development Agenda], can only
hasten the pace of recovery. And when that recovery is fully on its way,
it will be those economies that have competitive and well regulated
services sectors that will stand to gain the most. The time to invest in
the future is now.
Thank you for your attention.
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