TPRB Symposium on “The Financial and Economic Crises and the Role of the WTO”

> Pascal Lamy’s speeches


Thank you very much Ambassador Matus.  Let me add my voice of thanks to the IMF and the OECD for their contributions to this meeting. 

This Special Session of the TPRB builds on the trade policy monitoring exercises that we have developed over the past three years.  As I said at last week's TPRB meeting, I believe that we should reflect on how our monitoring exercise might be presented to Ministers in December.  Today's discussion should provide us with a few more elements to include in that reflection.

Our focus at this Special Session is on trade aspects of the exceptional fiscal support measures that many Members introduced in response to the global financial and economic crises of 2008-2009. We have tabled a report which you all have in front of you to feed into this exercise. This leads us into the interface between macroeconomic policies and trade policies. 

That interface is extensive, and much of it has traditionally been treated as lying outside the purview of the WTO. As we all know and as recalled in the foot note 1 on page 1 of the document WT/TPR/OV/W/4 you have before you, our monitoring has no legal effect on the rights and obligations of Members.

We should all have this important caveat in mind for today's symposium. Many of the measures we have tracked are not subject to existing WTO disciplines or to notification obligations. Some of them may be subject to WTO rules, but, as you all know, questioning their compliance is not within the Secretariat's authority. Only members can do that in relevant committees or in dispute settlement. This has also a bearing on notification obligations.

We are, in a way, exploring unchartered territories, with the hope that, at the end of the day, we all have a better view of the impact of national measures on trade partners and this in turn is a condition to any further clarification of the responsibilities of WTO in these matters.  In this organization, it is members who decide on the rules and on the process to ensure their implementation. Short of such an agreement, we are exploring, brainstorming.

Let us not also forget that there are two other related exercises under way in the WTO.  One is in the Committee on Trade in Financial Services that held a session last year dedicated to the financial and monetary support measures Members introduced in response to the financial crisis.  The other is in the Working Group on Trade, Debt and Finance which has agreed to undertake work on the relationship between trade and exchange rates.  We must ensure that our work across the WTO on the macro/trade interface is coherent.

Previous WTO monitoring reports recorded measures taken by Members through their fiscal stimulus programmes, although admittedly not in anything like as much detail as our coverage of border measures such as tariffs, trade remedy measures, and so on.  Excluding financial bail-out packages, budgetary assistance programmes were implemented or announced by many Members, both developed and developing.

It is clear that these reflationary, fiscal programmes succeeded in reversing the severe contraction of global trade and output that occurred in 2008-2009.  In doing so, they probably also helped to take pressure off governments to react to the effects of the crisis through traditional trade restrictions to protect domestic output and jobs.  I do not believe that there is any serious doubt amongst us that viewed from this perspective, the fiscal programmes were supportive of trade and of the multilateral trading system.

It is when we dig deeper into the component parts of the fiscal programmes that concerns can arise about whether some measures — taxes, subsidies, and government procurement programmes — discriminated against imported goods and services or foreign service suppliers, or otherwise altered the conditions of competition in a Member's market so as to favour domestic producers at the expense of overseas competitors.  

We know of course that they can do in theory.  But in operational terms the concerns that I have just described need to be addressed through empirical analysis. 

The starting point is therefore a matter of transparency — what do we know about specific fiscal measures that Members employed in response to the crisis? 

The answer, judging from the Secretariat's background Note for this Symposium, is that we do not know very much.  We have a general idea about the overall size of the fiscal support programmes of many Members, but little information about the specific measures that were used.  A few Members do publish details of their fiscal support measures for domestic producers, but most do not.  Parties to the Government Procurement Agreement share information amongst themselves about their procurement activities, but most Members are not Parties to the GPA, and even in the case of those that are, not a great deal is known about the government procurement activities of their sub-federal entities.

Without this empirical information, it is hard to begin the next step of trying to calculate trade impacts of the measures.  I note that the IMF has made an attempt to do so in the paper they will present to the Symposium today, and I congratulate them for that, but I note also that they too found it necessary to introduce caveats into their paper about the data constraints they have faced.

The need for greater transparency would be the first suggestion that I would inject into our exercise today, therefore, if we are to take up this exercise in earnest. This is as valid to this exercise as it is overall to the monitoring and surveillance functions of the WTO. And this is an area where I believe there is room for improvement. We can and must do better in notifications and information sharing.

My second suggestion is not to try to cast our net too wide for the time being.  Instead, we should focus on what we have already in the WTO and try to build on that. 

In that regard, a prime candidate for our attention in my view should be Government Procurement.  Government procurement is estimated to account for 15-20% of the GDP of Parties to the GPA, which is probably about the range for the membership overall.  This represents an enormous market.  Opening up procurement markets to foreign suppliers has a huge potential for expanding trade.  Very good progress is being made in that direction in the Committee on Government Procurement.  Building on its work, expanding membership of the GPA and expanding the range of procurement activities that are covered, offers great potential for boosting trade growth and for bringing under closer multilateral review this area of fiscal support.

This concludes my introductory remarks for this meeting.  I look forward at hearing delegations' views and experiences regarding the impact of the crisis-related measures and the role that the WTO can play in this area. This could provide useful food for thought for the Ministerial Conference at the end of the year.

Thank you for your attention.

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