WTO NEWS: SPEECHES — DG PASCAL LAMY

“Value chains binding us together”


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Vice-Premier Wang,
Vice-Minister Gao,
Secretary-General Panitchpakdi Supachai,
Secretary-General Angel Gurria,

Distinguished Guests,
Friends,
Ladies and Gentlemen,

It is a great pleasure to be here today, in an inter-agency setting and hosted by MOFCOM, to discuss one of the most important factors shaping contemporary international trade — the rise of global value chains. And it is auspicious to do this in China, given the huge importance that global value chains have for China.

This is a valuable opportunity for us to consider not just how global value chains have transformed international production relationships, but what this means for international trade relations. The high level of import intensity in export production has created an unprecedented level of inter-dependency among countries engaged in supply chains. It is no longer just about exports. Imports are essential to export. It is no longer just about “them”. It is about “us”.

In order to understand the true nature of trade relationships, we need to know what each country along a global value chain contributes to the value of a final product.  We also need to know how that contribution is linked to those of other suppliers in other countries coming before and after along the chain. In order to ensure that trade opening is overall job creating, as we believe it is, we need to know how much employment is generated through this value addition. The only way to do this is to measures trade in terms of value-added. As we shall see in discussions today and tomorrow, this is more easily said than done.  But we must do it.

The international fragmentation of production processes offers tremendous opportunities, in particular for developing and least-developed countries. It has significantly reduced the costs for them to reach out to the global market. But enterprises have to know how to use those opportunities.  For their part, governments have to be willing to create an environment that encourages engagement by enterprises in supply chains. 

Many of us tend to think mostly about the international aspects of supply chains. But this is too narrow a view because many supply chains are quite national in character and can become more so over time. While recognizing that the size of a country matters, localizing an increasing share of value-added along a supply chain is part of a nation’s development and diversification process. This does not mean that trade becomes irrelevant — far from it — but it does mean that we need to take a holistic view of international production processes. In other words, we are not just talking about creating export platforms, even if this may be an important stage in a country’s engagement in supply chain activity.

In making the most of the growth, diversification, employment and developmental opportunities arising from participation in global value chains, it is essential to look beyond traditional trade policies, important as these are. We need to think more broadly about the impact of an array of policies. Investment policy is crucial, for example. The same is true for policies associated with technology, innovation and intellectual property. Beyond that, the longer-term success of countries in fostering economic prosperity in an increasingly internationalized global economy will be influenced by factors more remote from trade, such as education and the existence of social safety nets.

These are clearly vital issues for the future of both national economies and the global economy. But they are also complex issues and raise different challenges for different countries and governments. It is the importance and the complexity of the issues that makes meetings like this valuable. 

Let us make the most of the opportunity. Once again, I should like to thank our hosts for putting this together.

Thank you very much.

 

 

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