Honourable Ministers of Trade of the ACP,
Ladies and Gentlemen,
I welcome this opportunity to address you this afternoon on the occasion of the opening session of the ACP Ministers of Trade Meeting. The group of African, Caribbean and Pacific (ACP) members is one of the more powerful and influential advocacy and negotiating arms in the WTO. With your geographical reach and contributions of your membership, the ACP continues to play an instrumental role in moving forward the debate in Geneva. You have always been characterized by your ability to bridge your differences and coalesce around shared priorities and strategic positions.
I would like to briefly outline some elements of the current trade context and discuss with you how I see the ACP role in advancing a pro-ACP trade agenda.
First, the forecast for the global economy remains sobering. The WTO recently revised downward the projections for trade volume growth in 2012 to 2.5 per cent, down from 3.7 per cent in spring. The IMF revised its forecast for global growth to 3.3 per cent this year and the ILO has forecast that in 2013 an additional 7 million people will join the 200-million-strong ranks of the unemployed.
Second, we have the crisis in the euro zone, the risks from the US ’fiscal cliff’ and the slowdown in the emerging economies. The bright spark in all of this is that developing countries, such as the ACP, are refining their priorities and seeing non-traditional markets and trade within their own regions as important complements to their traditional export markets.
Third, we have a volatility in the food markets with prices spiking again, even if not at the level seen in 2008.
Let me now turn to the negotiations under the Doha Development Agenda. At the WTO Ministerial last December there was consensus that there is no prospect for concluding the entire agenda in the short term. But there was also consensus to try and reach deliverables in the shorter term.
We witnessed a first deliverable with the adoption of the guidelines to simplify the accessions of least-developed countries (LDCs) to the WTO earlier this year.
The question before you today is what are the issues that can be delivered in the shorter term of practical importance to the ACP? And as your economies become more multi-faceted and multi-tiered, you are also casting your net wider. A larger spectrum of issues requires your attention.
A second question before you today is therefore also what are longer-term trade issues which the ACP should care about?
I will focus my short intervention on five key areas. None of them are ’new’. All of them are already on the ACP radar. But maybe what necessitates a new approach to them is their inter-relatedness. If there is one lesson that we have learned from the economic crisis of 2008 and the slow recovery which continues to today, it is our inter-connectedness and the impact that policies in one corner of the globe can have on another part.
I will start with the most immediate issue requiring your attention. I say immediate because there is potential for short-term deliverable which fits with the ACP’s own regional agenda. This is the area of trade facilitation. As you well know, trade facilitation is essentially about making trade, both imports and exports, easier and less costly. It is about increasing customs productivity, improving tax collection at the border, limiting the scope for corruption and becoming more attractive to foreign direct investment. One only has to look at the annual World Bank “Doing Business Report” to see that those countries which have advanced up the list are those which have invested in effective trade facilitation and border procedures. A WTO agreement on trade facilitation would improve the transparency and predictability of trade and of doing business and is an excellent insurance policy for locking in domestic reforms which most of you are already undertaking for your own country or for regional purposes.
The figures speak for themselves: the cost of moving trade today worldwide is roughly 10 per cent of the value of trade. A WTO trade facilitation agreement could bring this down to 5 per cent, hence the economic impact of streamlining red tape and standardization. The negotiations are an important opportunity for developing countries, especially LDCs and landlocked developing countries (LLDCs), to upgrade their architecture for doing trade.
The novelty of the WTO deal on trade facilitation is that for the first time a WTO agreement recognizes the explicit link between adopting WTO commitments and technical assistance needed to implement them. This is a huge step forward in the traditional construct of WTO agreements. And one that can have an important role to play in the future. So my advice as a friend to you is to be active participants in this negotiation and to frame the technical assistance versus commitment link in clear and tangible terms. In December 2013, we will hold the 9th WTO Ministerial Conference in Indonesia. The Indonesian authorities are obviously looking forward to ensuring deliverables to be presented at their ministerial. But we all know that given the technical complexity of a trade facilitation agreement, this will not happen at the last minute. Getting there by the summer break next year should, in my view, be a reasonable target.
Trade facilitation, which is an essential element for cross-border integration, brings me to my second point, which is regional integration. The ACP has been built on the recognition that economies of scale and greater integration of small economies is a necessary policy for growth and development. There are degrees of integration within the ACP regions but I believe we can all agree that more effort needs to be exerted to make your regions truly integrated.
The recent African Union decision on boosting intra-African trade and the attention given to this theme at the African Union meetings of Heads of State and Ministers of Trade is therefore a welcome move in that direction, as is the focus given to the link between regional integration, agriculture productivity and food security at the upcoming AU Trade and Agriculture Ministers meeting in Addis next week. The efforts in the Caribbean and in the Pacific to develop regional Aid for Trade strategies which seek to focus on regional integration is also a testament to the centrality given to regional integration. We are ready to support you in these endeavours.
My third point is Aid for Trade. In 2010, resources for Aid for Trade reached their highest level at US$ 45 billion — the majority of this flowing to LDCs and low-income countries (LICs). There has been a renewed emphasis on showing impacts and results — especially important in a budget-strained environment. We expect commitments in the future to remain flat. This means using the assistance to leverage other forms of finance — and the Enhanced Integrated Framework continues to successfully play this role for LDCs. Aid for Trade is an essential component to your trade policies in that it allows you to build capacity and develop your trade-related infrastructures. Next July we will hold the fourth Aid for Trade Global Review and I hope I can count on the presence of as many of you as possible. Ahead of that, I also hope I can count on your co-operation by providing the information we will be shortly asking for from all stakeholders. The theme will be on connecting to value chains and highlighting the important complementary role of the private sector.
And this brings me to my fourth point, global value chains. These are not new phenomena. But what is new is their reach, their depth and their potential made possible by advances in communications and transportation technology. Value chains bind countries together and given that much of the focus of the ACP has been on strengthening regional integration, these should be seen as an opportunity — an opportunity to insert parts of your economy into a regional and global network of production and distribution where potential for technological transfer and moving up the value chain exists. Today almost 60 per cent of trade in goods is in intermediates or trade in tasks. Around 40 per cent of world exports are in fact imported inputs and this shows the futility of pursuing trade protectionism. Products and services are often bound together. There is in production chains a potential for ACP countries to move up the value ladder.
A final point I would like to make is on non-tariff measures (NTMs). Tariffs are decreasing in importance and non-tariff measures such as technical standards, health and safety requirements, and services regulation now have a greater potential to be obstacles to trade. They may be seeking to address legitimate concerns and the collective aim should be to create a level playing field to ensure consistency and transparency in their application. This is where capacity building to help countries to recognize, identify and address these NTMs is critical. The Standards and Trade Development Facility (STDF) plays this role in the area of sanitary and phytosanitary (SPS) measures, and Aid for Trade programmes can be important vectors to increase developing country compliance with these measures. In this area, many of you have already flagged the issue of private standards. I agree that they deserve specific attention and discussion in the relevant WTO body, the SPS committee.
What is clear from these five elements that I have briefly discussed today is how inter-related they all are and how important your work in the WTO is to addressing these which are all relevant to your trade. The Doha Development Round may not be as active as we would all want, but as you can see, the need to work continues on many important fronts, especially in areas of direct importance to the ACP.
Finally, a word about the Stakeholder Panel on the Future of Trade that I launched earlier this year. The views of the ACP on what you consider to be the present and future priorities for the multilateral trading system are essential to making that process relevant and useful. Former Botswana President Mogae, who has kindly accepted to put his experience at the service of the panel, and I will host a meeting on this matter in the margins of the upcoming African Union Trade Ministerial and I look forward to your contributions on this matter.