WTO NEWS: SPEECHES — DG PASCAL LAMY
Haiti and International Trade: A Necessary Relationship, Haiti Diplomatic Academy, Port au Prince, Haiti
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Ladies and gentlemen,
It is a great pleasure for me to be here, at Haiti’s State University. During the time we are spending together, I should like to raise with you the question of Haiti’s development. This is a subject that has been discussed and re-discussed and which you must already have addressed on numerous occasions. This is why I should like to throw a different light on the issue, mentioning the openings and opportunities which the global trading system affords to Haiti.
At first sight, this is a vast and ambitious approach. Haiti is one of the Caribbean countries least open to trade — 60% of its GDP, whereas for its neighbours the figure often exceeds 100%. Its exports are not very diversified and mostly consist of textile products. Up till now, the global trading system has not often been favourable for Haiti’s development. There are a large number of reasons for this, geographical and historical, political and economic. I do not wish to dwell on these. The past is the past and, even though it should never be forgotten, one has to look to the future. Particularly as the changes currently taking place in the global trading system create new opportunities for Haiti.
Firstly, because the way in which global trade and technology are developing is conducive to Haiti’s comparative advantages.
Secondly, because the WTO’s governance of global trade has evolved and continues to evolve in order better to accommodate the special features and needs of Haiti and other least developed countries.
Let us first look at what makes up the global economic scene. Among the current radical changes, Haiti can take advantage of two major trends under way: the shift in global trade towards services, and the dissemination of information and communications technologies in the world as a whole.
When one thinks of international trade, one immediately imagines large ports where thousands of containers are unloaded each day. One thinks of trade in goods and one therefore believes that integration into global chains of value inevitably requires industrialization. Some countries did indeed take this path in order to develop. But it is not the only way, especially in today’s world, which is marked by the expansion of trade in services. This trade is by nature less visible than trade in material goods. Nevertheless, if one measures the value added of end products, and not gross trade flows, today the global trade in services plays a more important role in the global trading system than trade in goods.
Why this trend? Because production chains have become segmented today, split among countries, depending on the comparative advantages they can offer. When a country has an advantage in a production process, companies locate their production there in order to benefit from this advantage and become more efficient. Production chains for many products have therefore become increasingly internationalized, to the extent that we now talk of global chains of value. But these chains are not only made up of intermediate goods which are then assembled to make an end product. They also increasingly include different and varied services, which thus account for a growing share of global trade.
A second key trend — I would even say revolution — is the very substantial reduction in distance-related costs. Nowadays, companies that are thousands of kilometres apart may have service-supply relations, whereas previously the services were to be found nearby. Today, call centres, financial services, data processing services may work in India for an American company, or in Africa for European companies. The technological revolution thus allows new trading relations to be created.
This is especially beneficial for companies in developing countries, which can thus become connected to global production chains and to companies all over the world in order to export services. One of the particular advantages of this new global trade is that it is not especially demanding as far as infrastructure is concerned. Compared to trade in goods, which requires large investment in ports and highways, trade in services does not call for costly expenditure. Looking at Africa, its current strong growth is partly attributable to the low cost of mobile telephone networks and Internet access. These have enabled the continent as a whole, even rural areas, to be connected to the rest of the world and to develop.
What are the implications of these changes for Haiti? They offer a new opportunity to take advantage of the trading system and production chains being built at the global level. Trade in services is growing, so here is a market to be conquered. New technologies make it possible to connect to clients all over the world, so here is an opportunity to export services and create jobs. These new technologies, these exports of services, only require a modest infrastructure, providing a means to rebuild Haiti’s economy more rapidly after the disastrous earthquake in 2010.
The potential of Haiti’s economy is not confined to the introduction of a system offering long‑distance services. Tourism services are also an important market to be developed.
The regional integration process within CARICOM is another vector for the Haitian economy’s growth, giving it access to consumers and to resources in other countries in the region. This integration should therefore be developed in order to increase the economic benefits yielded by dynamic regional trade among member countries.
As you can see, Haiti’s economy offers a wide range of possibilities. These have become more accessible as a result of the changes in the global economy. Nevertheless, the global trading system is not only a question of the economy, it also has legal aspects. To ensure that the system provides the utmost potential for development, the underlying rules must be adapted to the special features of developing countries, especially the least developed. This is the WTO’s current role. Since the late 1970s, the principle of special and differential treatment has been incorporated into the WTO’s rules. This principle recognizes that developing countries cannot have the same obligations as developed countries, and gives them more flexibility for their trade policy so that it can be adapted to their economic situations.
Some of these special rules should become stronger if the Doha Round negotiations currently under way at the WTO reach a successful conclusion. The Doha negotiating mandate in fact provides that the Members of the WTO commit themselves to the objective of duty-free and quota-free access to markets for products originating in the least developed countries, including Haiti.
The rules of origin could also be simplified for products originating in least developed countries. Special preferences are also envisaged for exporters of services from these countries. If an agreement is concluded in December, it is likely that it will include several provisions in favour of least developed countries, meaning also Haiti.
One last action which the WTO is implementing in order to reinforce Haiti’s integration into a development-oriented global trading system is Aid for Trade. Many developing countries in fact face barriers that restrict their capacity to develop their international trade. These barriers may be physical, such as the lack of transport and telecommunications networks. They may also be non-physical, for example, problems in complying with the regulations in export markets. If an exporter of cut flowers in a developing country is unable to obtain a label proving that the flowers do not contain any pesticide that is banned in the EU, he cannot export his flowers to the EU, even if the customs duty applicable is 0%. Through Aid for Trade, the WTO coordinates contributions of the funds needed by developing countries, especially least developed countries, in order to build their export capacity. However, the countries concerned must be able to state their needs and manage this support. This is the purpose of the Integrated Framework, an organization whose action in this respect is reserved for LDCs.
I have just mentioned a number of current trends which allow us to have confidence in Haiti’s closer integration into the global trading system. The new economic environment offers new possibilities. The WTO’s trade rules are being adapted to the needs of the least advanced economies. The Aid for Trade programme builds export capacity.
For all these reasons, I believe in Haiti’s capacity to derive benefits from the global trading system in order to develop. You, Haiti’s youth, share my faith in Haiti’s future. My last words are addressed to you: Haiti can develop, Haiti can benefit from global trade, and the WTO will be at its side to ensure that these opportunities can be realized.
Thank you for your attention.