22 June 2006

Twelfth Session of the Steering Committee — Parliamentary Conference on the WTO

Opening address by Mr. Pascal Lamy, WTO Director-General

Ladies and gentlemen,

It is my pleasure to meet you all again. We had met last September here, and subsequently in Hong Kong. I believe that my visit to you today is particularly timely; not only becomes it comes before some crucial times for the WTO and for the Doha Development Agenda, but also because it takes place in the wake of two very important reports that you have just issued: one, on the results of a questionnaire on how parliamentarians perceive, and deal with, international trade; and, another, on the role of parliaments in scrutinizing and influencing trade policy. Personally, I have found the two reports enlightening, and must thank you for the time and energy that you are investing in seeing how best to handle international trade.

I have also taken note of the resolution you adopted in Nairobi in May on the need to obtain an appropriate status at WTO Ministerial Conferences — an issue that I have discussed at length with Mr. Anders Johnsson earlier this year.

The objective of my opening remarks today is twofold: first, is to share my thoughts with you on these reports, and on your relationship with the WTO; and second, is to set out the issues at stake for the Doha Development Agenda in the coming few days.

I understand from your reports that you see your role on international trade as having three different dimensions: first, is a “surveillance” role, in which you monitor the actions of your governments and ensure their accountability. Second, is a role in ratifying international treaties with which your parliaments are presented. And, third, is a role in developing implementing legislation for international treaties, and seeing them through. This three dimensional role makes you crucial partners of the WTO. Your role is essential to ensuring both the understanding and acceptance of the WTO at the national level; and equally essential to tailoring new international obligations to domestic interests and needs.

However, I have sensed from your reports that there are areas where you feel that improvements can be made. Your studies note that there is a wide divergence in how different parliaments deal with international trade. While some have established specific committees to look at the subject, and seem to have an in-depth knowledge of the WTO, others feel less equipped to influence trade policy. Furthermore, the powers that are vested in parliaments across different countries seem to vary tremendously. While some parliaments play a determinative role in the positions that their governments take in international fora, and can call for changes to these positions, others do not enjoy as a broad a role. Some only step in at the end of international negotiations, delivering either a “yes” or a “no” to international accords. While this, of course, is a very powerful role, it nevertheless limits the scope of parliamentary involvement.

You have also noted the way in which Trade Promotion Authority in the United States defines the role of the US Congress on trade agreements. That Authority — as you know — has had an important impact on trade policy, not just within the United States, but worldwide. In fact, the calendar of the Doha Development Agenda is determined by that Authority, which will expire early next year, and before which we are therefore obliged to complete the Doha negotiations.

I welcome the reflection that you have launched into how best parliaments may structure themselves to play a meaningful role on trade. I believe that three of the issues that you raise are of particular importance: first, that it can be useful to create specialized fora within parliaments to deal with international trade; second, that regional and international collaboration amongst parliamentarians can facilitate information exchange, and the understanding of international negotiations; and third, that to play an effective role you are in need of timely and accurate information. Governments, but also international institutions such as the WTO, have a responsibility in facilitating information flow.

Today, virtually all WTO documents are posted on the WTO's website. Furthermore, the WTO gives specialized training courses to parliamentarians. We have organized:

  • 7 regional seminars for parliamentarians in collaboration with the Commonwealth Parliamentary Association;
  • 1 regional seminar with the Francophonie; and
  • 1 regional seminar with Parlatino.

Of course, more needs to be done. But it will perhaps come as a surprise to you that the entire WTO is size of only one department in the World Bank, and that the WTO's budget is about 1/10th of the budget of FIFA! So no wonder then that the Doha Round is more difficult to organize than the World Cup! More seriously, though, I say this to draw your attention to the tremendous resource constraints that we operate under.

On your relationship with the WTO, I understand your need for more direct involvement. Some of you have already attended WTO Ministerial Conferences as part of governmental delegations. I know that you have already started a dialogue with your governments on your more systematic involvement, and that this is reflected in your May resolution. I am also glad that you are in touch with the Chairman of the WTO General Council on how to enhance your collaboration with the WTO. Any greater involvement though, will require consensus amongst WTO Members, since as you know, the WTO is a member-driven organization. As you continue to work towards greater representation, I would simply ask of you to not put your trade-related work on hold. I am convinced that you can already exercise tremendous influence over the WTO by the very nature of your role. Your position papers and public statements cannot be ignored. Remember, it is through you that any negotiating deal must eventually pass. Many of you have “veto power” over what we do.

Let me now turn to the Doha Development Agenda. Next week is a crucial moment for the negotiations. A number of ministers will be travelling to Geneva with the aim of narrowing differences in two key areas: trade opening in industrial and in agricultural goods. There are many other subjects in the Doha Round, such as the opening of services trade, the refinement of our rules on anti-dumping, the creation of new rules on fisheries subsidies, and on a whole host of other environmental issues. But we can only turn to this long list, with agricultural and industrial goods out of the way. Only this morning, the Chairs of the negotiating groups on agriculture and industrial goods have issued what are called “draft modalities” for their negotiations. These are documents that sum up the current state-of-play, and which will form the basis for next week's negotiations. They announce the beginning of a marathon, since much work remains.

In agriculture — a sector that was a late comer to rules of multilateral trade — and which lags some 50 odd years behind the industrial, much of the developing world has placed its aspirations. The various forms of subsidies that the rich world had given to its producers, have crowded out African and other farmers from international markets, putting the breaks on their agricultural trade. Furthermore, the very high tariffs on agricultural products have seriously hampered trade flow. Some developing countries argue that they need these tariffs to counter the effects of rich world subsidies, which lead to the dumping of their produce in developing country markets. So one distortion has basically led to another. While the average tariff worldwide on industrial goods is only 5%, it is 60% on the agricultural. In launching the Doha Round, the developing world insisted that these imbalances be corrected, and has since been very active in the negotiations.

The “Cotton 4” — Burkina Faso, Chad, Benin, and Mali — placed cotton at the heart of the negotiations, insisting that because of its tremendous importance to over 30 African economies, it had to benefit from special treatment. It was agreed that cotton would undergo faster and more ambitious tariff and subsidy reductions than other agricultural goods. And, in fact, in Hong Kong, the Cotton 4 scored a major victory when duty-free-quota-free treatment for the cotton exports of all LDCs was agreed. The very forceful coalition of developing countries, known as the G20, also insisted that agriculture be placed as the forefront of the Doha Round. Issues, such as tariff escalation, that hampers the export of processed agricultural goods from the developing world — and that is a major obstacle to development — is now squarely on the table.

While substantial progress in the agricultural negotiations has been made, wide divergences between our members remain. On export subsidies, countries have already agreed to their elimination by 2013. Consensus is also emerging on the new rules that are being crafted to control export credits, to prevent the commercial displacement that is sometimes caused by food aid, and to discipline the role of state-trading enterprises that are major exporters. However, there continue to be divergences between our Members on the extent reductions that must be undertaken of tariffs, and of domestic subsidies that distort farming decisions. The two sides of what has been called “the magic triangle”, the EU on agricultural tariffs and the US on agricultural subsidies, will need to move over the coming few days if a deal is to be reached.

In industrial goods, the situation is a little less complicated, since we are dealing with a smaller range of issues. We need to agree on the size of the tariff cuts for developed and developing countries. While the average industrial tariff worldwide is low as I previously mentioned, developing country tariffs remain quite high, and developed countries continue to maintain certain tariff peaks. Furthermore, developed country tariffs tend to escalate on some of the products that are of key of commercial interest to developing countries, such as textiles. The lowering of developing country tariffs will also be crucial to a successful outcome on this part of the negotiations. High developing country tariffs have stifled competitiveness in their markets, raised the cost of essential goods to consumers, and hampered not only North-South, but also South-South trade. I urge Brazil, India, Egypt and other developing countries — that constitute the third side of “the magic triangle” — to join in making the necessary comprises next week.

A failure of the Doha Round would be first and foremost a loss for the developing world, who fought hard to launch a trade negotiation that would set the trade record straight. We now have a once in a generation opportunity to correct the imbalances in multilateral trade. I ask that we not waste it.

Thank you for your attention.