18 September 2006

Lamy: ‘political heavy lifting' at home needed to revive talks

Concern about the multilateral system and a willingness to continue talking are not enough for a breakthrough in the Doha negotiations; governments have to work hard in their own constituencies, despite the “political costs of re-calibrating national positions”, WTO Director-General Pascal Lamy told the World Bank-IMF International Monetary and Finance Committee in Singapore on 18 September 2006. This is what he said:

Statement by Pascal Lamy, WTO Director-General

International Monetary and Finance Committee

Mr. Chairman,

Last year — at this same meeting — I warned that we had a shrinking window of opportunity to conclude the Doha Round by this year. We have collectively allowed this opportunity to pass us by. World trade has not come to an end because the talks are suspended and the Round is adrift. But we should be under no illusions about the costs if we fail — to the global economy and the multilateral system which underpins it. We are working on borrowed time.

The current impasse is costly precisely because we have achieved such impressive results in the negotiations so far — results that would make this the most ambitious round ever concluded in terms of trade opening and strengthened rules.

The impasse is also costly because concluding this Round is clearly within reach. The biggest blockage lies in agricultural subsides and market access where remaining differences are holding up progress in all other part of the Round. We then need to agree on the numbers to cut substantially, but fairly, tariffs on industrial products. In services, which represent an ever-increasing part of economies, we also need a greater push. On measures to cut down red tape at the border, trade facilitation in our jargon, or tightening rules about anti dumping, this good progress achieved needs consolidation.

In each of these areas, we need to deliver on the development benefits of this Round, which was — and remains — an overriding objective. A key part of this equation is Aid for Trade. The fact is that many developing countries have been unable to benefit from the market opening that WTO has achieved, because they lack the necessary trade-related capacity and infrastructure – and this had made some reluctant to consider further liberalization. Good work was done in the WTO Aid-for-Trade Task Force and the Integrated Framework for LDcs task force , and I pledge to continuing working closely with the Fund and the Bank, with regional development finance institutions, and with national governments to deliver concrete results. Aid for Trade is not a substitute for a successful Doha Round — I want to be clear about that - but it is a necessary and valuable piece of our broader trade and growth agenda.

There are reasons for optimism. One month after the suspension of talks, voices have been heard amongst practically all our members stressing the serious danger of a collapse of the Doha Round and calling for a swift resumption of the talks. I share these concerns, even more so given current geopolitical instability and the challenges facing the global economy which you are discussing here.

But let us be clear. The challenge is not technical, but political. It is not enough to express concern about the multilateral system and a willingness to continue talking. We need to translate our collective concerns into concrete action and this means engaging in some “political heavy lifting” in constituencies at home. WTO members need to rethink their positions — especially in the two key agricultural areas I have mentioned above — so that the existing differences in positions can be bridged. We need to overcome a crisis of complacency.

It is now time to reflect, to consult with stakeholders, to crunch numbers, to work together so that a resumption can take place soon with renewed positions brought to the table. I do not want to minimize the political costs of re-calibrating national positions, finding compromises and embracing freer global trade. But I would argue that the cost of not acting now, of squandering the gains we have made, and of ultimately weakening the multilateral system is much, much greater. And that these costs rise inexorably the longer we drift.

All of us around this table have a major stake in a successful Round and an effective WTO, after all, it remains the best insurance policy against protectionism and the most extensive and the least expensive.

I would be grateful to you all for making this case in your governments as forcefully as possible. Time is not on our side.