WTO NEWS: SPEECHES — DG PASCAL LAMY

Remarks by Mr. Pascal Lamy WTO Director-General
12th Session Of ACP-EU Joint Parliamentary Assembly, Barbados

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Ladies and gentlemen,

It is my pleasure to be here with you today, even if only in a “virtual” way.

Allow me to start by paying tribute to parliamentarians. In representing the voice of the people, parliamentarians are absolutely vital to the work of the WTO. It is only through parliamentarians that the WTO can obtain a real acceptance of its trade accords. It is only through you, that the WTO can truly respond to the needs and concerns of the world’s citizens.

I am particularly pleased that international trade has featured in your agenda today. And there are many reasons indeed why it should.

  • In 2005, the collective GDP of the ACP had reached 564 billion Euros. The export-to-GDP ratio of the ACP was as high as 30%! While I recognize that there is significant variation across different members of the ACP, this statistic is nevertheless extremely significant. It reflects the importance of international trade to your economies.
  • Furthermore, ACP trade has witnessed significant growth, and the ACP trade account has been fairly balanced. From 2001 to 2005, ACP exports expanded from 115 billion Euros to 171. A 30% expansion. ACP imports expanded from 121 billion Euros to 174. An equal 30% rise.
  • Looking at the ACP-EU trade relations, one can see the extent of your inter-dependence. Approximately 30% of ACP trade takes place with the EU, making it you first trading partner. But you have other important partners too. The US is your second trading partner, representing 20% of your total trade, and is followed by China, Japan, Korea, South Africa, Brazil, and so on. Your partners in international trade are numerous.
  • But your exports too are equally numerous. They range from agricultural and energy products to several manufactured goods, such as chemicals, textiles and clothing. While primary products represent about 60% of your exports, you have been able to produce more manufactured goods over the years, adding-value to your raw materials.

The picture that I have just described to you makes it self-evident, I hope, that international trade is an important pillar of your economies. Additional trade opening would bring even greater benefits to the ACP. However, I am a firm believer that trade opening must be accompanied by an appropriate set of policies; economic, social, environmental, and otherwise, for its full benefits to be reaped — as you the parliamentarians know very well of course.

Naturally you will have heard of the suspension of the Doha Development Agenda last July. The Doha Round was launched in 2001 with the hope of rebalancing the rules of the multilateral trading system in favour of the poor. It was launched with the expectation that it would solidify the multilateral trading system that countries had worked so hard to create, thereby ensuring that the law of the jungle in trade relations would never again prevail. Sadly, though, the positions of the main WTO partners in July remained too far apart. We had to call, therefore, for a “time-out” from the negotiations. A period in which countries could reflect on the flexibility required for a return to the negotiating table.

Parliamentarians were amongst the first to see the dangers of the failure of the Doha Round. A deal containing double or even tripple the level of ambition of the Uruguay Round, was suddenly being put at risk. A historic opportunity to rebalance the rules of the multilateral trading system in favour of the poor, was also about to disappear.

Hence the call that was made by the Inter-Parliamentary Union for immediate resumption, only 2 months after suspension. Many other parliamentarians had issued similar calls, such as the European Parliament. In the WTO, it was some of the world’s poorest countries — the least-developed countries — that led the demand for a return to the negotiating table.

Well, what is on the table then in the Doha Round for the ACP? Why does the Doha Round need to be concluded? In being a “round” of trade negotiations, a whole host of different subjects are part of the negotiating basket: such as agriculture, industrial goods, services, trade facilitation, environment, fisheries subsidies, and so on.

All of these areas are important to the ACP. I will start with services,though, since I know that this particular session of your assembly has been looking at the tourism sector. While several of the services sectors that are under negotiation in the WTO are of interest to the ACP, such as transport and environmental services, it is understandable that many of you are placing your focus on tourism. In the Maldives, Seychelles, Antigua and Barbuda, and the Bahamas, travel and tourism account for 50% of GDP. By liberalizing tourism services, ACP countries have the opportunity to attract greater numbers of tourists. For, as the work of the World Tourism Organization shows, tourists are in search not just of recreational activities and historic sites, but they are also in search of the best facilities. Of the best customer service. It is only through a lifting of the barriers to trade in tourism services — i.e. the myriad of regulations that shackle service providers — that these services can improve. Common barriers to trade in tourism include the restrictions placed on the establishment and presence of foreign commercial entities.

But to truly promote tourism services, countries would no doubt need to open up many other related services sectors too, such as transportation services. These would ensure better road, air and maritime transport. ACPs have an important role to play in the services negotiations. I urge you therefore, to give this issue your highest consideration.

In agriculture, the ACP stands to benefit from a very significant package of proposals that was on the table in July, and which could be further improved when the negotiations fully resume. Prior to suspension, WTO members had already agreed to eliminate all forms of export subsidies by 2013, including the parallel elimination of other, slightly less direct, export subsidizing practices. In addition, developed countries had before them proposals to slash the WTO ceilings for their trade-distorting domestic subsidies by about 60-70%. These subsidy reductions would have been key to rebalancing agricultural trade in favour of the poor. While poor countries can indeed compete against the agricultural products of rich nations, what they cannot do — as Minister Kamal Nath often likes to say — is to compete against their treasuries!

In addition, countries had before them a proposal to slash developed world tariffs down to half. However, I underline, that the package gave developing countries, and in particular the smallest and most vulnerable amongst them, the possibility to protect sensitive sectors and adjust their pace of trade opening.

Cotton” was also on the agenda. Four ACP countries, Benin, Burkina Faso, Chad and Mali, together with many other ACPs had fought long and hard to give cotton priority in the Doha Round. And they had won that battle, with countries agreeing to give cotton more specific, ambitious and expeditious treatment with respect to both subsidies and tariffs. In fact total duty-free-quota-free entry for the cotton exports of LDCs into developed country markets had already been promised.

The negotiations on industrial goods are also important for the ACP — for products such as your chemicals and textiles and clothing. The Doha Round would have offered you substantially more market access into your target markets, not just developed but also developing countries. Moreover, whether in agriculture or industrial goods, the problem of tariff escalation — i.e. of tariffs rising with value-added, would have been tackled. The reduction of such quote unquote “anti-development” tariffs would have been important in promoting the industrialization of the world’s poorest nations.

Here, I believe, I must pause to address a question that I know must certainly be on your minds — that of preference erosion. Allow me to share my views on this important question. Preferences have always been a short-term solution to a long-term problem. Why? because the tide is heading in the direction of greater trade opening, whether through multilateral, bilateral or unilateral efforts. Suffice it to see the number of FTAs that exist today, as well as the news that are under negotiation, and which erode your preferences every day. The WTO offers the ACP a possibility for “managed” trade opening; an opening whose pace you can decide. It is only through the WTO, that the ACP can secure a predictable trading environment for the long haul.

There are many other aspects of the Doha Round that could have benefitted the ACP: such as trade facilitation negotiations, designed to eliminate the bureaucratic red tape (such as cumbersome customs clearance procedures) that stifles trade; and fisheries negotiations that would have reduced the fisheries subsidies that are endangering the world’s fish stock. All of these subjects were part of the Doha Round. It is this entire package — which would have been inconceivable at the time of the Uruguay Round — that was frozen together with the overall suspension of the trade talks.

Last week, we decided with your Ambassadors to restart the negotiating process here in Geneva. But we all know that moving from here to fully-fledged ministerial negotiations will require serious thinking and compromises. I ask for your support in relaunching these negotiations in full gear, so you may reap their full reward.

Finally, allow me to say that while the Doha Round will generate new trade opportunities, it is widely known that your supply side constraints will need to be addressed for these opportunities to become reality. Hence the need for A4T. I would invite you to continue pursuing a substantial A4T package as a complement to the Doha Round. But more importantly, to continue making the case in your countries for the inclusion of trade in your development agenda. I hope that this will be amongst your priorities.

I thank you for your attention and would be pleased to take your questions.

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