Manila, Philippines

“Time for action in the Doha Development Round”
Philippines Chamber of Commerce and Industry (PCCI)
Business Roundtable

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Ladies and Gentleman,

Members of the Philippines Business Chamber of Commerce and Industry, I am pleased to be with all of you today, and to share with you my views on where we are in the on-going WTO negotiations. This event should have taken place last December, but unfortunately the appalling weather conditions prevented me from coming to the Philippines.

Later in the day I will be meeting with President Arroyo, with Mr. Favila, Secretary of Trade and Industry, and Mr. Yep, Secretary of Agriculture, for discussions about the state of play of the WTO negotiations. I also will take the opportunity to share views with civil society organizations.

I said “discussions” and not “negotiations”. I am not the negotiator-in-chief — Ministers are the negotiators. My role is to act as go-between, in a fair and neutral way, to advise, to remind WTO Members of the commitments they have already taken during these five years of negotiations and also of the necessity to translate these commitments into precise numbers or texts, pretty soon now.

Before I address the Doha Round, I would like to take the opportunity to express my sincere thanks to President Arroyo, who has been giving her generous and continuous support to the WTO, the Doha Round negotiations and to my own work. The Philippines hosted last year's ASEAN Summit. With President Arroyo's personal efforts, and together with the support of other ASEAN leaders, a strong political ASEAN Leaders Statement on Doha came out of Cebu last December. It was important, not only because it showed the political determination of ASEAN leaders to work collectively for an early and successful conclusion of the Round, but also because it was a helping hand extended to the multilateral trading system when it needed it most. This Statement did not go unnoticed. It gave a strong and positive push for the resumption of the negotiations and I would like to pay tribute to President Arroyo's personal efforts.

Where do we stand now?

Now let me turn to the Round and brief you on where we stand now.

After a period of suspension, the negotiating engines are buzzing again. Members are now working at three different levels. First, political leaders in many countries have expressed their support and full engagement to conclude this round. In addition to the clear ASEAN determination as expressed in Cebu, we saw the engagement of US President Bush, German Chancellor Merkel, President Lula, PM Singh, PM Abe and many other heads of States in Asia and Africa. Second, trade ministers in key countries are doing shuttle diplomacy, testing numbers, looking into specifics, trying to reach convergence. Third, senior officials and experts are also discussing in the different negotiating groups in Geneva.

What are the main issues? Three issues are at the forefront of the discussions at the moment: agricultural subsidies, agricultural tariffs and industrial tariffs. Work is also on-going on trade in services to prepare the improved offers that each country should table in order to be ready for negotiations on the specifics of further market opening.

Many proposals have already been presented but clearly what is on the table today, although pretty impressive, is not enough to lead us to success. All parties need to make a greater contribution, starting with agriculture. The United States has to accept cuts in its subsidies beyond its current offer. The EU and the G-10 (including countries like Japan and Korea) have to agree to greater cuts in agriculture tariffs beyond their current positions. India and the G33 also have to make a contribution. They need to ensure that the special protection they have already secured for their most sensitive agricultural products does not negate the overall objective of providing more market access. If we are to reach a result, all Members have to move. No one through this round should be asked to undertake disproportionate commitments. Each country will have to make its contribution, with bigger players contributing more than smaller and weaker ones. And with flexibilities to cater for specificities. With an additional effort we can unlock agriculture which in turn will open the last stage of talks on the other topics.

Success is now a question of months away and not quarters or semesters, especially given the upcoming expiry of the US Trade Promotion Authority on 1 July. We now have in our hands the possibility to strengthen the multilateral trading system and make it fairer for developing countries.

Why is the DDA so difficult to conclude?

People are asking themselves the question, if the Round is good for all of us, why is it so difficult to conclude?

First, this is a very ambitious Round on several fronts. The scope of the negotiations is much larger and deeper than in any previous Round. The method of negotiation is also much more ambitious. In previous Rounds, there were no formulae agreed for tariff reductions; people worked with averages so it was possible to hide products from tariff cuts with the resulting tariff peaks. Now with one formula it may be fairer but it is also much more difficult because it hurts in addressing tariff peaks in both developed and developing countries, on products such as textile and clothing or automobiles.

Secondly, this is a “Development Round”, which aims at addressing remaining unfair rules in the trade system, in particular developed countries' trade distorting subsidies in agriculture. At the same time, the Round allows for the protection of developing countries' specific sensitivities in agriculture, in particular through its provisions on sensitive products, special products or the special safeguard mechanism.

Thirdly, the actors now are different from previous rounds. Developing countries are much more active in this Round, which is a good sign of their deeper commitment. There are now several groups of them, such as G20, G33, NAMA 11 or the LDC Group, depending on interests, sensitive sectors and strategy. This is specially true in agriculture which is at the core of the current Round. We don't work with the QUAD anymore. We have a new G-4 : US, EC, India, and Brazil, and G-6 with Australia and Japan.

Furthermore, the large number of Members and the diversity of topics coupled with the WTO's traditional bottom-up approach and single undertaking nature of the negotiating agenda — where nothing is agreed until everything is agreed — makes it more challenging to reach consensus.

What does the Round mean for the Philippines?

Now let me turn to what this Round means for the Philippines. First of all, from a systemic perspective, the WTO provides a global level playing field for Philippine exports, making sure they enjoy Most Favoured Nation and National Treatment without being discriminated against. The WTO also provides a forum to solve trade disputes fairly when they happen, and the Philippines has benefited from the protection of the Dispute Settlement system.

The Doha Round, with its reduction of trade barriers in both developed and developing countries would bring more market opportunities to Philippine exporters and producers. In manufactured goods, Philippine exports are concentrated on electric and electronic equipment, machinery and vehicles and apparels, which accounted for over 70% of Philippine exports in 2005, with destinations concentrated in the US, Japan, the EU, China and Hong Kong China. The Doha industrial tariff negotiation aims for an ambitious reduction of high tariffs, tariff peaks and escalation and, if successfully concluded, will substantially reduce the tariff barriers Philippine exports face in these target markets. Being a developing country, the Philippines is entitled to the flexibilities available for developing countries. These additional flexibilities, though does not provide full exemption of the Philippines from concessions, but does provide breathing space for the Government to cover their most sensitive sector and achieve developmental objectives.

In agriculture, the Philippines also has offensive interests. For example, The Philippines is the world's largest coconut exporter. The Philippines has an interest in making sure that trade-distorting domestic subsidies and export support is reduced as a result of this Round, and markets in other countries are more open.

The Doha Round is also negotiating new rules, like trade facilitation. As the Philippines is strategically located, global disciplines cutting red tape and facilitating customs clearance will greatly enhance the country's competitiveness.

In summary, Doha could bring more market access, a fairer playing field, new disciplines and better enforcement of existing rules. On the other hand, every country in these negotiations, including the Philippines, needs to contribute, the bigger ones contributing more, the weaker or the smaller ones contributing less. The Philippines will be entitled to the flexibilities available for developing countries in all areas of negotiation. There will be enough scope to protect sensitive sectors. I count on the Philippines to help move the process forward, and find the final balance.

Finally, I would like to take the opportunity to thank the Philippines Business Chamber of Commerce and Industry for their engagement in our work. Your support to the WTO, your active involvement in the Doha Round at this crucial time is vital. I look forward to working closely with you in the coming months to achieve our shared objective. I count on your continued support.

Thank you.

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