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Chairman, Members of Parliament,
May I begin by thanking you for giving me this opportunity to clarify a
number of points, often poorly understood or ill-perceived outside the
walls of the WTO, concerning the state of the Doha Development Agenda
negotiations. The round has progressed considerably since I last saw you
in Geneva in the month of March. By way of introduction, allow me to
read you a few excerpts from the international press concerning the
multilateral negotiations:
Take this quote from The Economist, for example:
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“Protectionist sentiment in Europe and America dragged this round out for seven years and imperilled it until the very end. There are reasons to believe that this sentiment will continue to gain strength in the industrial countries.”
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Again from The Economist:
“Fatigue now reigns in Geneva” — “A round which took three years to devise and seven more to complete is out of date even as it is finished.” -
At the same time, the French press talks of a “betrayal of the fundamental interests of the country” (Quotidien de Paris) and a “hard-won deal” (Le Figaro).
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An agreement like this leaves Europe outside world trade (Les Echos).
In actual fact, these words, despite their
familiar ring, all date not from yesterday, or last month, or even last
year, but from the final days of the Uruguay Round in 1992 and 1993! If
these lamentations in the press had been anything to go by, the
conclusion of an agreement would appear to have been not very likely and
even less desirable. Some saw in it an abdication on the part of the
developed countries, and others a death sentence for the developing
countries. And yet today everyone agrees that the Uruguay Round
increased world income by several hundreds of billions of dollars, and
that the establishment of the WTO by the Marrakesh Agreement marked an
important advance in world governance. We should endeavour not to repeat
these mistakes as we approach the end of the Doha Round, and I therefore
propose that we take an objective look at the state of the negotiations.
I will begin, if I may, by examining the general balance of the
agreement being prepared, before going on to review certain features of
special concern to the European Union.
First of all, a few words regarding the overall balance of the
agreement. As you know, the WTO operates on the principle of a single
undertaking, that is to say, the principle of a complete agreement in
which nothing is concluded until everything has been concluded.
Specifically, this enables Members to negotiate mutual and cross
concessions with the certainty of arriving at a balanced agreement,
while retaining blocking powers for use in the event of their finding
the package as a whole unsatisfactory.
The negotiating programme adopted in 2001 comprises a score of issues,
including agriculture, industrial goods, services, anti-dumping rules,
fishing subsidies, and environmental goods and services. All these
vessels must reach port at the same time, even though at the moment they
are sailing at different speeds.
For the time being, the negotiations are focused on agriculture and
industrial goods, and the main mutual concessions to be made are roughly
as follows: the developed countries must reduce their subsidies and
their levels of agricultural protection, obtaining in exchange better
access to developing-country markets for their industry. Of course, the
North-North and South-South dimensions are also important. In fact, the
United States has offensive interests in Europe, just as Malaysia and
Thailand may have them in China or in India.
Within this context, our first constraint is the need to maintain a
balance between the agricultural and industrial components. This
equality of “ambitions” between the two pillars was established by the
ministers in Hong Kong in 2005.
To this principle of balance we then must add the need for fairness. As
the stated aim of the Doha Round is to promote development, the
principle of imperfect reciprocity must be applied, with the rich
countries contributing more than their poorer partners. This dual quest
for balance and fairness calls for a complex alchemy which explains,
among other things, the time needed to reach an agreement.
Is that balance attainable today? I think it is, considering the current
proposals and the work that remains to be done. There are three main
issues on the table for consideration in the next few weeks: the
reduction of agricultural subsidies in the rich countries, the reduction
of agricultural tariffs, and the reduction of the tariffs on industrial
goods.
These three issues form the subject of two compromise texts submitted
last week by the chairmen of the agricultural and industrial negotiating
groups. These revised texts are the means of enabling us to arrive at an
interim agreement on agriculture and industrial goods which could — I
ought to have said should — be achieved during the month of June.
Let us start with agriculture. You will recall that the elimination, by
2013, of export subsidies, which have a particularly toxic effect on the
operation of world markets, was already the subject of a compromise at
the ministerial meeting in Hong Kong.
With regard to domestic subsidies, the proposals currently on the table
would make it possible to lower the ceiling on the most trade-distorting
subsidies (amber box) by 70 to 80 per cent. Moreover, caps per product
would be established to limit the concentration of these subsidies. As
for the so-called “blue box” subsidies, which do less harm to trade,
they would be capped at 2.5 per cent of production. Finally, it remains
to confirm the criteria for ensuring that green box subsidies continue
not to hurt international trade.
Secondly, there is the question of agricultural customs duties. The
present proposals envisage the approximate halving of these duties for
the developed countries and a roughly 36 per cent reduction for the
developing countries. The tariff peaks would also be sharply reduced by
applying heavier cuts to the highest customs duties.
The draft agricultural agreement suggests that WTO Members, including
the developed countries, be authorized to protect a limited number of
“sensitive products” for which, in exchange for a lesser reduction in
their customs duties, these countries would have to offer market access
in the form of quotas. The developing countries would also be able to
protect certain so-called “special” products to ensure their food
security and the livelihood of their subsistence farmers. A special
safeguard mechanism to protect against any sudden deterioration in the
terms of trade or sharp increases in imports is also provided for
developing Members.
Where do things stand as far as non-agricultural products are concerned?
With respect to industrial customs duties, there are two important
factors at work: the binding, that is to say, the placing of a ceiling
on the duties authorized at the WTO, and the reduction of the duties
actually applied, even though the commitments undertaken by the Members
of the WTO only relate to the bound duties, that is to say, the
ceilings.
The draft agreement envisages that by the end of the round most
developing-country (excluding LDC) customs duties will be bound. That
would be a crucial advance for economic operators in terms of
transparency and legal certainty for exporters to these markets.
Where reductions in customs duties are concerned, the package currently
on offer has genuine market-opening potential. The draft would enable
economic operators to save around 40 billion dollars in customs duties
(of which one third would come from exports to developing countries and
two thirds from exports to developed countries), all this without
counting the new trade flows generated by the agreement.
As with agriculture, the draft compromise provides for flexibility for
the developing countries, which could limit the cuts applicable in
relation to a restricted number of tariff lines. However, the average of
the bound (and applied) customs duties of the developing countries would
fall from about 30 per cent to nearly 12 per cent. This would be the
first time that the developing countries had agreed to reduce their
tariffs, since in the previous round they mainly bound their customs
duties, with only the developed countries actually reducing them.
We can now return to our first question, namely: from the European point
of view, is the package I have just outlined a balanced one?
Only you Europeans can answer that. My intention is merely to throw
light on what the negotiators sometimes tend to conceal in order to
leave themselves some bargaining space. Please bear in mind that for
Europe, with respect to both agriculture, where the Union has export
interests (since Europe is not only the world's leading importer of
agricultural products but also its leading exporter), and industry,
there is now the possibility of an agreement that would bring two or
three times the benefits of the previous round.
I would now like to say a few words about the benefits of the round that
extend beyond this core issue of agriculture and industrial goods.
The Union also has much to gain from the negotiations on opening up
trade in services. As distinct from agriculture and industrial goods,
services are not affected by import tariffs. It is more a question of
negotiating statutory market-opening commitments for specific sectors
and modes of supply. In parallel with the adoption of agricultural and
industrial modalities, I am therefore expecting to chair a
ministerial-level conference on services, at which delegations will be
able to exchange views on the content of the offers they intend to
submit during the summer.
Europe could also profit from other important advances that this round
could bring, for example, in relation to trade and the environment and
trade facilitation, which, among other things, concern customs
procedures, reductions in fishing subsidies and improvements in the
transparency of anti-dumping measures.
Finally, the Union could use the WTO as a springboard for its
development policy. The texts proposed have considerable potential where
economic development is concerned, but many countries will need
assistance in realizing that potential. That is where Aid for Trade
should come in. By agreeing to raise the level of its Aid for Trade to 2
billion euros by 2010 the European Union has taken a decisive step
towards achieving the millennium goals and building developing-country
capacities. Thus, it will be promoting the growth of those countries
which in a few years will be, rather than its competitors, its most
promising trade partners.
In February of this year, we adopted a roadmap intended, among other
things, to increase developing country ownership of Aid for Trade; to
shift emphasis to monitoring implementation with a focus on country,
regional and sectoral priorities; and to launch work on improving aid
programme evaluation.
In general, as you have just heard, the conclusion of the Doha Round is
a major challenge for the world and for the European Union in
particular.
In the short term, I hope that by the end of June we shall have a
ministerial meeting in Geneva that enables us to stabilize the agreement
in principle on agricultural subsidies, agricultural tariffs and tariffs
on industrial goods, and to establish a nucleus onto which, by the end
of the year, we will have been able to graft the numerous other elements
I have just described. As the technical work is already well advanced,
it is now mainly a question of political will.
In today's world with its many anxieties, whether they be economic,
social or political, the solution lies not in withdrawal and
protectionism but in a combination, still to be explored, of openness
and the international and domestic disciplines by which it must be
accompanied if it is to be of benefit to all. The international
component of these disciplines is the job of the WTO. A WTO which you
Europeans yourselves wanted and did much to help to build. A WTO which
you need and which needs you.
Thank you for your attention.
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