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> Speeches of former WTO Directors-General
Ladies and Gentlemen,
My main message to you today is simple; in order to cope with soaring
food prices, supply must adjust to demand. For this to happen, trade
will help. Easier, more open trade can strengthen the production
capacity of developing countries, rendering them less vulnerable. I am
aware that this point of view is not shared by all, and that some
believe that more open trade can harm their domestic production
capacity. But let us look at the numbers.
Looking at the list of the 22 countries that the FAO has identified as
the most “vulnerable” to the food price crisis, we find that some of
them are amongst the world's “least-trade integrated” economies in
agriculture. Included amongst them are, for example, Zambia which
imports only 4% of its total grain supply and Cambodia which imports
only 5% of that supply. If these countries are amongst the most
vulnerable to the food price crisis, it is not because of their
integration into international agricultural markets. Rather, it is
because they import nearly 100% of their oil, and with the rising price
of oil, have found themselves impoverished.
Quite to the contrary, international trade can help ease food shortages
by channelling food to where it is required. It can lead to greater
efficiency by shifting production to countries with the greatest
comparative advantage. Through greater and fairer competition,
international trade can help lower prices. But all of this presupposes
that the trade-distorting agriculture subsidies that have given an
unfair advantage to rich world farmers, will be tackled. It would also
necessitate tariff reduction. These two objectives have been agreed by
WTO Members when they launched the Doha Development Round in 2001.
Climate change is also on the agenda of this meeting, and rightly so. It
will have many impacts on agriculture, one of which is the potentially
greater scarcity of water. In 2006, the UNDP's Human Development Report
drew our attention to the water-saving potential of international trade.
The “virtual trade in water” — as the UNDP called it — could lead to
reduced water consumption in importing countries. It gave the powerful
example of Egypt. If Egypt were to seek self-sufficiency in agriculture,
it would have to import water!
Similarly, were Northern countries to aim for greater agricultural
production in greenhouses, their carbon footprint would very soon come
to complicate the already complex climate change negotiations.
The FAO tells that, contrary to some of the arguments we hear that the
world has approached the “ceiling” of what is possible to produce,
agricultural production is capable of rising. It is capable of keeping
pace with rising demand for food. However, for “global” supply and
demand equilibria to translate into equilibria at the “national level,”
the many trade restrictions and unfair distortions that impede food
production and travel must be tackled.
This is why the WTO Doha Round of trade negotiations can be part of the
medium-to-long term response to the food price crisis. It would reduce
the trade-distorting subsidies that have stymied the developing world's
production capacity. It would also bring down tariffs — albeit while
maintaining adequate safety nets — thereby increasing consumer access to
food through lower prices. Efficiency gains would follow. I would be remiss
if I were not to mention that the negotiations also provide a
possibility for strengthening WTO rules on export restrictions.
Ladies and gentlemen, we know that the crisis we are facing today is
multifaceted and that mitigating high food prices necessitates various
policy initiatives at the domestic and international level; short-term,
medium-term and long-term. Reducing unfair obstacles to trade can be
part of the solution, but is far from sufficient. I am convinced that it
is vital to reinforce the developing world's production capacity, which
Jacques Diouf tells us is the number 1 challenge.
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