WTO NEWS: SPEECHES DG PASCAL LAMY
Annual 2008 Session of the Parliamentary
Conference of the WTO
Inter-Parliamentary Union and European Parliament
Ladies and gentlemen,
This year I am the bearer of — how should I put it — “news that is not
all that good!” You, the Parliamentary Conference on the WTO, have been
following our work, and in particular the Doha Development Agenda,
closely since its launch in 2001. The Doha Round which took almost 7
years of negotiations had been widely expected to bridge an important
“milestone” towards its conclusion at the Ministerial meeting convened
this July.
The meeting was expected to adopt “modalities” for agricultural, and
industrial goods, and to make progress in the services negotiations. In
WTO jargon, “modalities” mean the parameters on whose basis Members
would establish their new commitments, whether in terms of lower
tariffs, subsidies, or new disciplines.
The meeting did not succeed. It collapsed to the detriment of a world
economy that is much in need of a bit of blue sky; to the detriment of
the poor who would have benefited the most from the lowering of prices
that trade opening brings about; and to the detriment of the developing
world who has fought long and hard to bring greater equity to
international rules, in particular to the field of its greatest
comparative advantage; agriculture.
I often hear it said that one of the greatest flaws of the WTO is that
it does not deal with inequality at the national level. It opens markets,
and then claims that its role ends there, passing the bucket to
governments to deal with winners and losers. This, in my view, does not
fully reflect reality.
Had the July package stabilized, much greater equity would have been
brought about. Few realize that through the opening of markets, trade
does more to making basic goods and services accessible to the poor than
many income redistribution policies. Throughout history, trade has
enhanced the purchasing power of the poor across the globe, enabling
them with their limited dollars, to buy more for less. Thanks to more
open markets a basic T-shirt that would have cost $3 dollars behind a
tariff wall, can today cost less than half or even a third of that
price.
But, of course, as you Parliamentarians know very well, those who gain
from trade are seldom as loud in the political arena as those who lose.
In fact, those who gain, are seldom aware that global trade rules may
have had something to do with their gain. A T-shirt sold at a department
store does not come with a label saying: “This T-shirt comes to you with
a 50% reduction due to new WTO rules.” That label is simply not present,
and hence the missing awareness too.
Yet, the persons you hear from are those whose factories are shutting
down because they cannot sustain the competition; in other words they
cannot offer a T-shirt for $1, but only for 2 or 3. Now, while consumers
are made better off by trade, producers must also be assisted in
adjusting to more open markets. Hence the need for accompanying policies
to trade, whether social, infrastructural, environmental or otherwise.
It is only with such accompanying policies that domestic producers can
better adapt to trade opening. Similarly, it is only with awareness
raising that consumers can come to understand the full magnitude of the
benefits they reap. And, as we all know, producers are also consumers —
they're one and the same!
The package before Ministers in July had combined all of the following:
the reduction of unfair agricultural subsidies; the reduction of tariff
walls on industrial and agricultural goods; the reduction of barriers to
trade in critical services, such as banking, insurance, energy, and
environmental services; and beyond that a myriad of new trade rules.
Rules that would have made the multilateral trading system fairer, in
particular for the developing world. To give you, but a few telling
examples of what was foregone in July, I would mention the reduction of
the rich world's agriculture subsidies which would have been sliced by
70-80%, and of their highest agricultural tariffs that would have fallen
by 70%, not to mention the commensurate effort that they would have made
on industrial goods. I hasten to add that all efforts in the Doha Round
would have been made in accordance with the principle of Less than Full
Reciprocity, with the developed world making 2/3ds of the contribution,
and the emerging part of the developing world only 1/3d.
But behind those headline catching numbers, was a new set of rules —
which while the media paid scant attention to — were perhaps just as
important as the headline-grabbing figures I just cited. For example,
the subsidies that the rich extend to agriculture would have not only
been reduced in an aggregate manner, but new ceilings per product would
have also been established. Hence, players such as the United States,
the European Union and Japan would have no longer been allowed to
concentrate the bulk of their support on only a few commodities. Do I
need to spell out for you what this would have meant for cotton! The
litmus test for the development dimension of the Doha Round! It is
indeed a great shame that this package did not materialize at that time.
To the Parliamentary Conference on the WTO, the trading community owes
an explanation. What exactly happened in July, how did such a package
slip through our fingers? What were the issues that were resolved, and
which were left outstanding? I will try to respond to these questions as
faithfully as I can since I believe that greater accountability lends
force to what we do, and that your voice will be vital to re-energizing
the negotiations.
WTO Members entered the July Mini-Ministerial looking at agricultural
subsidies, agricultural tariffs, industrial tariffs and services. In a
short space of time, they accomplished what some never thought they
would.
They found convergence on the issue of agriculture subsidies, even if
the specific extra reduction for cotton subsidies remained to be
negotiated. They went a long way on the issue of agricultural tariffs.
The same can be said about industrial tariffs, even if a few issues
remained for further clarification. And they had a promise before them
of attractive services offers, based on the Services Signalling
Conference that had been held.
In agriculture, various elements of the Doha Package had been designed
to address both the developed and the developing world's many
sensitivities. In July, much progress was achieved on “sensitive
products” for developed and developing countries, and on “special
products” reserved exclusively for the developing world — these are all
products that would take either a lower tariff reduction than the norm
or no reduction at all, to make trade opening more gradual. The
flexibilities were intended to allow for a “tailor-made” package as
opposed to a “one-size-fits-all.”
But where the negotiations collapsed, was on the details of the Special
Safeguard Mechanism for agriculture for the developing world. Countries
could not agree on the circumstances in which this Safeguard could be
used — the extent of volume surge, or price decline of imported products
that would have to occur for it to be triggered. And nor could they
agree on the extent of the remedy that it would provide when set in
motion — the magnitude of the extra duty that would be imposed on
imported goods to protect the domestic market.
Efforts were made until the very last minute of the meeting to find a
compromise over the Special Safeguard, but it eventually became clear
that this thorny issue would require more work to build convergence. It
was not, in the end, as ripe as some thought it was. Because the
negotiation stopped at the Safeguard, negotiators never made it to other
critical issues, such as cotton. The Cotton-4, Benin, Burkina Faso, Chad
and Mali — not to mention the rest of Africa — walked away in extreme
disappointment.
So, what now? Do we throw in the towel, and do we give up? Most WTO
Members have already said that this would be highly irresponsible. To
let a 7-year international effort to essentially “do good” collapse
would be a calamity. Who is ready to shoulder that responsibility? Are
we really willing to tell the taxpayer who has funded us for this long
that we've wasted his/her money! Not only that, are we willing to tell
producers and consumers alike that we blew away in a single month their
hope for more open markets, and a more equitable, and
development-friendly, trading system? Are we willing to tell them that
topics that would have followed these modalities, such as trade
facilitation for small businesses, market opening for environmental
goods and services and the reduction of environmentally-harmful
fisheries subsidies, are now off the table without even a chance at a
Ministerial discussion?
There is simply no way. Hence the stance taken by WTO Members, asking
that we preserve the enormous progress that had been achieved and to
build on it for a final agreement. August has been a very active month
for the WTO family. A fair amount of travelling and phone diplomacy has
taken place to not let this opportunity slip through our fingers. My
sense is that there is scope for renewed engagement over the coming
weeks, as confirmed by the technical discussions that have been held
here in Geneva these past two days.
Today I ask you to help us close the July package. While it has now
become clear that we cannot complete the Doha Round by the end of this
year, let us at least aim to complete modalities in 2008, so as to
conclude the Round in 2009.
In conclusion, let me add that completing the Doha Round is intimately
linked to the themes that you have chosen for this conference, food
security and climate change. The wave of rising food prices that we
witnessed, would find at least a partial answer through the Doha Round,
allowing increases in supply to adjust to increases in demand in
different corners of our planet with much greater ease.
As for climate change, I must confess to you that what has happened in
the WTO in July has left me with a bitter taste. If the international
community cannot find the courage to do what it has done many times
before — which is to open markets collectively through a trade round —
will it have the courage to tackle what has “never” yet been tackled!
Not to mention that the Doha Round contained the first-ever
environmental chapter of a trade round of negotiations. Does busting
that chapter in any way pave the road to a post-Kyoto regime?
What we now need is a bit more leadership and courage. You have shown
both with your unwavering support for the WTO. Please try to transmit
this same spirit to your country's negotiators. Please convey the
message back home that, in view of the package that is currently on the
WTO table, the Doha Round must see the light of day. Further delays
would weaken the multilateral trading system, our collective capacity to
achieve the Millennium Development Goals, and endanger other major
international negotiations which are needed to stabilize our risky
planet; such as the one on climate change.
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