OECD Ministerial Council meeting
Session 9: “International trade and investment for the benefit of all”

Ministers,
Excellencies,
Ladies and gentlemen,

Good morning.

Ensuring that more people can benefit from international trade and investment has always been a central consideration for governments around the world.

This very point is there in the 1947 General Agreement on Tariffs & Trade, which states its aim to raise standards of living, ensure full employment and raise real incomes.

And it’s there in the founding documents of the WTO – the Marrakesh Declaration in particular.

There, ministers declared that the WTO would “usher in a new era of global economic cooperation reflecting the desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples.”

Of course, a lot has been achieved over the years to this end. Trade has transformed the prospects of communities around the world.

But the trading system remains a work in progress.

As we look around us today, it is clear that the economic and political landscape is changing. So we need to take a fresh look at these issues. 

In many countries we are clearly seeing a growing backlash against globalization in significant segments of the population.

In this context, trade is often identified as a cause of disruptions in the labour market. These concerns are of course legitimate and deserve to be responded to.

And while trade can play a role here, we should be clear that it is actually just one of a range of factors at play.

Actually, independent studies have found that new technologies and higher productivity is around four times more disruptive in labour markets than trade.   

Obviously, like trade, innovation and new technologies are fundamental for economic growth and social development. So we must embrace and foster these forces, but we must also be ready to respond to their transformational challenges.

Policies around inclusion, the provision of skills training, support for workers and so on will be important here. But these are domestic issues. It is for your governments to determine the right policy recipe, according to the particular circumstances in each of your countries.

At the global level, however, I think we can also do a great deal to support growth and development. And we can provide more stability in global trade, which is fundamental for economic progress.

Clearly trade growth has underperformed in recent years.

Our latest data show that in 2016 world trade grew at just 1.3%. This was the slowest pace since the financial crisis. FDI flows have not returned to their pre-crisis peak.

Despite signs of stronger trade growth in the first quarter of this year, it is likely that 2017 will be the sixth consecutive year with trade growth below 3%.

In the 70 year history of the multilateral trading system the only time we’ve seen anything similar was in the early 1980s.

That period of low growth was due to a number of factors, including oil shocks and recessions in developed countries – but protectionism was also a significant factor.

In contrast to that period, the erection of new trade barriers is not the defining factor in today’s scenario.

The share of world imports covered by import-restrictive measures implemented since October 2008 is just 5%. Of course it could be even lower – but it shows that the WTO did its job. Let’s hope it will not change.

The real story behind the low trade growth of recent years is low economic growth, combined with – not necessarily protectionism – but an absence of liberalization.

Recent breakthroughs at the WTO will help here, as they begin to come on-stream.

We are now in the process of implementing the WTO’s Trade Facilitation Agreement, after it entered into force earlier this year.

As you know, this deal aims to cut trade costs by streamlining and harmonizing procedures at the border. It is less about market access trade-offs than about the search for cooperative solutions to shared challenges. These include standardizing customs procedures, harmonizing documentation requirements, and improving information exchanges.

In this way the Agreement promises major economic benefits – greater than the removal of all remaining import tariffs worldwide.

And this success at the WTO has been joined by others – such as the expansion of the Information Technology Agreement and the abolition of agricultural export subsidies.

All these deals were achieved because of a willingness among members to do things differently. And they proved that the WTO can deliver.

Our task now is to continue this trend.

And I think we are seeing more pragmatism, realism and flexibility in our debates than ever.

The Buenos Aires Ministerial Conference is just a few months away. That will be another important opportunity for progress.

And, I must stress that progress at the WTO should work alongside progress elsewhere.

There are many other regional, plurilateral and bilateral initiatives being pursued that can help complement and act as building blocks for the global system.

However, even if all regional agreements could be completed tomorrow, we would still need an effective and well-functioning WTO.

Almost none of the global trade challenges we face would be easier to solve outside of the multilateral system. And multilateral results would certainly help deliver the benefits of trade to more and more people around the world.

So it’s clear that cooperation at the global level will remain essential.

But of course the system can be better, and it can deliver more.

The Trade Facilitation Agreement was a remarkable outcome not just  because it was the first – the first – major deal delivered at the WTO.

Since then we have built on this momentum to deliver further agreements, as I have described. This should become the norm – not the exception.

It is my hope that these last few years of success should signal the start of that “new era” which ministers called for in 1994 – one which works to spread the benefits of trade in the way we all want to see.

We must ensure that trade contributes to solving the myriad of problems that leaders are wrestling with today. There’s no doubt in my mind that it can do even more to create jobs and support growth and development.

Of course none of the challenges we face today are easy. But with trade as a key ingredient of whatever recipe you choose to implement, I’m positive that our chances of success will increase dramatically.

Thank you. I look forward to hearing your views.