DG Azevêdo at the Council on Foreign Relations symposium with moderator Diana Farrell, President and Chief Executive Officer, JPMorgan Chase Institute.
DG Azevêdo at the Council on Foreign Relations symposium with moderator Diana Farrell, President and Chief Executive Officer, JPMorgan Chase Institute.



Ladies and gentlemen,

Good afternoon.

It's a pleasure to join you on this occasion. I would like to thank the Council on Foreign Relations for the kind invitation.

This symposium has looked at the future directions for trade – in the US and the world as a whole. You have had a full programme, touching upon a range of big, and sometimes tough, issues.

In closing today's proceedings, I would like to step back and offer you a broader perspective.

And frankly, given the tenor of the trade debate at present, you could be forgiven for drawing some drastic conclusions.

It can sometimes feel as if the global trading architecture which was so painstakingly constructed over the decades – in reaction to the greatest crises of the 20th century – is now on the verge of collapse.

There are indeed some very real challenges before us today – and I will come to them shortly. But we should retain some balance in our analysis.

Of course we cannot ignore all the current risks, but actually the multilateral trading system is stronger than it has been for some years and more needed than ever. And, while it certainly must evolve and improve, I have yet to hear of any credible alternative to the system we have today. Without it, we would be in a world ruled by unilateral actions - which is almost a euphemism for trade wars - and we’d all, without exception, be worse off. 

To illustrate this point, let me take you back a few years to 2013.

At that time the WTO was 18 years old. Yet, it had never delivered a major multilateral trade deal.

It was not seen as a place where you could do business. On the contrary, it was seen as an organization facing an existential crisis. I remember the situation very well. Every speech you heard or article you read said that the situation was 'critical' or that we were 'on the brink'.

But by December of that year we started to change all that. In Bali, at our Ministerial Conference, we delivered the first multilateral deal in the history of the organization – the Trade Facilitation Agreement.

This deal has huge economic significance. Full implementation could cut trade costs globally by an average of 14.3 per cent. This is a bigger impact than the elimination of all remaining tariffs in the world today.

Then, two years after that breakthrough, we delivered the biggest farm reform in two decades, with the decision to abolish agricultural export subsidies.

In addition to that, a group of members agreed on the expansion of the WTO's Information Technology Agreement. This deal eliminates tariffs on a range of new generation IT products, trade in which is worth around 1.3 trillion dollars per year.

In addition, WTO members have also agreed numerous steps to support the integration of least-developed countries into the trading system.

And these deals did not just stay on the paper. We are seeing them through into reality.

This year we have already seen the entry into force of the Trade Facilitation Agreement and the TRIPS amendment, which eases the access to essential medicines for the poorest countries.

Besides their economic significance, I think these breakthroughs achieved more than the sum of their parts. They showed that the 164 WTO members could work together in a meaningful way to solve the most complex problems they face. And they proved that the WTO can deliver.

At a more fundamental level, we saw the value of the trading system during the financial crisis.

In the 1930s, protectionist measures wiped out two-thirds of trade flows – with devastating consequences.

In the crisis of 2008 we did not see the same escalation – precisely because governments knew they were bound by common rules. They held each other to the agreed standards. And those standards were quite clear. Unlike in the 1930s, members knew where the red lines were.

In fact, our monitoring shows that trade restrictions imposed by the G20 economies since the 2008 crisis cover just 4.25 per cent of world trade.

The system is doing what it was created to do.

Of course, we are still feeling the impact of the crisis. But, after a long period of sluggish growth, global trade is starting to pick up.

Last month we issued a strong upward revision to our forecast for trade growth in 2017.

We are now forecasting trade growth of 3.6 per cent in volume terms. This represents a substantial improvement on the lacklustre 1.3 per cent increase in 2016. And it is the first year since 2011 that we are likely to be above 3 per cent.

This is positive news – but of course growth alone is not enough.

It's clear that expanding trade flows have brought important benefits to the economy overall. They have helped to create new opportunities, create better jobs and lift many people out of poverty.

However, it's also clear that many people feel disconnected from economic progress.

We can't cross our fingers and hope that with renewed growth other structural problems will simply melt away. 

We need to confront these problems head on.

Trade is often singled out as a disruptive force in labour markets. While trade does have an effect, technology is actually the major force driving change and disruption in economies everywhere.

Automation, digitization and new managerial techniques are revolutionising the global economy.

Productivity gains from new technologies are reducing the demand for labour in sectors such as agriculture or manufacturing. In some economies, including the US, 8 out of 10 job losses in manufacturing are due to higher productivity – not cheaper imports.

Like technology, trade is essential for progress. So we should not reject these forces. We need to embrace them and adapt.

Having made these points, let’s not ignore that the overall benefits of trade or technology are of no consolation for someone who has lost their job.

We must ensure that the global economic system is more inclusive, ensure that its benefits reach everyone.

An important element here is domestic policy.

This includes more active labour market policies, education policies and the provision of support for workers. The fourth industrial revolution is not going to make all our jobs disappear. But it is going to bring huge changes. We need to adapt.

There is no 'one size fits all' recipe. But success will hinge on the ability of economies to adjust to changes.

Turning against trade will not solve these problems.

In fact, I think the multilateral trading system has a constructive role to play here. 

We can do more to address these issues and ensure that the system continues to evolve and improve. Of course this is, ultimately, in the hands of members.

We know that some – including the US – have concerns about some areas of our work. I am in close contact with the administration on this point, and we've had further meetings today. We will continue this dialogue.

I want to work with all members to strengthen and improve the trading system. That is why I took on the role of Director-General. And this is an ongoing effort.

An important milestone on this front is our upcoming WTO Ministerial Conference in Buenos Aires in December.

Members are currently discussing how we can make progress on a number of fronts.

Agriculture is a prominent theme – with a strong focus on domestic support, and issues related to food security in developing countries.

Similarly, there is appetite among some to take action on services regulations.

Members are looking at ways to limit subsidies which lead to overfishing. 

They are discussing measures in support of developing and least developed countries.

And there is increasing interest among some in discussing other issues such as e-commerce, investment facilitation, and how to help small and medium-sized enterprises to trade.

These conversations continue to be very constructive and dynamic. I think we are seeing more pragmatism, realism and flexibility in our debates than ever.

However, at present there is no easy or obvious solution on any of these fronts. And, as you know, we will need all WTO members on board. So this will be challenging and we need to keep working.

Buenos Aires is a very important milestone for the organization and for global trade. We should seek to deliver everything we can by December. But that will not be the end of the road.

I hope that we will leave Buenos Aires with members committed to strengthening the trading system, and with a clear path forward for our future work.

The global trading system has been – and will remain – a work in progress.

It represents the world's best efforts to keep economic tensions at bay and ensure that trade supports growth and development for all.

And those efforts have paid off. The system is working.

Of course the work of cooperation is tough. It is painstaking. But it is essential. We have to keep at it.

The best thing we can do to secure the future of the global trading system is to redouble our efforts to improve and reform it. We have come a long way in recent years – and now we must go further.

We must ensure that trade remains an essential means to support peace and inclusive prosperity around the world.




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