SPEECHES — DG ROBERTO AZEVÊDO
Remarks by DG Azevêdo
Ladies and gentlemen,
I am pleased to join you today. I would like to thank the National Center for APEC, as well as Deloitte and Moody’s, for their kind invitation.
You have been looking at some big, tough issues today – the evolution of trade, technology, and globalization, and at ways to ensure that the benefits of these forces can be shared more widely.
There is no doubt that we are living through some testing times.
Against this background, we need to ensure that leaders and citizens are able to tackle these challenges, while promoting sustainable and inclusive growth among APEC members, and around the world.
The financial crisis hit almost a decade ago – but it's clear that we are still dealing with its effects.
Growth and investment are yet to return to their pre-crisis levels. However, after a long period of sluggish growth, global trade is starting to pick up.
In September WTO economists 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. 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.
APEC members have been major beneficiaries of this phenomenon.
But of course growth alone is not enough.
It's clear that many people feel disconnected from economic progress. We are seeing a growing backlash against globalization.
In this debate, 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, eight out of ten job losses in manufacturing are due to higher productivity – not cheaper imports.
So while trade and technology are of course extremely beneficial, these overall gains are of no consolation for someone who has lost their job.
These are legitimate concerns that must be responded to. Domestic policies in education, skills and social security, for example, have a huge role to play here.
However, if we treat disruptions in the job market solely as a trade problem, then we will only be responding to one part – the smaller part – of the picture.
Turning to protectionism would do nothing to address the real challenges we face – and it would cause many more problems besides. We need to see trade – and technology – as solutions to the problems before us.
Some would argue that the challenges we face today raise questions about the future of global economic cooperation, of the multilateral trading system, and of the World Trade Organization.
Actually, as I see it, the WTO was built precisely for times like these. When tensions are at their highest, this is when we need a strong, rules-based trading system the most. It is essential for global economic stability.
It provides a framework to ensure that trade flows as smoothly and as predictably as possible, as well as a dispute settlement system which ensures that trade differences do not spiral into larger conflicts.
This system was constructed as the world's response to the chaos of the 1930s, when rising protectionism wiped out two thirds of global trade.
In the 2008 crisis the system was put to the test, and it passed. We did not see a significant rise in protectionism.
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 system did its job. While the system is not perfect, it is essential.
With all of this in mind, we must keep strengthening the system, delivering new reforms and resisting the creation of new barriers to trade.
And, given the strong regional focus to today's event, let me say that support for the multilateral trading system does not need to come at the expense of an active bilateral and regional negotiating agenda.
It is not a zero sum game as it is often portrayed. These initiatives can have a significant and positive impact on each other.
APEC is a key example of this, and there are many other regional and bilateral initiatives being pursued in the Asia-Pacific region that can complement multilateral rules and act as building blocks for the global system.
However, this doesn’t change the fact that, even if all regional agreements could be completed tomorrow, we would still need the WTO.
Almost none of the global trade challenges we face today, whether related to the digital economy, or agricultural or fisheries subsidies, would be easier to solve outside of the multilateral system.
That's why it matters so much that we keep strengthening and improving the multilateral system. We have made real progress on this front.
For many years up until 2013, the WTO was seen as a place where you could not do business.
Not anymore. We have been innovating, doing things differently, and recent WTO negotiating successes prove that the system can deliver.
In 2013 we delivered the Trade Facilitation Agreement. It was the first major multilateral deal in the organization's history. And it was a big one. 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 WTO's biggest ever agriculture reform, 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.
And these deals did not just stay on 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 of 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.
We need to keep this drive, strengthening and improving the trading system so it can deliver even more for growth, development and inclusivity.
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 we have to have one eye on the longer term.
We need to 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.
Cooperation at the global level will be essential to ensure that the system is as strong and as inclusive as possible. And, as ever, I count on APEC's leadership on this front.
At a time of rapid economic change, we need to ensure that trade contributes to solving the myriad of problems that the world is wrestling with today.