Ladies and gentlemen,

Good morning.

Before I begin, I wish to convey my heartfelt condolences to the people of Korea for the tragic loss of many lives, particularly those of many young students in the recent ferry accident.

I share your grief in this time of great sadness and offer my deepest sympathies to those who have lost their loved ones.

I am delighted to be here in Korea — the land of the morning calm.

And I would like to thank President Sa-Gong Il and the Institute for Global Economics for inviting me to speak to such an impressive audience today.

Since the successful conclusion of the 9th WTO Ministerial Conference last December in Bali, WTO members have been working hard to build on the success of the Bali Package in order to reinvigorate the multilateral trading system and restore the WTO’s central role in global economic cooperation and governance.

The success of the Bali Package demonstrated, for the first time, that the WTO can reach multilaterally agreed outcomes.

It was the first such deal since the organization was created in 1995. So it has given the WTO a new and fresh perspective for the future.

Korea played a crucial role in delivering the Bali Package. And the support of the private sector was vital.

I’d like to take this opportunity to thank you all for your support in making this breakthrough possible.

The business community in Korea — and around the world — played an absolutely crucial role in creating the conditions in which a deal could be struck.

Our challenge now is thus to make the case for going even further to strengthen the multilateral trading system — and therefore to help improve people’s lives.

The outcomes of Bali have provided a strong platform for this work.

So today I’d like to talk about my vision for the future of the multilateral trading system and the important role to be played by Korea.

 

THE EVOLVING TRADE LANDSCAPE

It is an interesting time for the global debate on trade.

Let me thus begin with the evolving trade landscape we experience today.

Although Bali has put the spotlight back onto the WTO, a lot of focus — in the government and in the private sector — is on the large regional trade initiatives which are currently being pursued.

But I don’t believe that this is at the expense of our work at the multilateral level.

In my view, the current work that is going on at the plurilateral and regional level is positive and welcome. These initiatives clearly have a role to play. These blocks help to build the edifice of global trade rules and trade liberalization.

But it is clear that these initiatives are not sufficient on their own. They must coexist with the multilateral system.

For one, they leave out a large number of countries — not only the most dynamic emerging economies, but also the smallest and most vulnerable.

In addition, many of the big issues can only be tackled at the global level — and therefore many of the big gains can only be delivered at this level too.

For example, the Trade Facilitation Agreement in the Bali Package was successful in the WTO because it simply makes no sense to adopt regulations to streamline customs bilaterally — if you do it for one country, you do it for everybody.

Similarly, financial regulations or telecoms regulations can’t be truly liberalized for just one player. There may be minor things that you can do but it is clearly much better to negotiate services regulations globally in the WTO.

Other examples include farming subsidies or fisheries subsidies — they cannot be tackled in bilateral deals. Another example is disciplines on trade remedies like anti-dumping or countervailing duties — they also require a multilateral approach.

The simple fact is that the major global challenges for trade can only be addressed globally and multilaterally.

Therefore the different tracks have to exist together — they are symbiotic. 

But how these regional initiatives are pursued, alongside efforts to revitalise and strengthen the multilateral trading system, will be an important factor in how the global trading system evolves in the coming years.

And we do need to evolve.

The world is changing rapidly.

New players in global economic governance, technological innovation and new trade patterns are changing the way governments use and design trade policies to capture economic gains.

The rise of new global patterns of production is a case in point.

This new architecture of transborder production can help countries to integrate into the global system. Trading in parts and components, or performing intermediate tasks, has lowered the threshold for countries to participate in international trade and to attract investments.

However, the benefits are not automatic, and the formula for full integration into global trade flows varies from country to country.

While some have been successful in participating in global value chains, a significant number of low income countries, particularly the least-developed, are still absent. And of course the benefits can vary considerably depending on whether a country operates at the high or at the low end of the value chain.

The effective implementation of the Trade Facilitation Agreement agreed in Bali and the further reduction of tariff barriers and distortive measures in the context of the Doha negotiations can help remove some of the constraints that have prevented countries from participating in global production chains.

But to fully capture the effects and implications of this evolving trend, further analysis is needed to improve our understanding and help individual governments to harness the benefits.

 

GLOBAL ECONOMY AND THE MTS

I will now turn to how the multilateral trading system can promote economic growth.

International trade is still feeling the aftershocks of the global financial crisis.

For the last two years, trade growth has averaged just 2.2% - still a long way below its historical average.

Looking ahead, we are a little more positive.

We expect a broad-based but modest upturn in the volume of world trade in 2014 (around 4.7%) and further consolidation of this growth in 2015 (maybe up to 5.3%). 

Although relatively positive, the outlook still remains modest and the risk of setback remains present.

But WTO members are not mere observers. They can actively support trade growth — first, by avoiding protectionism.

Therefore, our work in monitoring trade developments around the world remains critically important. We must detect trade restrictive measures in their early stages and discourage their adoption wherever they show up.

Second, members can support growth by strengthening and updating the rules-based multilateral trading system through reaching new trade agreements.

The success in Bali made this point eloquently.

The Bali Package promises significant gains for the global economy, delivering growth and jobs, once implemented — particularly in terms of the Trade Facilitation Agreement.

Economists estimate that by implementing that Agreement, and therefore making it quicker and easier to do business across borders, we could inject up to $1 trillion into the global economy.

By cutting trade bureaucracy, the deal could reduce Korea’s trade cost for doing business internationally by 10%.

And, significantly, it will help small and medium-sized enterprises to become exporters. This deal will lower the barriers that SMEs face, helping them to export and access new markets — therefore helping them to grow and create even more jobs.

And the evidence shows that export-focused jobs are generally higher quality jobs — and the wages clearly have a premium over wages in other areas.

Bali thus showed that the WTO can deliver in a big way.

We have to make sure that Bali is just the beginning — and use that momentum to deliver even more.

And this brings me to the most important thing we’re doing in Geneva at the moment to strengthen the multilateral system.

 

DDA WORK PROGRAMME

As instructed by Ministers in Bali, delegations in Geneva have started work to prepare, by the end of this year, a clearly defined work programme to conclude the Doha Round.

And there are some really important issues on the table. In my view, any engagement here will have to tackle the really tough areas upfront: industrial goods, services, and agriculture.  

Some of these issues have not been seriously discussed in nearly six years. That’s far too long. So now it is time to bring them back into play. We cannot avoid them anymore. And we need to retain the sense of urgency that was so important in Bali.

If we make progress on these issues, then everything else will fall into place, I have no doubt. If we don’t, then any progress elsewhere is going to be very, very limited.

And I think there is a different mood now — things have changed since these issues were last discussed.

Since Bali I have been travelling around the world to build on the momentum that the Bali deal created — and ensure that the WTO can deliver even more in the future.

In recent months, I visited the US and talked to President Obama. In the EU, I talked to Presidents Barroso and Van Rompuy. I talked to President Dilma in Brazil, President Mujica in Uruguay, and many other political leaders both north and south.

And everywhere I go I sense that there is very strong support for the multilateral system and the WTO.

Yesterday in Korea I met with the Speaker and members of the National Assembly, the Minister of Trade, Industry and Energy, and the Minister of Agriculture, Food and Rural Affairs. They all showed strong support for the WTO and for a successful conclusion of the Doha Round.

Because of Bali, people are willing to give us another chance at completing these negotiations and making a once-in-a-generation leap forward in the trade agenda.

But at the same time they all want to avoid a repetition of the past cycle of failures to reach multilaterally negotiated outcomes.

I am not suggesting that we should increase or decrease our ambition for the Doha agenda — what we must have is a new approach to deliver results.

So, as a major player in trade, Korea’s support is essential. And as a middle grounder in the Doha negotiations, Korea can help to bridge the gap between developed and developing country members.

 

KOREA’S ECONOMIC DEVELOPMENT AND TRADE

We should take a moment, however, to remember why all these things matter.

Trade is a force for growth and development. Trade stimulates innovation and competitiveness. Trade supports the creation of good quality jobs. And trade lowers prices and the cost of living, brings in new products, and improves the quality of people’s lives.

Of course, Korea knows all of that — Korea has achieved all of those through trade.

In fact, Korea has been an inspiration for many developing countries. It has achieved its economic success in just a few decades since emerging from conflict. 

Korea’s total trade volume increased from USD 0.5 billion in the early 1960s to over USD 1 trillion in 2013; and its GDP per capita from USD 80 to over USD 24,000.

Over the past 50 years, therefore, Korea’s GDP per capita increased by 300 times, and its trade volume by 2,000 times, with an average of 20% annual growth in exports over three decades.

More trade meant more economic growth for Korea.

As the seventh-largest exporter in the world today, Korea is:

• first in shipbuilding,
• second in semiconductors,
• third in electronic goods, and
• fifth in automobiles.

Korea is also home to the world’s biggest mobile phone manufacturer.

That’s pretty impressive.

So, over the years, the multilateral trading system, as embodied in the WTO, has been important for Korea.

The converse is also true — Korea has become a central player in the multilateral trading system.

Therefore, as we approach a critical moment for the trading system, Korea will have a central role to play.

 

CONCLUSION

Korea has always been a strong supporter of the multilateral trading system and the WTO. And Korea’s commitment and engagement contributed to making the breakthrough in Bali.

We must keep this kind of engagement.

And this isn’t just about government.

As I said at the outset, the support of the private sector was crucial in Bali — and it will be even more crucial in the future.

Korea’s own experience shows how big and how transformative trade can be.

Although it’s been only about 24 hours since I arrived in Seoul for the first time, I could see and feel the dynamism and strength of Korea. It may be the land of the morning calm but Korea is certainly full of energy and motivation for further growth.

So I urge businesspeople in Korea:

• share your stories
• tell people why trade matters, and
• explain the difference it can make in growing your businesses, and in improving your own lives and those of the next generation.

Korea’s economic success, achieved in a short period of time, supported by trade liberalization, is a model that many aspire to follow.

And, with your support, we can help them to do so — by delivering the economic gains that are on the table now and strengthening the trading system for the future for the benefit of us all.

Thank you.