SPEECHES — DG ROBERTO AZEVÊDO

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Remarks by DG Azevêdo

Good morning everyone.

Welcome to the launch of this year's World Trade Report, our flagship publication on key issues in global trade. It is great to have you here today.

The Public Forum is all about sharing knowledge, sparking new conversations, and hearing new perspectives. So I think this is an ideal platform to launch this publication.

Every year our World Trade Report looks at an emerging trend in global trade policy. It aims to shed light on how the trading system is developing, and therefore to inform our debates and deliberations in Geneva and beyond. This year is no different. We have an excellent report to discuss today.

The topic this time is how digital technologies are transforming global commerce, and the challenges and opportunities that this will create. The focus is on internet-enabled technologies such as the Internet of Things, artificial intelligence, 3D printing and Blockchain.

I want to thank Cosimo Beverelli and Emmanuelle Ganne as the co-coordinators of this year's report, as well as colleagues from our Economic Research and Statistics Division, and other divisions, who made very important contributions to it. You've done a great job.

Trade and technology are closely interlinked – and they always have been. From the invention of the wheel, to the railways, to the advent of containerization, technology has shaped the way we trade.  

Today this phenomenon is accelerating as never before. Just think of the transformation that each of us have seen in our lifetimes – and not just my generation, this applies to the millennials too. We are living through an era of unprecedented technological change.

Some call it the 4th Industrial Revolution; others the New Industrial Revolution; or even the New Digital Revolution. But the common theme is clear – this is a revolution. These technologies are reshaping the economy before our eyes; and these are structural changes.

This was clear from the opening session yesterday. And I am glad we have the chance to continue to develop this conversation today.

In a moment Bob will guide you through the findings of the report. But first, I want to give you a few highlights to illustrate how these technologies are interacting with trading practices – and what effects this could have.

Take Blockchain. We all know the term. And it has sparked huge debate. But what exactly does it mean for trade? Well, there is a wide range of potential applications.

Blockchain is essentially a tamper-proof, decentralised digital record of transactions. It is a tool to create trust and it is said to be highly resilient.

It could therefore support smaller businesses to start trading by helping them to build trust with partners around the world. It could enhance the transparency of supply chains, accelerate the digitalization of trade operations and automate contractual transactions. In this way it could deliver significant cost reduction and revenue gains. In fact, studies estimate that by 2030, the gains from Blockchain could deliver 3 trillion dollars of value worldwide.

Similarly, AI and the Internet of Things have a huge number of potential applications.

They will enable significant efficiencies for traders. They will, for example, help companies to track products along the supply chain and optimize route planning.

3D printing could transform what we buy. Instead of a finished good, we would be buying the code needed to reproduce it. This could democratize manufacturing by giving everyone the ability to produce goods. This will certainly lower the barriers to entry to smaller companies and entrepreneurs.

The effects of all these changes will be significant.

The report estimates that, by cutting trade costs, these technologies could boost trade by up to 2 percentage points per year until 2030. That amounts to growth of 31 to 34 percentage points over 15 years.

The report also shows that the reduction in trade costs driven by these technologies can be especially beneficial for smaller businesses and for firms from developing countries. But, as ever, this depends on appropriate complementary policies being put in place.

If that is the case, then developing countries' share in global trade could grow from today's 46% to 57% by 2030.

The report also highlights potential changes in the structure of trade.

Beyond easing trade in goods, digital technologies can facilitate services trade and enable new services to emerge. The report predicts that the share of services trade could grow from 21% to 25% by 2030.

For example, Blockchain could give rise to a new generation of services, particularly in areas such as financial services, transportation, logistics and retail distribution. In this way, Blockchain could be to the services sector what robots are to manufacturing.

However, this also throws up important policy questions.

These technologies are blurring the distinction between trade in goods and trade in services. Between data flows and intellectual property. And they are giving rise to a number of concerns. This includes the effect of these technologies on market concentration, loss of privacy, productivity and the digital divide.

Will these technologies empower smaller economies and smaller producers to compete? Or will they fuel greater exclusion?

Will the changes lead to an expansion in global value chains, further shifting production activities to developing countries? Or will we see the opposite effect as it becomes more efficient to bring production activities back together in so-called "smart factories"?

How can we ensure that we have the right policies in place to spread the opportunities provided by this revolution and overcome the challenges?

These are very important questions, which deserve our close attention.

These technologies are becoming ubiquitous. Increasingly they are shaping every element of the economy and every element of our lives. We can't simply leave our future to chance, or simply trust market forces. We have a duty to make this technological revolution work for everyone. 

So we can't shy away from this debate. Not least because it is linked with a broader ongoing debate about trade and globalization.

These are challenging times for trade. Trade tensions are on the rise. This is extremely serious.  Continued escalation risks a major economic impact.

All this requires an urgent response. There is a responsibility on the whole international community to help resolve all these issues.

And we must listen to the concerns which stand behind the moves to restrict trade. History has shown that jobs are being lost in manufacturing and in agricultural production. The anxieties felt by workers are real and must be addressed.

But the majority of the jobs that are lost - around 80% - are being lost due to automation and new technologies – not trade. And we know that with technological advance, new jobs are also created – jobs that we hadn’t imagined before.

We have to respond to these accelerating structural changes – and we have to do so in full possession of the facts. 

If we misdiagnose the situation and think that choking off global trade is a solution, we will only bring greater harm.

We need an informed debate about trade and technology, and the World Trade Report is a significant contribution to these efforts.

The fact is we are entering a new economic era. It demands new thinking. How we will respond is the defining question facing governments around the world today.

There is much to discuss – and much to do. Unfortunately I cannot stay for the debate this morning, but I look forward to receiving a full report of the proceedings. And I know that we have a fantastic set of panellists here today to discuss all these questions.

So thank you all for joining us. I wish you a very productive event. And I urge you all to read this report!

Thank you.

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