While in Lithuania the Director-General also met with the Minister of Foreign Affairs, Linas Linkevičius, and the Lithuanian Confederation of Industrialists. In addition, he gave a keynote speech at a Trade Policy Conference entitled ‘Global trade - what’s in it for us?’, held at Lithuania’s National Gallery of Art, and took part in a panel discussion. The Director-General’s speech is available below.

Remarks by DG Azevêdo

Excellencies,
Ladies and gentlemen,

Good afternoon.

It is an honour to be here today.

This is my first visit to Lithuania. And it is a particular pleasure to be here during this special year, as you mark the 100th anniversary of the restoration of your independence. Congratulations!

This is a very significant moment for the Lithuanian people. It is an important occasion to reflect on the progress made and, of course, to set the path for an even brighter future.

We had a moment earlier this afternoon to tour the exhibition of Antanas Sutkus, here at the National Gallery.

It gave a powerful insight into Lithuanian life and culture through the years. And one thing in the literature about the exhibition struck me very clearly. It talked about the photographer's conception of the country in the 1950s as: "Planet Lithuania, which in those days was almost as difficult to reach from the west as the moon."

Well, what a journey you have been on since then.

With a range of reforms, together with membership of the European Union and the World Trade Organization, today Lithuania is an open and connected economy. It is well integrated with its neighbours and the wider world.

I congratulate President Grybauskaitė on her leadership in taking the country through the latest stage of this journey.

I'm proud that the WTO has been an important partner here. And I want to ensure that we continue to be an important partner in the years to come.

With that in mind I'm pleased to have this opportunity today to set out why trade and the WTO are so vital for Lithuania, for the EU, and for the entire global community.

We are meeting against the backdrop of a rather uncertain and mixed global economic landscape.

New tariffs announced this year cover hundreds of billions of dollars in trade. Further measures have been proposed. And, at present, continued escalation is a real possibility.

Although only some countries are directly involved at this stage, the potential impacts of these tensions could spread far and wide. Further escalation would cause significant disruptions for workers, companies and communities everywhere.

We need to maintain openness and stability in global trade.

In fact, in these times of rising tensions, I think it's vital to remember the fundamental importance of maintaining, developing and improving our trading relations.

The question posed by today's conference is:  'global trade – what is in it for us?'

And I think the answer is clear. What's in it for all of us is:

• First, lower prices in the shops, and greater choice.
• Second, jobs – in fact one in five Lithuanian jobs are export-related – and these jobs tend to be better paid as well.
• Third, opportunities to sell your goods and services abroad, and
• Fourth, stronger and more stable economic growth.

These benefits are certainly vital but they only capture the economic effects - and this is only part of the picture. Trade also connects us with the world – to other people and other cultures.

It's because of trade that here in Vilnius you can buy Italian shoes, or South African wine, or a smart phone which contains parts from hundreds of suppliers around the world.

It's because of trade that we can watch American films or use Japanese apps.

And it's because of the closer and more stable relationships that trade fosters that we can enjoy more peaceful relations with other nations.

In all of these ways, trade makes our lives better.

And it is the WTO that underpins the smooth flow of trade around the world, and which enables us to seize these benefits.

When Lithuania joined the WTO, the then President Valdas Adamkus welcomed the "more reliable, transparent and predictable rules and regulations" which the system brings.

This is exactly right.

The WTO provides the constitution for global trade, establishing shared principles which underpin trading practices around the world. It provides the only global forum for discussion and debate on trade issues. It provides the mechanisms for countries to monitor and review each other's trade policies. And it provides the means to settle disputes when they arise. 

The WTO is also tasked with negotiating new agreements to update the rules. For a long period little progress was made on this front. But more recently we have begun to change that, delivering a number of important agreements with significant economic benefits. 

In the last five years members have struck a range of deals, such as:

• the abolition of agricultural export subsidies,
• the expansion of the Information Technology Agreement, and of course
• the Trade Facilitation Agreement.

Together, these measures represent the biggest trade reforms in the WTO's history.

In each case, the EU was at the centre of the negotiations – and I want to pay tribute to Lithuania's leadership as well.

The Trade Facilitation Agreement is particularly notable. It was the first multilateral deal ever done by the WTO. Its impact could be greater than the abolition of all remaining tariffs around the world.

Lithuania held the Presidency of the EU Council during the crucial period when the deal was struck. And so you played a key role in achieving that historic outcome.

You continue to play a leading role today. Lithuania's Permanent Representative in Geneva — Dalia Kadišienė – currently chairs the Committee which oversees the implementation of this agreement.

And of course we don’t want to stop there – we want to keep delivering.

At present members are working hard to meet a 2019 deadline for an agreement on fisheries subsidies. This is a very important piece of work that would deliver on a key element of the Sustainable Development Goals.   

We are also striving to advance other important and longstanding issues, such as agriculture, food security, services and development.

And it is important to note the activity in a range of other areas as well.

Groups of WTO members have launched new 'joint initiatives' to discuss a range of areas of emerging economic interest. These areas include e-commerce, investment facilitation, support for small businesses to trade, and the economic empowerment of women. It won’t surprise you to hear that the EU is closely involved in all of this work.

Time will tell exactly how these initiatives develop. Although these initiatives are not supported by all members, the proponents are building real momentum. Members themselves will decide what they want to discuss and how they want to do it.

While this goes on we are also working to tackle the tensions that we see rising between major trading partners.

There is a responsibility on the whole international community to help ease tensions and avoid the risks that further escalation could bring.

Our economists have been assessing a variety of possible scenarios to develop this picture, including the impact of a full, global trade war. 

By this we mean a breakdown in international trade cooperation, where instead of tariffs being set cooperatively in the WTO or in other trade agreements, they are set unilaterally.

Under this mindset, tariffs would rise sharply.

We would see a reduction of global trade by around 17%.

This would cause a very significant slowdown in GDP growth, and bring major disruptions for workers, firms and communities as they adjust to this new reality. Potentially millions of workers would need to find new jobs; firms would be looking for new products and markets; and communities for new sources of growth.

Clearly, we can't afford to go down this road.  

We need to see more dialogue – both bilaterally and through the WTO.

In fact, this situation is putting a new focus on the multilateral trading system as a place where solutions may be found.

At the root of the current tensions is the argument that the world has changed significantly and that the trading system is not responsive to the new realities on the ground. Therefore, the argument goes, the system needs to change in order to properly address these new challenges.

Some see this as an opportunity to update the organization and revamp the trading system for a new century. Others have doubts about this emerging discussion and would prefer to focus on completing longstanding work.

Whatever the precise arguments, there's no question that this focus on WTO 'reform' or 'modernization' is growing rapidly. A serious and substantive debate is beginning to emerge, driven by leaders around the world.

And we should keep in mind the wider context in which this debate is playing out. These are not ordinary times…

• In some senses we are still recovering from the crisis of 2008. Many countries are still dealing with its after-effects.
• At the same time we are experiencing a new era in the form of the 4th industrial revolution, as new technologies reshape many aspects of our lives and the economy.

These historic events have combined to foster a sense of fear and uncertainty about the future, creating an upsurge in anti-trade and even anti-foreign sentiment.

One important element here is the perception that trade is taking people's jobs and sending them overseas. In reality the driving force behind job losses is innovation and higher productivity enabled by technology. Eighty per cent of jobs lost are because of these forces – not because of trade.

Regardless of the causes, it's clear that people feel left behind by economic change.

This requires real action – and much of this will be about domestic policies on education, skills, adjustment support and other labour market reforms to help workers adapt to the new economic realities. Each country will have its own recipe here – there is no single right answer.

But one thing is clear, no one is going to be helped by choking off trade. If we turn our backs on trade and the outside world, in the end everybody loses.

So while members debate WTO reform, we need to keep a proper perspective on all of these issues.

The momentum behind this conversation is growing.

WTO reform has been raised with me in my interactions with a variety of leaders. And no doubt it will be a key issue when we meet at the G20 summit in Buenos Aires in two weeks' time. That meeting will be an important moment – and I know that the EU is coming with ideas to put on the table.

I will be there and I will be bringing a strong message about the vital importance of maintaining and strengthening the trading system, in everyone's interests.

On the substance, a variety of initiatives and meetings are being prepared, and a range of priorities have been suggested by WTO members, including by the EU, US, China, Japan, Canada and many others. These priorities include, for example:

• resolving disputes and reaching agreements more rapidly and effectively,
• addressing a variety of trade distorting practices that are either not covered or are just partially covered by existing disciplines,
• avoiding protectionism and unilateral actions, 
• advancing current work, and
• improving notifications and transparency.

These are all important issues. But at present there is no common view on whether and how they should be taken forward.

I will be supporting our members at every stage to find ways to facilitate their work and to strengthen the system for the future.

In all of the current discussions, probably the most urgent issue facing us is the crisis in the dispute settlement system. The specific issue here is the impasse in appointments to the Appellate Body.

This could eventually threaten the functioning of the whole dispute settlement system as we know it.

There are some signs that members are engaging more deeply here. And proposals are being brought forward. But we need to see a major shift in gears and positions if we are to make progress.

I am redoubling my own efforts in this area and I continue to urge members to do all they can to expedite this discussion and find ways forward.

This is a real systemic risk – and it demands urgent action.

To conclude, I think it's clear that we have many challenges before us today.  

But the key challenge is for us to transform this crisis into an opportunity.

The trading system has been under pressure before, and each time it has emerged stronger.

In 2008, faced with the worst economic crisis for many decades, the system proved its value, preventing an outbreak of protectionist measures.

In 2013, after years of deadlock, we proved that we could deliver negotiated results.

Today, we must rise to the challenge again.

Indeed, I believe that if we want this system to thrive, we need to fight for it like never before.

We cannot take the system for granted. It is only as resilient as its members' commitment to defend and strengthen it.

Lithuania's history is one of resilience in testing times – rising up to face challenges to build a more prosperous future.

This is the kind of leadership that we need.

So I count on your continued support, together with the EU, to ensure that the trading system continues to underpin all of those benefits that I have detailed today.

Together we can ensure that trade plays its full role in building the brighter future that we all want to see.

Thank you.