SPEECHES — DG ROBERTO AZEVÊDO
Remarks by the Director-General
Dr Giorguli, President of Colegio de México,
Under-Secretary de la Mora,
Ambassador de Mateo,
Ladies and gentlemen,
Good day. It gives me great pleasure to be in Mexico and to have an opportunity to address you. Thank you for your kind invitation.
The last time I visited Mexico was in 2014. I was impressed by the country's drive to integrate with the global economy - and by your strong support for the WTO.
So, it is a pleasure to be back, and to see that trade and the WTO remain a central part of Mexico's economic strategy.
The relationship between Mexico and the WTO goes back a long way.
Mexico was a founding Member of the WTO - and continues to play a very important role in our work. And I am pleased to have next to me two great friends of the WTO:
- Ambassador Zapata, who represents Mexico at the WTO today, and chairs our negotiations on fisheries subsidies; and
- Ambassador de Mateo, who chaired the WTO's General Council in 2015 and helped lead our work in the run-up to our Ministerial Conference in Nairobi.
Both are outstanding examples of Mexican leadership at the WTO.
Mexico is also involved in our capacity-building work in developing countries, helping to build the skills required to navigate the trading system - and by so doing, spread the benefits of trade.
In fact, I am pleased to announce that Colegio de México was selected to be the host of the next WTO Regional Trade Policy Course in Latin America.
Congratulations to everyone involved! I am sure it will be a great success.
There is no doubt about the importance that Mexico attaches to the work of the WTO.
In turn, the WTO plays an important role in supporting Mexico's trade - and therefore in supporting Mexican companies and livelihoods.
A strong rules-based trading system is very important for Mexico:
- Trade helps to lower prices in the shops and offers greater choice.
- Trade helps to create jobs.
The country needs to be connected to global markets so it is very positive to see trade as an important element in the government's agenda.
Mexico is working to make trade more responsive to the needs of its people, more diversified, and more integrated globally.
I met with President López Obrador this morning and he emphasized the importance of ensuring that Mexico is well integrated with its neighbours and the wider world.
Mexico has been working to chart a promising path and there has been some significant progress in recent months.
This includes the signing of the new USMCA between Mexico, the United States and Canada, and the entry into force of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
However, challenges persist in other areas, which can also affect Mexico.
We all need world trade to work well.
In recent years, trade growth has gained momentum, but this situation is changing. This week we published new trade figures. Our economists forecast that the volume of trade in goods will drop in 2019 to 2.6%. In 2018 growth stood at 3% and in 2017 it had reached 4.6%. In other words, in the space of two years we moved from growth of 4.6% to a growth outlook of 2.6%. This is bad news for the whole world.
In 2018, trade growth slowed for a number of reasons, notably:
- application of new tariffs and restrictive measures which have considerably affected trade in goods;
- volatile financial markets;
- sluggish world economic growth; and
- imposition of more restrictive monetary conditions in developed countries.
This situation deserves our attention. Trade tensions have real economic repercussions. They heighten uncertainty and cause major disruptions.
The causes of these tensions are quite complex. They are connected to the technological revolution that we are seeing in our economies. This is disrupting the labour market and changing the political landscape.
Some also argue that the current frictions exist in part because WTO rules are not fully meeting the challenges that we face today. Therefore, the system needs to change.
There is no doubt that we need to respond to the current situation. We are working to do just that - in three key ways.
First, we are working urgently to reduce tensions.
It is essential that we work to de-escalate the situation. The WTO will continue to support these efforts through all possible avenues.
We are facilitating conversations between Members on the key issues and we are exploring possible WTO reforms. In addition, we are helping Members to resolve their disputes.
And this brings me to my second point: We have to keep delivering for the global economy.
Striking deals on issues of practical economic importance is key to demonstrating the continued relevance and credibility of the WTO.
After years without progress, more recently we have built up a good track record of progress. For example, we have achieved:
- the Trade Facilitation Agreement;
- the expansion of the Information Technology Agreement; and
- the deal to abolish export subsidies in agriculture.
Currently, many issues are under discussion. Members are looking at ways to make progress on longstanding issues such as agriculture, food security, domestic regulation in services and development.
Members are also working hard to finalize a deal on fisheries subsidies by the end of the year. In the face of an alarming decline in fish stocks, countries have a window of opportunity to set rules on state subsidies for fishing under the WTO.
Mexico chairs these negotiations under the leadership of Ambassador Zapata. It is important to keep up the momentum here.
To facilitate progress in this and other areas, we also need to consider how the trading system can work better.
This brings me to my third and final point, which is about reforming or modernizing the way the WTO operates.
There is a widely held view that we must act on this front.
The G20 Declaration in Buenos Aires last December called for improvements and "necessary reforms" to the WTO. It also underlined the essential economic role played by the Organization.
Of course, we count on Mexico's leadership as we look ahead to the G20 leaders' meeting in Osaka this year.
Members are not having this conversation because they think reform will be simple. They are talking about reform because reform is imperative in the current circumstances.
As I have said, it is being seen as a way to ease some of the big trade problems that some Members have identified, and deal with some of the issues that they have placed on the table.
Underlying this debate is real momentum that involves all pillars of the Organization:
- First, improving the functioning of our regular work. This means improving some of the main bodies that meet regularly to discuss fundamental issues like food safety, labelling or sanitary measures. This also includes ways of improving notifications and enhancing transparency.
- Second, fixing the DSB. Finding an urgent solution to the Appellate Body is absolutely critical for the system.
- Third, speeding up our negotiating processes.
A key concern of mine is that the debate remains practical. It is not about a new package or a new round. It is about advancing wherever and whenever possible.
And in this context of "reform", Members are willing to engage in different ways at the WTO.
For example, at our Ministerial Conference in Buenos Aires in December 2017, groups of WTO Members announced what they call "joint initiatives" to pursue discussions in a number of areas of emerging economic importance. They included:
- micro, small and medium-sized enterprises;
- investment facilitation; and
- the economic empowerment of women.
Mexico is part of all these conversations, as these are issues of paramount importance to your economy.
Time will tell exactly how all this work unfolds. Not all Members are part of these joint initiatives but they are open to anyone who wants to join or participate in the discussions.
And their proponents are gaining momentum. In January, 76 WTO Members (including Mexico) announced their intention to launch negotiations on e-commerce, which is of pivotal importance to every economy.
E-commerce has a great potential in the country. According to the Mexican Internet Association, the Mexican e-commerce market grew by 20.1% in 2017, reaching close to USD 21 billion. In 2014 - only three years previously - this market had been estimated at almost half that value (nearly USD 12 billion).
This is impressive. Work to facilitate these flows could further boost this growth.
The announcement by these Members marked a significant step. It is a sign that the WTO is entering a new era.
There is a real sense of ambition behind some of the issues I've mentioned today, and Members are looking at what they might be able to achieve by our next Ministerial Conference in Kazakhstan next year.
In conclusion, success on any front will depend on our ability to evolve, be flexible and creative. The world needs the trading system to succeed. Therefore, we have no choice but to evolve.
Without a well-functioning system of global trade rules, we would all lose. It would be the law of the jungle. We cannot afford to go down this path. We are facing major challenges today, but we also have an opportunity to place the trading system on a stronger footing for years to come.
I look forward to working with Mexico to that end, and to building the strong and vibrant trading system we all wish to see.