SPEECHES — DG ROBERTO AZEVÊDO
Remarks by the Director-General
Minister of Foreign Affairs, Mr Rodolfo Nin Novoa,
Mr Enrique Iglesias,
Mr Sergio Abreu,
Ladies and gentlemen,
It is a great pleasure to join you today to celebrate the 25th anniversary of the conclusion of the Uruguay Round. Thank you for the kind invitation.
This is my second visit to Uruguay as Director-General of the WTO. I have also had the chance to serve for three years in the Brazilian Embassy in Montevideo earlier in my career. And of course, I interacted with Uruguay on several occasions as a trade negotiator.
So, I have been able to witness the importance of trade for this country. Here we have an example of the role trade can play in leveraging opportunities and competitiveness.
To be able to achieve that, Uruguay counts on the vision of its leaders. And indeed, Uruguay itself has helped to build and strengthen the multilateral trading system.
The life story of Julio Lacarte – it would be remiss of me not to mention him – is virtually indissociable from the history of the GATT and the WTO. He participated in the historic Conference in Havana in 1946, where everything began. And almost half a century later, he became the first Chair of the Appellate Body. Julio elevated Uruguay to a unique place in the history of cooperation on world trade.
Uruguay has been a Member and an important player of the global system of trade rules for over 65 years. The country has made many contributions to construct this vital global good.
And of course, a huge milestone in that road has been Uruguay's leadership as the host of the GATT Ministerial Meeting in Punta del Este in 1986.
That meeting – chaired by Enrique Iglesias, whom we had the honour of listening to a few moments ago - launched the Uruguay Round. That was the largest trade negotiation ever, and it culminated in the creation of the WTO. It launched the basis for the multilateral trading system as we know it. And the person who banged the gavel to ratify the Marrakesh Agreement was Sergio Abreu, who also delivered his address to us.
The Round was innovative in many ways.It shifted the mandate and scope of the GATT by expanding the ambit of trade negotiations, including notably trade in services, intellectual property, and agriculture and textiles.
But the major goal of the Uruguay Round was not only to expand the coverage of the rules, it was also to make these rules universal.
Ultimately, the Uruguay Round brought about the biggest reform of the international trading system since the end of the Second World War, when GATT was created.
This included the establishment of a permanent global trade organization – the WTO - to administer the new multilateral trade agreements, to monitor national trade policies and to settle trade-related disputes.
By creating the WTO, commitments were made on a much wider array of issues. Now the system looks not only at the cross-border movement of goods but also of services, capital, ideas and people. And it sets binding multilateral rules on non-tariff issues, relating even to trade rules behind the borders. This has helped produce a much stronger and clearer legal framework for international trade.
All this has helped tousher in a more open and integrated global economy.
The negotiations of the Uruguay Round resulted in tariff reductions of up to 40% and the liberalization of new sectors.
The new system also reflected a more diverse and globalized world. In 1947, the GATT started with just 23 contracting Parties. This figure grew to 128 at the end of the Uruguay Round. Currently, the WTO has 164 Members, with 22 countries in the process of acceding to the organization.
Today, all the world's major economies are part of a single economic system – covering 98% of global commerce.
And while industrialized countries dominated the GATT, developing countries play a key role in managing the WTO, in shaping its agenda and in actively negotiating its agreements.
In fact, since 1995, the developing countries' share of global merchandise trade has grown from 27% to over 43%.Their share of global GDP has risen from 41% to over 53%.
The system has also played another essential role in promoting the rule of law in international economic relations and bringing stability and predictability into trading relations.
The WTO’s dispute settlement system helps Members resolve trade tensions, offering a useful tool to depoliticize areas of friction.
The dispute settlement system is highly effective and is one of the fundamental pillars of global economic governance and peace – and it is highly effective. To date, the WTO has dealt with almost 600 trade disputes. Many disputes are resolved before they reach the litigation stage, but when they do proceed to that stage compliance with rulings is very high, at around 90%.
As you know, some Members have been raising concerns about the way the Dispute Settlement System works. We are striving to deal with those concerns and advance a dialogue which will improve this essential pillar of the WTO. But this is a complex endeavour and, so far, I cannot say that we have a solution in sight.
But what I can say with regard to negotiating and upgrading the trade rules is that we have had important achievements in the past years with significant economic benefits.
In 2013 WTO Members agreed the first multilateral deal of the organization: the Trade Facilitation Agreement. This deal aims to streamline, simplify and standardise customs procedures.
It is expected to help to cut trade costs by an average of 14.3% globally, creating more than 1 trillion dollars in trade annually. This is a bigger impact than the elimination of all remaining tariffs in the world today.
In 2015, the Members reached an agreement on the elimination of export subsidies for agricultural goods. This was the biggest reform in agriculture trade in 20 years.
At the same time, a group of WTO Members struck a deal to eliminate tariffs on a range of new generation information technology products. Trade in these products is worth around 1.3 trillion dollars each year. That is bigger than global trade in automobiles and auto parts.
In addition, Members have taken decisions to help Least Developed Countries to better integrate into the trading system. They have also taken steps to improve food security, and brought into force the amendment to the TRIPS agreement, which helps developing countries have easier and affordable access to generic medicines.
Together, these deals represent the biggest trade reforms in a generation.
So, looking back at our trajectory, there is much to be celebrated. The system has fostered greater cooperation between nations, facilitating huge advances in economic well-being around the world. It has supported job creation, prosperity and development. And it has helped to lift millions of people out of poverty.
However, when the Uruguay Round was concluded, global leaders could not have foreseen how much the world economy would change. Nor could they foresee how deep and challenging these changes would be.
New technologies are revolutionizing the global economy. They are completely transforming the way in which goods, services and information are designed, produced, paid for and exchanged.
Of course, this process of technological innovation is not new.
But now in the 21st century, what is unprecedented is the pace and speed of these new technological developments.
Trade in services, data, and information is surging across digital platforms. And we know that traditional trade in manufactured goods, agricultural products, or natural resources is also increasingly enabled by digital technologies.
Current estimates indicate that global e-commerce sales grew 13% in 2017 alone, totalling around 29 trillion dollars.
All this presents many opportunities to leverage trade as a tool to promote economic development. At the same time, this unprecedented technological advance is also driving big structural changes.
Productivity gains from new technologies are reducing the demand for labour in more traditional sectors. Studies indicate that in manufacturing, up to 8 out of 10 jobs could be lost due to higher productivity, not cheaper imports – that usually take the blame for it.
We need to respond to all of this and adapt. These are challenges facing governments and societies everywhere – in both developed and developing economies.
And the trading system must also respond to these challenges.
A key element here is to help defuse trade tensions.
At the WTO we are working urgently to reduce tensions.
We are also seeing people raise their voices. Business leaders and associations are calling on governments to refrain from putting up new barriers. They are asking for governments to negotiate and find solutions – to protect the system. The system is the last wall between what we now have and the law of the jungle.
Fortunately, most people are also understanding that trade tensions lead to uncertainty, and greater uncertainty risks investors pulling back, and jobs being lost.
In a changing world, I think that the only way to strengthen the system is by helping it to evolve. And we are working to do precisely that at the WTO.
Members of the Organization are engaged in a number of debates to make the WTO more agile and more responsive.
They are looking at how we might be able to improve the regular work of the Organization.
They are also looking at ways to advance our negotiating work – including through exploring new flexibilities and innovative approaches.
Updating the rulebook is fundamental if the trading system is to truly respond to the needs of this new economy.
The major issue here is whether or not we can make progress multilaterally, in undertakings by all Members.
We have to find innovative ways to inject new energy and momentum into longstanding multilateral issues.
This includes issues such as agriculture and food security. It also includes negotiations to address fisheries subsidies. This is a very important area – and Members are working to meet the end-of-year deadline to strike a deal.
Groups of Members are seeking to complement the multilateral path with initiatives launched at our Ministerial Conference in Buenos Aires in 2017. These groups are discussing issues of emerging economic importance.
Not all WTO Members are part of these groups. But each of them is open to anyone who wants to join or simply participate in the discussions.
We are seeing real momentum in this work.
One important topic under discussion is e-commerce. 80 Members accounting for 90% of global trade are engaged in the negotiations.
And I think this is quite right. Surely any modern, effective trading system has to deal with digital trade.
This was given a boost at the G20 summit last June. Leaders of 24 economies issued the "Osaka Declaration on Digital Economy" committing to reaching "substantial progress" in the negotiations by the 12th WTO Ministerial Conference in June 2020.
Another topic is Investment Facilitation. Discussions here involve 70 Members accounting for around 72% of trade and 66% of inward foreign direct investment. Their goal is to develop a multilateral framework to streamline the bureaucracy and improve the transparency involved in making investments.
In addition, a group of Members is discussing new regulatory disciplines for services trade. It comprises 60 Members, representing 73% of world trade.
Finally, other groups of Members are also pursuing discussions on micro, small and medium-sized enterprises and women's economic empowerment.
Uruguay is part of all these debates. Ambassador José Luis Cancela is doing an excellent job as Coordinator of the MSME Group.
Our 12th Ministerial Conference in Kazakhstan in June next year is an obvious landmark for all these conversations.
We need to keep working hard on all of these fronts if we want to see progress. And we should stay pragmatic to deliver where and when we can.
In celebrating 25 years since the conclusion of the Uruguay Round, we are celebrating a huge milestone of trade multilateralism.
Of course, multilateralism is not perfect. It does not magic away our differences and disagreements. But it does give us the means by which to resolve them in a peaceful, cooperative manner.
We are experiencing a period of huge and very rapid change.
These changes transcend national borders – they need a global response.
We need a new sense of common purpose to improve and update global cooperation, fit for the challenges of today's world.
I have no doubt that Uruguay will continue to be a leading voice here. I look forward to keep working with all of you to that end.Thank you.