SPEECHES — DG ROBERTO AZEVÊDO
Monsieur Pierre Maudet, Conseiller d'Etat du canton de Genève,
Mr Claudio Bozzo,
Ladies and gentlemen,
Good evening and welcome to the WTO.
It's great to have this opportunity to interact with all of you today.
Your interest and engagement are very important. Chambers of commerce play a very important role in international trade.
You are usually the first point of contact for companies looking to go international. You play a critical role in familiarizing them with foreign markets, regulations and trade-related procedures. You also help them find new business opportunities and potential partners.
All this work is of great value, especially for smaller companies, or those that don't have such expertise in-house.
However, making trade more inclusive requires us to understand how it is evolving. This is essential to help businesses reap the benefits of changes in the trading environment.
It is clear that the modern economy is going through some big structural changes.
Automation, digitization and new business models are revolutionizing our economies. These new technologies are completely transforming the way goods, services and information are produced and exchanged.
Clearly, this process of technological evolution is not new.
But today the pace and speed of these new technological developments feels unprecedented.
Innovations spread faster than ever. For example, the spinning mule, a key device in industrial-scale thread production, was invented in 1779. It took more than 100 years for this technology to be used in some developing countries.
Many of us here are from developing countries. Still, the smartphones in our pockets and bags were invented in 2007.
Societies once had decades to adapt to the transformations imposed by new technologies. Today we have a few years.
This pace of progress is completely changing labour markets. And it is making people nervous about their jobs and their families' future prospects.
Productivity gains from new technologies are reducing the demand for labour in traditional sectors such as agriculture and manufacturing.
Trade can become an easy target for those complaining about the loss of manufacturing jobs. But studies show that in some economies, eight out of ten job losses in industry are due to higher productivity rather than cheaper imports.
Of course, the so-called “fourth industrial revolution” will not make all jobs disappear. It is highly likely that more jobs will be created than lost — just as new kinds of work have emerged in countries where most people used to be farmers.
But we should be clear: the jobs being lost and the jobs being created will likely demand very different skills. They may even be in different geographic regions of a country. And, most likely, the person losing a job in the manufacturing sector will not be the one getting the new job in the more dynamic sectors of the economy.
In addition, there will be major structural changes. One such effect is the increasing weight of the services sector.
Our latest World Trade Report shows that, on average, trade in services has grown 5.4% per year since 2005, significantly faster than trade in goods.
It also shows that developing countries' share of global trade in services has grown dramatically: by more than 10 percentage points since 2005.
Yet enormous potential remains untapped. It requires investments in institutions and regulation in importing countries. Chambers of commerce could potentially play an important role in bringing the business voice to these processes.
Governments and societies everywhere — developed and developing countries alike — need to respond to these tectonic shifts in the economy. They need to help people and businesses to seize opportunities and adjust to dislocation.
Much of this response will be domestic, in terms of social policy as well as action by the private sector.
But there's also a role for international cooperation in making the regulatory environment more supportive for businesses of all sizes, in countries at all levels of development. That's where the World Trade Organization fits in.
The WTO is the only organization dealing with trade rules at the global level.
This rules-based trading system plays an essential role in maintaining a stable and predictable environment for doing business across borders.
But we can do more to improve the system. Global rules need to be updated to better respond to the challenges of the modern economy. The rules of the WTO were negotiated in the 1980s. We had no internet back then.
World leaders are talking about WTO reform — and we are working in exactly that direction.
Groups of like-minded members are bringing the issues of the new economy to the agenda of the WTO.
One of these so-called joint initiatives is looking at how to help micro, small and medium-sized enterprises to trade internationally.
MSMEs are the backbone of many economies, representing more than 90% of all companies and accounting for about 60% of employment. They are major employers of women and young people, and a key driver of innovation.
Despite that, their participation in world trade does not reflect their importance domestically.
Enabling these firms to tap into international markets in greater numbers would help make the trading system more inclusive.
There are also talks ongoing in e-commerce. Eighty members — accounting for 90% of global trade — are engaged in negotiations on rules to govern the digital sector that is transforming the global economy.
More and more trade is conducted via digital technologies and platforms. According to the latest 2017 data, e-commerce sales have grown by 13% year-on-year to around USD 29 trillion. But there is still huge potential to be explored. Transactions between firms and end consumers (B2C) accounted for only 13% of total sales. And of those transactions, only 11% crossed borders.
In the absence of a framework of shared rules to regulate digital commerce, the risk is that larger market participants will benefit at the expense of smaller ones.
Besides, unilateral policy decisions could fragment the digital economy, leading to higher costs and uncertainty for consumers and businesses. That's why these WTO e-commerce talks are so important.
And there are other themes on members' radar:
- how to facilitate direct investments,
- making domestic regulation more supportive of trade in services, and
- leveraging trade's contribution to women's economic empowerment.
There is also multilateral work ongoing to advance longstanding issues, such as agriculture and abolishing harmful fisheries subsidies.
The reform discussions also address other issues vital to the functioning of the WTO.
For example, improving the work of our regular bodies by, among other things, improving transparency and members' notifications.
Another focus of discussions is the crisis in the WTO Dispute Settlement System.
Members are exploring options for addressing the impasse over the Appellate Body, but have not yet agreed on a solution. Finding a way forward on rules enforcement, even if imperfect, will be important for preserving the integrity of the WTO system.
Despite the challenges around dispute settlement, the broader reform debate has created a window for our members to address different issues of interest to them in innovative ways. We should seek to capitalize on this momentum.
Our 12th Ministerial Conference in Kazakhstan in June 2020 is an obvious milestone for all these conversations.
We need to keep working hard on all fronts if we want to see progress.
To drive any of these issues forward, we need engagement — from all stakeholders.
Your voices can help rebuild confidence in trade and the trading system.
In recent years, we've built a very positive dialogue with the business community. Such conversations help the system remain up-to-date with the needs of its users.
We also have our annual Public Forum. This year we received more than 3,000 registrations. There were 140 sessions — another record — organized by different stakeholders, particularly the private sector. That reflects the importance that different stakeholders attribute to our work.
So let's keep this conversation going.
There is no doubt that we face a range of extremely complex challenges in the international trading system.
But this is also a unique opportunity to strengthen and modernize the system. We must address major systemic issues and pragmatically advance negotiations where possible.
So it's great to count on your support.
I look forward to working with all of you as we continue to prepare the trading system for the future.
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