Ladies and gentlemen,
I would like to thank Minister Natalegawa and Minister Wirjawan for inviting me to Bali. Indeed this is my first ever APEC meeting. I have always heard from the outside as a Brazilian Ambassador and Senior Official about APEC’s key role over many years in supporting the multilateral trading system. I am glad to now be on the inside — so to speak — and look forward to working with you all at a time when the multilateral trading system could certainly use your help.
As you know, in two months’ time, WTO Members will gather here in Bali for our 9th Ministerial Conference. I’m sure I won’t be the first Director-General who has come to you asking for help and saying that the WTO is at a standstill with negotiations at an impasse. This has now been the situation for many years.
But things are changing. I would like to explain the current situation and why you should look afresh at what is happening in Geneva. I believe we have the opportunity now to make some long overdue progress. Success in Bali in December is a vital first step.
And it is a clear possibility: a first harvest is within reach. Intensive engagement by members on a package for Bali is going well — indeed there is a new negotiating dynamic present in Geneva. Members are talking to one another in ways that we have not seen for a number of years — trust has been growing, compromises suggested and flexibility shown. We are making progress in our efforts to shape an outcome centred around trade facilitation, agriculture and development.
But we are not there yet — in fact the challenges are still quite significant and time is running out. This is why I wrote to all WTO Trade Ministers last week to highlight the need for close political engagement in the process starting now.
To better understand the importance of an outcome in December, let me give you an overview of the economic context in which we are operating
Only two weeks ago, the WTO reviewed downwards its estimates for world trade growth. For this year, WTO economists predict a growth rate of just 2.5%, down from the 3.3% forecast in April. This is much closer to the disappointing 2.3% rate seen in 2012. For 2014, trade growth is expected to accelerate, but the rate has been revised down to 4.5% from the earlier 5.0% forecast. Predictably, these downward revisions in trade are accompanied by a slight downward revision of world GDP estimates.
Of course, it is not all bad news. Despite the downgraded figures, there are some encouraging signs that the conditions for a trade recovery are in place. Developed economies are improving their economic position. Demand for imports in developing countries has been resilient and has continued to somewhat compensate for the drop in developed economy imports. But the figures are not quite where we hoped they would be. Global trade is registering some acceleration, but it remains below the 5.4% average growth rate of the past 20 years.
Of course, there are many reasons for the downgrading. To a certain extent, it has to do with macroeconomic shocks. But the steady accumulation of protectionist measures is also playing its part in holding back the recovery.
The latest WTO report on G-20 trade measures showed that the cumulative trade impact of import restrictions since October 2008 is estimated at around 0.2% of G20 trade. This is not a high percentage and it seems to indicate that, overall, (a) countries have resisted protectionist pressures; and (b) the WTO disciplines are doing their part in keeping the temptation of protectionism at bay.
However, these figures should not mislead us into thinking that protectionism is no longer a threat. Protectionism has evolved. These reports often fail to account for new and less detectable protectionist measures. Indeed, protectionism, today, no longer presents itself in the form of tariffs, export subsidies and other traditional trade policy tools. It has become more complex and sophisticated. It is hidden in regulations and standards which sometimes can be used for protectionist ends — and which exploit convenient loopholes and grey areas in the current WTO Agreements. We need to upgrade these agreements — current disciplines reflect the world of more than 20 years ago.
This is why Bali is so important for the WTO. It is just a first step, but a sorely needed one. The issues currently on the table for the WTO Ministerial may not directly address all market access concerns, but they are nevertheless important, as a first step in giving new momentum to the WTO negotiations. And the issues are not complex — and I believe can be resolved in a way that would be beneficial to all. The issues are certainly doable. It is achievable and this is why your political engagement is critical.
APEC’s track record on trade facilitation can help us in Geneva. You know the benefits of reducing trade barriers and the cost of business transactions across borders. But just think of the new opportunities that can open up with a multilateral trade facilitation agreement that binds 159 countries to take measures that cut red tape and streamline customs procedures. Other important deliverables are in sight on food security and agriculture export competition, the administration of tariff rate quotas and some issues of interest to developing countries and LDCs. These are all areas where APEC members, with their experience and the lessons learnt, can give an important contribution.
Another area, where you can help is the Information Technology Agreement. ITA participants today represent around 97 per cent of world exports in information technology products. APEC members are at the forefront of these discussions and I would urge those of you involved to press on with a view, hopefully, to the harvesting of an ITA product expansion package in December.
Time is not on our side. We need to act fast.
We have less than 2 months to reach consensus on the Bali package. The engagement that Members are showing in Geneva is encouraging. However, I am calling for your help as well — this will be vital to get us over the line in December and set the WTO and the whole multilateral trading system in a much-needed positive direction.
The stakes could not be higher.
We have the opportunity to put the global trading system back on a secure footing, not just for the Asia-Pacific region, but for the world as a whole, and for the least-developed above all.
In closing, I wish to thank once again the Indonesian Government. We will working together to make the Bali WTO Minsiterial a success.
And thank you all for listening. I look forward to the discussion in the coming days.