WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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> Roberto Azevêdo’s speeches

  

Good evening everybody. Thank you for coming.

I’m delighted to be here in Canada.

And there could hardly be a more appropriate venue for our discussions this evening.

Scotiabank, with operations across the Americas and Asia, is a symbol of Canada’s outward focus — and so I would like to say a particular thank you to our hosts for arranging this event.

Canada has a strong history of leadership in global trade.

Since the multilateral trading system began with the General Agreement on Tariffs and Trade in 1948, Canada has been at the forefront.

The former Canadian trade negotiator Professor Michael Hart, wrote that:

“No country expected more of GATT than Canada. And no delegation was more enthusiastic about the prospect of a sound basis for international trade co-operation than that of Canada.”

Perhaps, therefore, it is not surprising that it was Canada that put forward the proposal for the very creation of the WTO during the Uruguay round of negotiations.

And of course you have been pursuing trade liberalization through a variety of channels — not just through the multilateral system.

Since the Free Trade Agreement was signed with the US in 1988 Canada has shown a continuous zeal in negotiating new bilateral and regional agreements.

Canada has free trade agreements in place with 10 countries. The most recent — the FTA with Honduras — came into force just last week. And you are in negotiations with over 60 more countries.

You are very active in the Trans-Pacific Partnership talks, and the Comprehensive Economic and Trade Agreement with the EU is nearing completion.

There’s a great deal of work going on.

Of course I understand why increasing efforts are being made in all these different formats — and I will come back to this.

But it is important to note that it is not happening at the expense of your engagement at the multilateral level.

Canada remains a key partner of the WTO.

Indeed, I am joined today by Ambassador Jonathan Fried, Canada’s ambassador to the WTO.

Ambassador Fried is the current chair of the WTO’s General Council — our highest decision-making body when we don’t have a ministerial conference.  And he has been at the heart of all our efforts to revive and strengthen the multilateral trading system.

So this history of leadership at the multilateral level continues.

And it is more important than ever.

The WTO is facing a challenge, the gravity of which is hard to overstate. In July we reached a major impasse - and we are now in the midst of a concerted effort to resolve it and move forward.

This is the core of what I want to talk about this evening — the challenges we face, what they mean for global trade, what they mean for Canada, and what they mean for you. Because, of course, our work affects the business environment in which you all operate.

Building on the GATT before it, the WTO has, for the last 20 years, provided the basic rules to help trade flourish in an open, stable and predictable manner.

We’ve been resolving trade disputes and monitoring trade practices in a very successful manner. These are two important functions of the Organization.

In fact, Canada is one of the most active users of the WTO’s dispute settlement system. Since 1995, Canada has been involved in 148 disputes across a range of diverse sectors, from softwood lumber to aircrafts.

And again Canada is a big supporter of the system. Together with New Zealand, Canada has provided the highest number of panellists to judge these disputes.

So this important — even unique — body has performed to a very high level over recent years.

However, the same cannot be said about our capacity to negotiate new trade rules.

The WTO has failed to deliver new multilateral results since its creation. This third function of the WTO needs urgent repair.

This is our defining challenge today - and it explains why it is so important that we overcome the current impasse. 

It is sobering to reflect that our current trade rules were agreed 20 years ago - and that they are therefore yet to enter the 21st century.

Yet, over this same period, the way we trade has changed fundamentally. Technology, innovation, shifting markets and shifting production chains mean that business has been transformed.

And of course we knew that this would be the case.

We do have in place very fundamental and wide ranging principles.  Without them the trading environment would be unpredictable and unfair.  The will of the strongest would prevail.  We simply cannot live without the WTO anymore. 

However, the rules were meant to evolve over time to address new situations. The original WTO agreements were designed to be built upon and to respond to the world as we find it today. 

And this is why our breakthrough in Bali last December was so important.

Ministers from every WTO member finally took a major step in updating multilateral rules by unanimously agreeing to the so-called Bali Package.

Canada played a major role in this success — and I pay tribute to the considerable efforts taken — including by the business community in giving their support to the deal.

The 10 decisions which make up the package have economic significance by themselves, but together they also opened a new chapter for multilateral trade negotiations. The success of Bali created new momentum for further negotiations. It has the potential to change the game.

And some of the Bali decisions are of direct interest to your businesses.

You are probably familiar with the Trade Facilitation Agreement, for example. Once implemented, this agreement will help streamline border procedures in all WTO Members, reducing the time and cost of trade operations worldwide. The benefits have been estimated at up to a trillion US dollars a year.

So the successful adoption of the Bali package was a big moment.

However, WTO Members are now facing a considerable challenge in implementing what they agreed. This is the impasse that we are trying to resolve now. 

I won’t go into the precise details of the difficulties we are having — though I would be happy to do so during our discussion in a few moments, if it would be helpful. For now, I think it is sufficient to say that the outcome remains unclear. 

My hope is that we will be able to implement the Bali decisions — and that therefore we will be able to resume our broader negotiating agenda. 

Together with the Members, we are working to make sure this is the case.

But if no solution is found then members must ask themselves some tough questions — about how they see the future of the Bali package and the post-Bali agenda. And what this means for the WTO’s negotiating function.

In this context, I’m sure that many of you are paying attention to the bilateral and regional negotiations that I mentioned earlier - and you are right to do so. If I was in your position I would do the same.

But the two tracks are not mutually exclusive.

Bilateral or regional agreements are not a new phenomenon.

In fact they pre-date the multilateral system because, in a sense, they were the seeds which grew into the 1947 General Agreement on Tariffs and Trade.

You can argue that the GATT was effectively a multilateralisation of the network of reciprocal trade agreements that countries had been pursuing for some years previously.

And we have always allowed for new agreements to be created. Both the GATT and now the WTO have specific rules providing for this.

So these initiatives co-exist with the multilateral system — and they can bolster it in a significant way.

They are bricks which can help build the edifice of global trade rules and liberalization.

But there is no doubt that these agreements have grown much more rapidly in recent years.

253 RTAs that are in force today have been notified to the WTO.

These initiatives are important for the multilateral trading system — but they do not substitute it — so we need to remain engaged at all levels. And let me explain why.

To start with, there are many big issues which can only be tackled in an efficient manner in the multilateral context through the WTO.

Trade Facilitation was negotiated successfully in the WTO because it makes no economic sense to cut red tape or simplify trade procedures at the border for one or two countries — if you do it for one country, in practical terms you do it for everyone.

And this is not the only issue that’s inherently multilateral.

Financial or telecoms regulations can’t be efficiently liberalized for just one trade partner — so it is best to negotiate services trade-offs globally in the WTO. 

Nor can farming or fisheries subsides be tackled in bilateral deals.

Disciplines on trade remedies, such as the application of anti-dumping or countervailing duties, cannot significantly go beyond WTO rules.

The simple fact is that very few of the big challenges facing world trade today can be solved outside the global system. They are global problems demanding global solutions. 

Indeed, it seems self-evident to argue that global companies, operating in global markets will inevitably demand global rules.

It is true that global companies are more ready for, and able to cope with, regulatory complexity — even if it is an increasing draw on resources. However, the SMEs tend to lose out.

SMEs are increasingly trading internationally but inevitably they don’t have the same capacity to overcome barriers, such as complex and differing regulations in target markets. 

Lifting the burdens and costs on traders is likely to disproportionately benefit SMEs — and after-all they tend to be the big job creators.

Global rules support this effort. And they provide an important backstop, so that even if we’re not always moving things forward, we know that because of the multilateral system countries cannot fall back into bad practices and raise new barriers. 

And we need to look at the bigger picture.

Low growth in the US and Europe, along with signs of declining growth in the emerging economies has led to suggestions that we didn’t just lose GDP growth in the years since the crisis — but that the level of potential growth has declined too.

Of course you know all about this — as businesspeople you’re living and breathing this “new normal” every day.

We need to find structural ways to respond and to boost productivity — and sustainable trade liberalisation is an obvious candidate.

It is a long time since any major steps on this front:  almost 20 years since the completion of the Uruguay round and the creation of the WTO — and almost 27 years since Canada’s FTA with the US. 

We are living off the liberalization of the past — we are living off the reforms negotiated by the last generation.

And we all know that the big market access gains will come not through negotiating free trade agreements with countries that already have low tariffs — but through negotiating with those that still have big cuts to make.

In the end, although bilateral and regional free trade agreements are welcome, they are not opening up new markets.

So we have to raise our sights. And I think we need to remember why we created the multilateral system in the first place.

It was created precisely to open up new markets — to ensure that multilateralism and the rule of law, backed-up by the means to settle disputes fairly, was spread as far and as wide as possible — with all the benefits that that can bring.

Moreover, it was created to spread the values of openness, freedom and peace.

With that in mind, we can’t afford to be complacent.

We have to fight for the multilateral trading system which underpins global trade, and all the other agreements that are now being pursued.

And this is the time to do it.

This is the time to renew our focus on the system.

We must resolve the current impasse and begin to define the path forward for the WTO.

Canada helped to create this system — and you have helped to sustain it through thick and thin. Today your leadership is more important than ever.

And the voice of business will be crucial.

Thank you.

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