> Roberto Azevêdo’s speeches
Ladies and gentlemen,
I am delighted to be here — and I’m especially pleased to be co-hosting this event with Secretary-General Kituyi.
We are committed to strengthening the partnership between our two organisations in support of trade and development. And I think this joint-session today is a sign of that commitment.
We all know there has been a sea-change in the way the global economy operates in recent years.
More open trade and investment — combined with huge advances in transport and communications — have changed how we do business.
The factory assembly line first described by Adam Smith over two centuries ago has evolved into today’s global assembly line. Trade and investment have become linked like never before.
And this has given rise to a number of significant challenges.
First, many are finding there are real obstacles to joining these emerging networks of production.
Investment is an essential element in dealing with these issues — by helping to improve infrastructure, for example.
And therefore stability is a major factor. Investors are looking for two things: predictability and returns. So, in order to give investors the confidence to commit to a country, political stability and a business-friendly regulatory environment are crucial.
And we must also acknowledge that there are some risks. For example, the potential race-to-the-bottom on domestic regulation that competition for investment can seem to encourage.
Second, a more globalised world rewards policy coherence — and punishes incoherence.
In a world of integrated production it makes no sense to make a huge effort to try to liberalize and attract investment without also ensuring that goods and services can cross the border in an effective and timely manner.
Third, multilateral rules are becoming more, not less, important.
Global firms operating in global markets need global rules. Many new areas of trade policy today are inherently multilateral.
Trade facilitation is a good example. It makes little practical sense to streamline border processes for a handful of partners — if you do it for one, you essentially do it for all.
The same logic applies in many areas — such as subsidies, services regulations, and intellectual property rules — all these issues are more amenable to multilateral treatment.
Fourth, global negotiations have become more complex. There are more countries at the table, more issues, more public scrutiny of negotiators. And of course all of this is very welcome.
But inevitably it also makes the process of reaching agreement even more complicated.
So here’s the dilemma: global economic governance has become more important, but also more difficult.
And I think the current situation in our negotiations at the WTO illustrates this rather well.
The Trade Facilitation Agreement, which members agreed in Bali last December, is a good, practical response to some of the emerging issues I’ve raised — such as coherence, for example.
Moreover, it would enable developing countries to provide a more transparent and predictable trading environment — which are key ingredients for attracting foreign investment and increasing trade.
Indeed, economists estimate that the Agreement could lead to an expansion in developing country exports of up to 9.9%.
Moreover, for the first time, developing countries would receive technical assistance and capacity building support to help them deliver the Agreement.
So this WTO Agreement underlines why global action is so important and so powerful — particularly for developing countries. But I’m afraid it also shows how difficult the process can be.
As you are probably aware, we are currently at an impasse in terms of the implementation of this Agreement, due to the political linkages being drawn between the Trade Facilitation Agreement and other decisions that were taken in Bali.
And these problems are not unique to the WTO — far from it.
Multilateralism has been struggling on a number of fronts in recent years. The danger is that the international order is not keeping up with the pace of global economic change.
And this really matters because the globalized economy can deliver enormous benefits.
By linking up to sophisticated trade and investment networks, developing countries have the potential to fast-track their growth. And many have already proved this — such as, Korea, Mexico, China and many others.
But, as I have indicated already, it takes a lot of work to get onto this fast-track.
Countries have to do a great deal of homework and ensure they fit into these global assembly lines. This is not an easy enterprise.
And instead of using domestic resources, it is much more efficient if countries can attract foreign investors — because of the multiplying effect that this can provide by bringing in new technologies and methods of production.
The fact is that the capacity to get onto this fast-track and integrate into the global economy differs significantly from country to country.
So what is the solution? How can we maximise the developmental potential of trade and investment for the benefit of all?
There are several steps we can take. I would highlight just three today:
- One — we need to reengage at the multilateral level — and we need to be pragmatic about what that means. Local and regional responses will be an important component — and we see this a lot, particularly in Africa for example — but again the multilateral trading system can assist these initiatives.
- Two — the importance of trade and investment for development should be present in the SDGs which are now being negotiated in the UN.
- And three — we all need to do a better job of explaining to the wider public why the global economic system matters.
Therefore this forum, which brings together such a broad range of stakeholders, is an ideal place to start this conversation.
So I am truly happy to be here and I look forward to hearing your views. Thank you.