WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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> Roberto Azevêdo’s speeches

  

Meeting with the Confederation of Indian Industry (CII)

It is a great pleasure to be able to speak to you today.  The Confederation of Indian Industry (CII) has played an important role over the years in putting forth the views and concerns of India’s industry to the government; and helping to create a business environment that is conducive to the development of India’s private sector.

I want to get straight to the point in my presentation today as we are at a crucial moment in the WTO’s history.  As you all know, in less than two months, WTO Trade Ministers will gather in Bali, Indonesia, to try to strike a deal that would move the Doha negotiations forward. I want to give you an overview of where we are and what needs to be done in order to arrive in Bali with a significant package that delivers meaningful benefits for traders, and for development, the world over.

To better understand the importance of an outcome in December, I can 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.

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.

We do not have to sit and wait for things to sort themselves out, we have the tools to take action and push the economic recovery forward. India has taken steps, for instance, to improve fiscal and monetary stability.  Increased trade can also make its own contribution to economic growth and development — which brings me back to Bali. 

The three areas that Members are working on for Bali are: trade facilitation, some elements in agriculture and development/LDC issues. Intense consultations have been carried out in recent weeks on all three areas. Members’ engagement is there, but there are still a number of gaps to close and time is running short. 

I have just returned from the APEC meetings in Bali where I met with a number of Ministers who gave a strong endorsement to the work we have been doing in Geneva.  Of course, my main reason for being in Delhi is to meet with Minister Sharma for similar reasons, particularly given India’s leadership role in putting a Bali package together.

Let me give you a brief overview of where we stand, starting with Trade Facilitation. This is an area where businesses have the most to gain. You know well that trading across borders can sometimes be a costly and time-consuming endeavour; and, often, it is only big firms, with access to resources and economies of scale, that can pay the costs. The agreement that we are negotiating in Geneva would bind WTO Members to put in place trade facilitation measures that cut red tape and streamline customs procedures. This would offer new and economically-viable opportunities for cross-border trade to businesses of all sizes.

We have made some progress but important issues where convergence has yet to be achieved include customs cooperation — of which India is a proponent; customs brokers; pre-shipment inspection; consularization; and certain transit issues.

A message I have been giving to business representatives is that industry must make its voice heard on this issue — particularly now.  This is not the least because of the potential boost that a trade facilitation agreement can give to south-south cooperation and the opportunities it offers.  I can see from looking around this room that the businesses you represent are part of regional and global value chains for whom both import and export facilitation is important, and which is what the proposed agreement is intended to do.

Trade between India and the African continent is a case in point. India has been the fastest growing export market for African exports. African exports to India have grown at over 41.8% annually between 2005 and 2011 — higher even than the 28% recorded with China. Similarly India’s exports to Africa grew at a brisk 23.1% annually between 2005 and 2011.

The Confederation of Indian Industry has been instrumental in driving this trade expansion. “Conclaves” of Indian and African businesses and policymakers organised by CII have helped highlight the commercial opportunities in each other’s markets and reduce the risk in doing new business.

On agriculture, let me start with the proposal that India has been advancing with its G-33 partners on public stockholding for food security. It was presented in reply to food security concerns linked to instability and price volatility, which have come to the forefront particularly since the 2007-08 food crisis.  I realise that this is an important issue for India, especially at the present time.

On this issue we have made some positive progress.  There is convergence on an interim, due-restraint, solution that would allow countries to take measures to address their food security concerns, while ensuring that market distortions are kept to a minimum. Discussions are on-going to define the parameters of this solution, but I believe that with the right political input a landing zone is possible.

Another element under agriculture is export competition. While Members recognize the distorting effects of export measures, there are a number of political sensitivities that need to be addressed. The deadline set in 2005 for eliminating all forms of export subsidies by the end of this year will not be met, but I am confident there will be a willingness to work towards an outcome that is acceptable to all Members in Bali.

The other agriculture issue is tariff rate quota administration — how imports within quotas are shared among importers. I am confident we can resolve the one outstanding issue which is the operation of the S&D [special and differential treatment] component.

On development, the main discussions are on the functioning of a monitoring mechanism for S&D provisions, which would allow countries like India to raise development related concerns. We also must agree on some issues for least-developed countries (LDCs) — the poorest amongst us — that would support their efforts to integrate into world trade, such as duty free quota free market access, rules of origin, cotton and the operalization of the services waiver that was adopted at the previous Ministerial. In this regard I welcome steps India has taken to provide duty free access to LDC exports. 

The issues we are aiming to deliver in Bali represent a small package. But, this does not mean that it will not be meaningful. The Bali package is only a first step in unblocking discussions in other areas of the Doha Round that directly address issues of market access and that would hold more direct benefits for the private sector.

Advancing these issues will require urgent political attention and inputs from capitals. On my part, last week I sent a letter to Trade Ministers to emphasise the need for their personal and active engagement in the process. Minister Sharma has an important role to play in this regard, which is why I am delighted to be in Delhi for discussions with him today.

Before concluding, let me just say that I am delighted with the growing collaboration between WTO and CII.  For the 4th Global Review of Aid for Trade in July this year, CII and WTO published a joint report examining in more detail the trade and development relationship between India and Africa. In a nutshell, the report found that the trade relationship could be further deepened and broadened by addressing a series of obstacles affecting African and Indian companies’ ability to trade with each other — including trade facilitation. 

I look forward to a further strengthening of this partnership, not only in the area of aid for trade, but also in helping us better understand the impact of India’s development assistance to south-south partners and the impact that is having, or could have, on leveraging and enhancing private sector trade and investment.

Thank you for your support and I would be happy to answer any questions in the time we have available.

 

Federation of Indian Chambers of Commerce and Industry (FICCI)
WTO, Multilateral Trading System and Bali Ministerial: where do we stand & the way forward

Thank you for giving me the opportunity to speak to you today.  FICCI is the largest and oldest business organisation in India and a firm supporter of a strong multilateral trading system. It is organizations like yours that have contributed substantially to the success of the most rapidly growing economies by spurring debate, channelling the private sector’s views and influencing policy.

Keeping an open dialogue between the private sector and the WTO is important, both for the WTO — to hear your requests and your needs — and for you, the traders, to understand the latest developments at the WTO, what they mean for your ability to trade and how to influence their outcome in a way that generates real gains.

As you know, in less than two months’ time, WTO Trade Ministers will gather in Bali, Indonesia, to strike a deal that would move the Doha negotiations forward. Today, I wish to give you an overview of where we are and what needs to be done in order to arrive in Bali with a significant package that delivers meaningful benefits for traders the world over.

The slow recovery of the global economy after the 2008 financial crisis is one of the reasons why WTO Members need to strike an agreement in Bali, and fast. There are some encouraging signs that the conditions for a trade recovery are in place. The overall assessment, however, is that the figures are not quite where we hoped them to be. A combination of macroeconomic shocks and persistent protectionist threats continues to hold back the recovery.

The good news is that we have the tools to take action and push the economic recovery forward. India has taken steps, for instance, to improve fiscal and monetary stability.  Increased trade can also make its own contribution to economic growth and development — which brings me to Bali. 

A successful Bali package can further support the reduction of these imbalances. After 12 years of stalled negotiations, we would finally be able to send an important political signal that trade liberalization at the multilateral level is still possible and desirable. Most importantly for you, it has the potential to spur trade opening, improve the conditions for trading internationally and create new opportunities for economic growth and development.

The three areas that Members believe to be doable for Bali are: trade facilitation, some elements in agriculture and development/LDC issues. Intense consultations have been carried out in recent weeks on all three areas. Members’ engagement is there, but there are still a number of gaps to close and time is running short.

This is why I am also reaching out to Ministers — which indeed is the main reason for my visit to Delhi today.  I have just had a very positive meeting with Minister Sharma and am convinced that India will play its part in delivering a successful Bali outcome.  Indeed only two days ago I was in Bali at the APEC meetings where I received similarly positive signals from all of the Ministers I was able to speak to. 

Let me give you a brief overview of where we stand in the three key areas, starting with Trade Facilitation. This is an area where businesses have the most to gain. You know well that trading across borders can sometimes be a costly and time-consuming endeavour; and, often, it is only big firms, with access to resources and economies of scale, that can pay the costs. The agreement that we are negotiating in Geneva would bind WTO Members to put in place trade facilitation measures that cut red tape and streamline customs procedures. This would offer new and economically-viable opportunities for cross-border trade to businesses of all sizes.

For some Members, especially developing countries and least-developed countries (LDCs), the entry into force of the agreement would require them to undergo structural adjustments in order to improve and enhance the efficiency of their customs procedures. To help them face these challenges, the agreement envisages longer timeframes and provision of technical assistance for those countries that are not in a position to comply with certain commitments from day one.

The balance between acquisition of capacity and implementation of commitments is an important element in the discussions and would contribute to the viability of the agreement itself. Other equally important issues on which we have to intensively engage and close gaps include customs cooperation — of which India is a proponent; customs brokers; pre-shipment inspection; consularization; and certain transit issues.

Convergence on these issues is not there yet. Pressure from the business community will help. Ultimately, it is in your interest to have predictability of customs procedures, expedited clearance and release of goods, and standardized requirements.

In agriculture, let me start with a proposal sponsored by India with the G-33 on public stockholding for food security. It was presented in reply to food security concerns linked to instability and price volatility, which have come to the forefront particularly since the 2007-08 food crisis. I understand the importance of this issue for India at the present time.

On this issue, there has been some positive convergence on an interim, due-restraint, solution that would allow countries to take measures to address their food security concerns, while ensuring that market distortions are kept to a minimum. Discussions are on-going to define the parameters of this solution, particularly on transparency requirements and appropriate safeguards, but I believe that with the right political input a landing zone is possible.  This would be an important outcome for India.

Another element under agriculture is export competition. You are all familiar with the trade-distorting effects that export subsidies can have on the market and the negative impact they have on the competitiveness of farmers in poorer countries.  The deadline set in 2005 for eliminating all forms of export subsidies by the end of this year will not be met, but there is willingness to work towards an outcome that is acceptable to all Members. But this remains a politically sensitive issue.

Another issue under discussion is the administration of tariff rate quotas — how imports within quotas are shared among importers. This could help ensure more predictability of market access conditions for traders. Here, the outstanding issue remains the operation of the S&D [special and differential treatment] component. In my view, this is doable if there is willingness to find a compromise.

On development, the issues include the functioning of a monitoring mechanism for S&D provisions, the adoption of 28 S&D provisions that were agreed ad referendum at a previous Ministerial meeting in Cancún, and some issues of interest to the LDCs that would support the poorest countries in their efforts to integrate in world trade, i.e. DFQF [duty-free, quota-free] market access, rules of origin, cotton and the operalization of the services waiver that was adopted at the previous Ministerial.

An outcome in this area would be important for south-south cooperation, an area that is becoming increasingly important for India and that can offer your firms new development opportunities.

The issues we are aiming to deliver in Bali represent a small package. But, this does not mean that it will not be meaningful. The Bali package is only a first step in unblocking discussions in other areas of the Doha Round that directly address issues of market access and that would hold more direct benefits for the trading community.

Advancing on these issues will require urgent political attention and inputs from capitals. On my part, last week I sent a letter to Trade Ministers to emphasise the need for their personal and active engagement in the process. What I ask from you is to put the right pressure on your representatives to ensure that your needs and interests are translated into action.

The work of the WTO remains relevant for the conduct of business the world over. The functioning of the multilateral trading system provides an invaluable insurance mechanism against protectionism, ensures transparency in trade relations and can ease the complexity resulting from different standards for trading and customs regimes. For this reason, it is important that you remain engaged in the discussions that are taking place in Geneva.

The interests of the private sector are part and parcel of the global trade policy agenda.  By advocating for a stronger WTO, you would be supporting your own agenda.

Thank you very much and I would be happy to respond to questions.

 

 

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