WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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Minister Alexander Mora,

Distinguished guests,

Ladies and gentlemen,

It is a great pleasure to be in Costa Rica. I thank you for your kind invitation.

I am pleased to have the opportunity to meet with you during my first visit to Costa Rica as Director-General of the World Trade Organization. Actually, this is my first time in Costa Rica, full-stop!

And especially so as we celebrate the 20th anniversary of the WTO.

Since its foundation in 1995, the WTO has shown that trade can be an important element in promoting development and growth.

Costa Rica has been an important partner in that mission, as well as an example of the role trade can play in leveraging opportunities and competitiveness.

Costa Rica became a Member of the WTO's predecessor, the General Agreement on Tariffs and Trade, in 1990. And, in 1995, it became a founding Member of the WTO.

Ever since then you have played a very active role.

I would like to thank Minister Mora and Ambassador Álvaro Cedeño Molinari for their leadership and commitment.

Costa Rica played an important role in the negotiations which led to the Trade Facilitation Agreement, which we are discussing here today. I'll come back to this in a moment.

Your country also plays a major role in supporting the Organization's day-to-day work.

For example, since February 2006, Ambassador Ronald Saborío of Costa Rica has chaired the negotiating group which discusses potential reforms to the rules underpinning dispute settlement in the WTO. This is one of the main pillars of the WTO's work. It is where Members resolve major trade disputes — and so potential reforms of this system are hugely important.

Indeed, as a small country, Costa Rica is known at the WTO for punching above its weight.

This is one of the strengths of the Organization. All Members have a seat at the table, all voices are heard. So it's up to you how loudly you want to speak — and Costa Rica speaks very loud!

I think there are a number of reasons for this prominent role.

Costa Rica is blessed by its geography. Located between the Caribbean and the Pacific, and connecting the Americas, Costa Rica is extremely well-positioned to trade.

Moreover, despite its relatively small size, Costa Rica has one of the most attractive business climates in Latin America.

The stability of governance and the skills of the workforce combine to make this country very attractive to investors.

And Costa Rica has seen impressive growth in recent years.

Over the last 20 years GDP per capita has tripled.

And I think trade has played an important role as an engine of growth.

Over the same period, since 1995, Costa Rica's goods exports have also tripled in value.

Now, of course, this is not to sound complacent.

The financial crisis had an impact here, as it did everywhere. And still, economic conditions are not as favourable as they could be.

So the work to promote growth and development continues.

I think that trade will be more important than ever in terms of how we move forward.

So let me say a few words about the role of the WTO in this context.

 

ROLE OF THE WTO

In the 20 years since the birth of the World Trade Organization, the world has seen huge changes.

New centres of economic growth have emerged. New technologies have proliferated. Communication has been revolutionized. In 1995, less than 0.8% of the world's population used the internet, while in 2015 it was around 44%.

We live in a world that is more interconnected than ever.

Today globalization is fact of life. So the question is less about whether or not we like globalization — it is more about how we should respond.

Closing markets will increase inefficiencies and costs. More than that, in the long run many jobs will be lost. In the end, protection leads to a downward economic spiral, which then becomes a difficult trend to revert.

The protectionism of the early 1930s, following the Wall Street Crash, wiped out two thirds of world trade.

We did not repeat that mistake after 2008. Governments did not respond with wholesale trade restrictions. Instead the policy response was mostly very restrained. And this was due largely to the fact that governments knew that they were bound by rules and obligations of the multilateral trading system. Introducing protectionist measures would have had costly consequences — even authorized sanctions under the dispute settlement mechanism.

So we need to value and maintain the trading system to ensure that countries like Costa Rica can compete in a fair, predictable, transparent and rules-based environment.

And we need to ensure that the system can evolve to reflect the realities of today.

We have seen the scope of the Organization increase dramatically over these 20 years. We have welcomed 33 new Members: from China and Russia, to some of the least developed economies.

Our membership will shortly rise to 162 with the accession of Kazakhstan which is expected later this year. And we hope that Liberia will follow soon.

We have also worked hard in providing more transparency.

The WTO has proved very effective as a forum where Members can monitor each other's practices and regulations to ensure that agreements are being observed.

The regular work of WTO bodies, for instance, enables countries to exchange information, to raise concerns and to suggest new approaches.

When difficult issues arise, the WTO has provided a place for dialogue that very often results in mutually acceptable understandings.

If those understandings don't materialize, we offer a dispute settlement mechanism that has a solid track-record on the international stage.

In just 20 years we have successfully dealt with almost 500 trade disputes, helping our Members settle their differences in a fair, open and transparent manner.

And the topics that are being handled in the dispute settlement mechanism show that the WTO is in tune with current issues.

Recent disputes touch upon the relationship of trade and renewable energy; policies to discourage tobacco consumption; packaging information for consumers; preservation and management of exhaustible resources; and many other issues.

As jurisprudence develops and new precedents are set, the dispute settlement system has allowed the rulebook to evolve and modernize.

Of course, the system also evolves through negotiating new trade rules. This is often where the most focus is placed in the media, and it is an area where we can deliver much, much more.

Many argue that the difficulties in advancing the Doha Development Agenda show that the Organization has lost its ability to negotiate.

However, while those difficulties are very real, the reality is that Members are negotiating all the time — and delivering.

Just last month we recorded a major negotiating success when a group of WTO Members laid the basis for an expansion of the WTO's Information Technology Agreement.

Costa Rica is part of this agreement.

This is the first tariff-cutting deal at the WTO in 18 years — and it is a big one! It will eliminate tariffs on over 200 IT products. Trade in those products is valued at over 1.3 trillion dollars each year.

Eliminating tariffs on trade of this magnitude will have a huge impact. It will support lower prices, create jobs, and it will help boost GDP growth around the world. Besides, while the expansion was agreed by a group of Members, its benefits will apply to all.

This success comes quick on the heels of the WTO's successful Bali negotiations in 2013.

These negotiations led to the "Bali package", which comprised a set of ten decisions, including:

  • steps on agriculture;
  • measures for LDCs;
  • and, of course, the Trade Facilitation Agreement — the first multilateral agreement since the WTO was created.

Let me say a few words on the significance of this agreement.

It will substantially reduce trade costs, by delivering simpler, more predictable, and streamlined border procedures.

Studies suggest that the full implementation of the Trade Facilitation Agreement could reduce worldwide trade costs by between 12.5% and 17.5%.

It is estimated that it could bring a boost in trade worth up to 1 trillion dollars and create 21 million jobs, 18 million of which would be in developing countries.

Besides its economic significance, the Trade Facilitation Agreement has a number of innovative features, including its novel implementation architecture.

It allows for more flexible implementation by developing countries. It also says that practical help must be provided, where needed, to developing countries.

And we have set up a new initiative — the Trade Facilitation Agreement Facility — to ensure that developing countries get the help they need to develop projects, find partners and access the necessary funds.

Now, two thirds of Members must ratify the agreement before it can enter into force. Some have done so, but we need to increase the pace.

Therefore, I am very pleased to hear that Costa Rica will submit the agreement for legislative approval later today.

That will be an important step to realize the gains that the agreement will bring.

And again it shows your leadership on trade issues. I hope that others in the region will follow this lead and move forward with their ratification processes.

Steps taken to improve trade and integration at the regional level can be very important in boosting trade and in complementing the multilateral system.

Costa Rica itself is part of several ventures of this nature, such as:

  • the Central American Common Market;
  • the Dominican Republic-Central America-United States Free Trade Agreement;
  • as well as numerous bilateral initiatives.

Trade liberalization is contagious, and so regional efforts can serve as an inspiration towards global agreements.

However, it is also important to note that there are many big issues, such as agricultural or fisheries subsidies, which simply cannot be efficiently tackled outside the WTO.

Today the WTO's system of rules and disciplines covers around 98% of global commerce.

At a time when the global economy is more interconnected than ever, I think it is difficult to imagine a world without the WTO and the multilateral trading system.

 

CAPACITY BUILDING

But openness by itself is just not enough to promote the widespread, equitable growth that I think we all want to see.

Liberalization must be accompanied by complementary policies that facilitate an enabling environment.

Too often, poor infrastructure and complex border procedures make countries uncompetitive. They can also distance whole segments of the population — especially in rural areas — and Small and Medium Enterprises from the benefits that trade can provide.

To avoid continued marginalization, a range of policies can be effective to improve connectivity, business environments, logistics and trade facilitation.

This is why providing practical support to build capacity is another crucial element of our work at the WTO.

That's what Aid for Trade is all about. To date, more than 245 billion dollars have been disbursed for official development assistance programmes and projects.

Costa Rica is a recipient of Aid for Trade — and we are seeing the results on the ground.

In 2006 it took on average more than 35 days to export. In 2014 this was just below 15. I'm sure we can do even better.

Implementing the Trade Facilitation Agreement will help to further increase that efficiency, which helps to cut costs and raise competitiveness.

Indeed, trade facilitation was one of the top priorities mentioned by participants of an Aid for Trade survey in Costa Rica.

 

CONCLUSION

So I am determined that we should keep building on all of this work. And I think that there are two immediate priorities:

    • First — we must move forward and implement the decisions taken in Bali, to ensure that the significant benefits promised are delivered — including the Trade Facilitation Agreement.
    • And second, we must make further progress on the Doha Development Agenda.

With this in mind, much hard work is going on in Geneva.

At the end of the year, we will hold our 10th Ministerial Conference in Nairobi, the first time it has been held in Africa.

During the first semester, progress has been modest. But we have been able to start tough discussions on the main issues, such as agriculture, industrial goods, and services.

And we have had engagement at a level that we haven't seen for some years.

However, there are still significant gaps to bridge.

If we want to deliver substantive outcomes by Nairobi, we have to redouble our efforts.

Nairobi is our number one focus.

And we will take inspiration from the success of Bali — and the recent breakthrough on the ITA.

May these successes be an inspiration on our road towards Nairobi.

We have a long journey ahead and Costa Rica's support and active participation in the months to come will be crucial.

So I urge you to stay engaged in every way you can — and keep displaying leadership in Geneva.

Let's make sure we end this year with real results in Nairobi, and lay the foundations for another successful 20 years.

I would like to thank you once again for this invitation and for your very kind attention.

Thank you.

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