WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO


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Thank you Gary (Hufbauer),
Ladies and gentlemen,

It's a pleasure to be in Washington once again.

I want to thank our friends at the Peterson Institute for organizing this event.

In 1995, 128 governments came together to create a global organization to govern trade.

Now, 20 years later, I think it is a good time to assess the progress made so far, and also to think about what the next 20 years might hold.

The US has played a leading role throughout the history of the multilateral trading system. And that leadership will be as important as ever as we shape its future.

Yet, often, in the active trade debate in Washington nowadays, the WTO does not feature very strongly. You are more likely to hear about the TPP or TTIP negotiations.

And this is no surprise. The WTO has faced big challenges over its 20 years, some of which have shaken people's faith in the system. The slow progress of the Doha Round is an obvious background in any such conversation.

There is no denying this — and I will come back to the negotiating function of the WTO in a moment. But it is important to remember that the WTO is about more than its negotiating function alone.

The organization is much broader, and so I think we should also remember the significant contribution that the WTO makes to global economic governance.

 

ACHIEVEMENTS OVER 20 YEARS

Trade is now governed by a robust organization, with a much broader scope than in the GATT years, and backed-up by a fully-functioning, automatic and mandatory dispute settlement system.

As a result, the cause of liberalised, inclusive, rules-based international trade has been advanced significantly.

In these two decades, 33 members have joined the WTO, including big players such as China and Russia. So today, the WTO covers 98% of global trade flows.

It is no coincidence that, over this period, average tariffs have fallen dramatically — in fact they have been cut in half. Average applied tariffs were 15 per cent in 1995. Today they stand at less than 8 per cent.

And trade volumes have more than doubled.

In addition, social issues have come to the fore in the trade debate over this period. The impact of trade policy on people's lives is something which is always on my mind — largely because it can be such a powerful tool in the fight against poverty.

The new Sustainable Development Goals which are being agreed this week in New York are a reminder of this as they place significant emphasis on the role that trade can play.

 

And of course the visit of Pope Francis is another reminder. His Holiness has delivered important messages on the role of multilateralism in providing an equitable trading system which supports small and poor countries.

I think the debate at the WTO now puts much more emphasis on these important issues — and of course, the voices of developing and least-developed countries are heard in that debate as never before.

It is also worth remembering that much of the day-to-day work of the organization goes unseen, but it is vital in administering the global trading system, and keeping commerce flowing.

On a daily basis, WTO members monitor each other’s practices and regulations to ensure that agreements are being observed.

The regular activities of WTO committees and bodies, for instance, enable members to exchange information, raise concerns and suggest new approaches on a range of standards and regulations. They deal with all sorts of real-life issues — from the use of chemicals in toys or toxins in food, to the labelling of products. Hundreds of issues are raised and discussed each year.

Moreover, our regular monitoring exercises, examining countries trade policies and trade restrictive measures, help to improve transparency and avoid protectionism.

In this way the system helped to avoid an outbreak of protectionism after the financial crisis. We have stepped-up our monitoring work since then.

Our latest report shows that trade protectionism remains of concern to the global economy. However, there has also been some more positive news in the most recent reporting period showing that the number of trade liberalizing measures has also been improving.

When disagreements arise in these monitoring activities — as they often do — the WTO offers a platform for dialogue that very often results in mutually acceptable understandings.

If disagreements prove unbridgeable, 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 members settle differences in an open and transparent manner.

This is a phenomenal level of demand.

It has put pressure on the dispute settlement system. But I think that pressure is a result of its success.

And the topics that are being handled in our disputes 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.

In this way the jurisprudence arising from these cases can help to update trade rules in an incremental way.

Indeed, the fact that the bulk of the WTO rulebook is now 20 years old is not, in itself, a problem.

When they founded the WTO and agreed the legal texts, our members provided the equivalent of a constitution for global trade.

That constitution enshrines the basic principles of trade — such as non-discrimination, or national treatment — which will stand the test of time.

But of course, we do need to negotiate new rules as well.  Especially where we need more clarity or where we have no disciplines at all.

Overall, I think the organization has helped to enhance global cooperation on trade in a range of ways.

But our underperformance on the negotiating front has become our Achilles heel and is something we cannot ignore if we are seeking to improve the overall health of the organization.  

 

NEGOTIATIONS AND RTAs

Of course there have been some real negotiating successes in the WTO over the past 20 years.

We have negotiated new agreements and improvements in Telecommunications, Financial Services, and Government Procurement.

In fact, we had a major breakthrough in the expansion of the Information Technology Agreement this July.

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. So that means the deal will eliminate tariffs on approximately 7% of global trade.

Now, these are examples of agreements that were negotiated by groups of members.

But we have also shown we can deliver multilaterally.

The Bali Package — negotiated two years ago, and including the Trade Facilitation Agreement — is clear proof of that.

Again this will deliver real economic benefits — providing a boost of up to 1 trillion dollars each year to the global economy, once the agreement is implemented. 

So promising steps have been taken.

But clearly, we need to deliver more, and to deliver it more quickly. And we cannot naively expect that market access negotiations would move as fast multilaterally as they do regionally and bilaterally.

This is illustrated by the emergence of the major Regional Trade Agreements that we are seeing today.

And we must consider how these agreements fit with WTO rules in particular.

This is something that the G20 has asked us to take a detailed look at.

What we have found so far is that WTO rules provide the basis for many RTAs. When RTAs deal with issues covered by WTO disciplines, those disciplines are maintained. This is mostly the case in anti-dumping provisions, safeguards, technical barriers to trade, sanitary and phytosanitary measures, and rules of origin in services.

However, RTAs also go beyond WTO rules in some areas. And we need to think about the implications of this into the future, as RTAs tackle new subjects. A proliferation of different rules and standards would be a drag on business, so this is an important area of work.

But of course, we shouldn't overstate the issue. The multilateral trading system has always coexisted with regional agreements — and proved to be mutually reinforcing.

Indeed, there are many issues which RTAs cannot address, such as agriculture or fishing subsidies. These are issues that need to be discussed collectively, with a multilateral approach.

And so this puts the spotlight back on the WTO — and our capacity to negotiate.

 

FUTURE OF NEGOTIATIONS

We need to have a firm, honest look at the current situation.

Right now, we are working hard to deliver meaningful outcomes in our next Ministerial Conference in Nairobi, this December. This will be the first time such a meeting has been held in Africa.

But as things stand today — and this won't come as a surprise — it doesn’t look like there will be big breakthroughs in the issues that have been stalled for so long, such as domestic support in Agriculture and market access in Agriculture, NAMA and services.

The gaps in these areas are still very big. The situation may change, but there are few signs of this at present.

And if there are no prospects for a major advance on these issues, members will need to face the reality. They will need to think about what they want the WTO to be and how it should work in the future.

It's a very important debate. The paper prepared by the Peterson Institute earlier this year, on the future of the WTO, was a welcome contribution to the discussion. Indeed it is a debate receiving attention at the highest political levels. At the Brisbane meeting last year, G20 leaders discussed what can be done to make the international trading system work better. And they plan to return to it at their Summit in Turkey in November.

Despite differences on major issues, I think there is still potential for a meaningful agreement in Nairobi. And indeed delivering a successful Nairobi meeting is perhaps the best thing we can do to make the system work better.

From conversations with a wide range of members — and groups of members — I sense that a set of deliverables in Nairobi is within reach.

These include outcomes on export competition in agriculture, as well as a number of provisions to improve transparency in several areas.

And crucially, there is a broad understanding across the membership that those deliverables must include significant steps on development and LDC issues.

We must continue our efforts in domestic support and market access, but we also need to start some serious work on these promising issues. 

So that is our immediate challenge.

Looking at our negotiating prospects more broadly, I think a look at our history can provide some important clues on possible ways forward.

We have proven that we can negotiate at the WTO, and we've often had success where we've taken more innovative approaches.

I see this work as following two broad tracks.

The first track is where all members are involved.

In these cases we are talking about a very diverse group. So the approach must reflect that.

This means that we can't have a monolithic, rigid outlook. In my opinion, the days of the ‘one size fits all’ approach are gone.

We need to have flexibilities inbuilt into agreements, which allow members to take on obligations at an appropriate pace according to their capabilities, and providing assistance to help them to do so when necessary.

Bali — especially the Trade Facilitation Agreement — provides precisely  this type of template.

This provided a new attitude to the way we look at negotiations, and proved that we can find common ground.

So I think this is food for thought.

Now, the second track to advance negotiations is one that embodies less than the full membership — for example, in pursuing sectoral agreements.

These kinds of approaches have provided an important avenue for groups of members to tackle specific issues of importance to them.

And this is a format we know how to work with, and where we've had many achievements.

Just look at the breakthrough we had in negotiating the expansion of the Information Technology Agreement.

And this is also the template followed by the prospective Environmental Goods Agreement — which again tackles a very important, emerging sector.

Of course, this track can be more rigid and demanding in its application, and demands much effort and commitment. Thus, not all members might be equipped to join them.

But because the agreements are negotiated in the WTO, their benefits are available to the other members as well.

So we have at least two possible ways to explore negotiations. And let's not ignore the possibility of hybrid approaches.

Of course, major trade rounds are very important. But the trading system has never been limited to that.

When progress is more difficult, we need to use the full range of tools available to us. We need to be innovative and keep an open mind to new formats and approaches.

 

CONCLUSION

The question posed in the title of this event today is: what are the future prospects for global co-operation in trade?

I think that the answer, based on WTO's track record in the last 20 years, is that the prospects in most areas are encouraging. Indeed I am positive about the future of the Organization. I certainly do not agree with some of the doomsayers who would say the best years are behind us. It is quite the opposite!

Today the WTO is firmly established as part of the architecture of global economic governance. The rule of law in trade is spread wider than ever before. And the daily work of administering the system — monitoring trade policies and settling disputes — provides an invaluable framework for members.

Yes, we need to look at how we can restore the negotiating function to a more positive footing — but I think we made a good start to that in Bali and again earlier this year, and I want to ensure that we continue this in Nairobi.

While I would not deny that we face real challenges, if you expect to be a truly relevant institution for global economic governance, the challenges and the stakes are always going to be very high. 

Our record in recent years shows that we can deliver — and that we can do so in a variety of ways.

We should not lose sight of that. We must build on recent success in order to deliver even more in future.

And we have some clear next steps ahead of us to make it happen.

This starts with delivering the expanded Information Technology Agreement, implementing the Trade Facilitation Agreement and other Bali outcomes, pushing forward the Environmental Goods Agreement, and — most important of all — delivering meaningful outcomes in Nairobi.

In fulfilling this mission, your involvement and contributions will be as important as ever.

I hope we can continue to rely on your support — and welcome your views on the way ahead.

Thank you.



24.09.2015
DG Azevêdo speaking at the Peterson Institute in Washington D.C.

 

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