WTO NEWS: SPEECHES — DG ROBERTO AZEVÊDO

Remarks by Director-General Roberto Azevêdo


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Good afternoon everyone.

Welcome to our second plenary session of the 2015 WTO Public Forum.

As you know, our topic for this session is “Making trade work for business”.

At our session this morning I outlined to you — in a broad sense — how the activities of the World Trade Organization have helped trade to work better across a number of areas.

Our debate highlighted that when trade is accompanied by the right policies, it can have a transformative effect.

It can help to attract investment, create jobs, and provide better access to technologies.

And this is something the private sector knows all about.

The rules we deal with at the WTO bear directly on businesses’ ability to connect to global trade flows.

When trade is working well — or not so well — businesses are the first ones to feel the effects.

Already today we have talked a lot about jobs, growth and development. All of these concerns have a common thread — and that is: business.

They are the job creators. They are the wealth creators. Any positive effect of trade is transmitted by them.

So the private sector voice is crucial in this debate — and we are pleased to give you this platform.

I think at the WTO we have taken some concrete steps to make trade work for businesses — big, medium, small and micro — in both developed and developing economies.

Our work here is all about lowering barriers, improving connectivity, and raising capabilities.

We aim to provide people with the tools and the skills they need to join trade flows and benefit from them.

That’s what the WTO’s Aid for Trade initiative is all about.

Research has found that one dollar invested in Aid for Trade results in nearly 8 dollars of exports from developing countries in general. And in the poorest countries, that one dollar becomes 20 dollars.

So this is important work.  

Another big step was the Bali Package.

Bali was a historic moment for the WTO. And the support of the business community was vital in making it happen.

A range of significant outcomes were achieved there. They included outcomes in agriculture, food security, and issues that are a priority for the least-developed countries.

They also included the Trade Facilitation Agreement.

The business community is well aware of the problems caused by high costs and long delays at the border — and the barriers to trade that they represent.

These barriers can often mean the difference between being able to compete internationally or not.

So the Trade Facilitation Agreement aims to lower, or remove, these barriers. The Agreement is essentially about streamlining and simplifying customs procedures to cut the cost of trade.

It could reduce the cost of trade by up to 15% and by doing so, it is estimated that it could boost global exports by around 1 trillion dollars per annum.

This is very significant.

These reforms will bring a higher level of predictability to customs processes, making it easier for businesses — especially the smaller enterprises — to join global value chains.

Another recent success which will support business growth is the plan to expand the Information Technology Agreement. 

This will eliminate tariffs on some 200 IT products whose trade is valued at 1.3 trillion dollars per year, or around 7% of total global trade today.

The immediate impact of this will be significant. And, more than that, the secondary effects will also be very important. IT products are a key input to many production processes. So this expanded agreement could have a big impact on lowering production costs and creating jobs.

And I hope that we can maintain this momentum.

An Environmental Goods Agreement is also in the pipeline. Again this tackles a very important, emerging sector — so the economic impacts could be very positive.

And although these sectoral agreements are at this stage being conducted by groups of members, their benefits extend to the whole membership.

We must advance the broader range of our negotiating work as well, especially as we look ahead to our 10th Ministerial Conference in Nairobi.

Members are constantly seeking to reform trade rules to make them fairer, more sustainable and more enabling for businesses around the world.

With this in mind, I think there are two issues which I would like to highlight. 

One is making sure that the trading system works for SMEs.

These businesses are the backbone of many economies. In fact, they employ over 60% of the private sector workforce around the world.

Yet they suffer more from administrative burdens than large enterprises, particularly in developing countries.

Of course the bigger corporates can find ways to overcome obstacles and still access markets in a competitive way. But high trade costs and low connectivity exclude SMEs from markets altogether.

So lifting these burdens and facilitating their access to global markets could have big benefits. In fact, when SMEs connect to global value chains the benefits often go to sectors of the economy that can be most marginalized.

Implementing the Trade Facilitation Agreement is vital in this effort, so work on this front is key.

Another important issue is trade finance.

Up to 80% of global trade is supported by some sort of financing or credit insurance.

However, since the 2008 crisis the supply of credit has not yet returned to normal levels, especially in developing countries.

Also, in many cases, the domestic financial system is less than adequate. This means there are some big financing gaps, particularly in Africa and Asia.

The estimate for the value of unmet demand for trade finance in Africa is between 110 and 120 billion dollars.

In Asia, the unmet demand for trade finance is estimated at over one trillion dollars.

This means that all too often, opportunities for growth and development are missed.

Businesses are deprived the fuel they need to grow.

By bridging this gap we could unleash the trading potential of many thousands of individuals and small businesses — because those are the ones who find it hardest to access trade finance.

We want to work with business to deliver all of this. And clearly there is a lot of work to do.

This morning we published our updated trade forecasts.

For 2015 we now expect trade growth of 2.8%, down from the previous figure of 3.3%.

For 2016, it has been revised to 3.9%, slightly down from the previous estimate of 4%.

And, significantly, these figures are compared against a 20 year average of 5% growth.

In light of this, we can’t lose our focus. We need to ensure trade keeps playing its role to support growth.

In recent years the WTO has shown that it can deliver agreements with real economic impact.

Now we need the support of the business community to move ahead once again. The record shows that when we join forces — private sector and governments in the WTO — we can achieve a great deal.

So, I think we have much to talk about — and again, we have a fantastic panel.

I welcome back our moderator, Lerato Mbele. Also a special welcome to:

  • Gregory Domingo, Secretary of the Department of Trade and Industry of the Philippines;
  • Terry McGraw, Chairman of the International Chamber of Commerce;
  • Roland Auschel,  Board Member at Adidas;
  • And Evelyn Nguleka, President of the World Farmers’ Organization.

We have a very wide range of interesting perspectives here — and I’m sure our debate will be very engaging.

So thank you for joining us. I look forward to our discussion.

Now, let’s get started. Over to you Lerato.

 

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