Tuesday 3 September 2002
Trade and Sustainable Development: The Doha Development Agenda
World Summit on Sustainable Development High-Level Special Roundtable : The Future of Multilateralism
Your Excellencies, ladies and gentlemen,
First of all, I would like to thank you, Mr. President, and the Government and people of South Africa for hosting this UN World Summit and for your tireless efforts to make it a resounding success. I do not need to describe to you the many challenges we face in achieving sustainable development or the consequences of failing. You know them well.
The reality of globalization is an increasingly interdependent world. The title of this roundtable, “The Future of Multilateralism”, is an apt one. Leadership in our increasingly global and interdependent world is about the art of cooperation and consensus. It is about defining common goals and interests, and of coherently managing the complex interdependence of global issues. This can only be successfully achieved through the full and effective participation of all countries. The world needs a reaffirmation of our choice of multilateralism over unilateralism; stability over uncertainty; consensus over conflict; rules over power. This Summit, which comes at an important time, is an essential reaffirmation of these values.
At Doha last November, in a climate of dangerous international uncertainty, WTO members showed the determination to make multilateralism work. It is salutary that this Summit has recognised trade as one vital component to achieving sustainable development. I greatly welcome the political reaffirmation that Heads of State and Government at this Summit have given to the negotiations launched at Doha last November. Your call for WTO Members to fulfil the commitments made in the Doha Declaration adds further impetus to our work. At Doha, Ministers launched a new Round of trade negotiations. At this Summit, Leaders have called on WTO Members to bring these negotiations to a successful conclusion. It is through the Doha Development Agenda negotiations that difficult issues of tariff peaks, tariff escalation, subsidies and other trade distorting measures can be resolved and new areas progressed.
I want to highlight three simple but vital points on how trade can contribute to sustainable development :
- Trade barriers harm the poorest
- Removing trade barriers helps alleviate poverty
- Trade liberalization is a powerful ally of sustainable development
Trade offers one solution. But for sustainable development to work, we will also need solutions in other areas and we need these solutions now and not in some hypothetical future. And finding solutions begins with recognising that shared problems cannot be solved by unilateral approaches. The reality today is that multilateralism is the only sustainable way to secure our global future.
There is great expectation about the results of these negotiations and for good reason. The World Bank's Global Economic Prospects 2002, estimates that abolishing all trade barriers could boost global income over a ten year period by US$2.8 trillion. Of this, developing countries stand to reap more than half of these gains and an additional reduction in global poverty of 320 million people by 2015. These are rough estimates, but they provide us with a clear indication; freer trade, accompanied by appropriate domestic macroeconomic policies and a sound legal framework, is vital in helping poor countries grow their way out of poverty and move on to the path of sustainable development.
UN Secretary-General Kofi Annan has called on donor countries to double present levels of assistance to US$100 billion a year in order to meet the Millennium Development Goals. At the same time, UN estimates show that official development aid provided by developed countries has fallen to an average of 0.22% of their GNP. So, how do we pay for the Millennium Development Goals and make the vision of sustainable development a reality? One answer is in assisting developing countries to benefit more from trade and generate the resources needed for development. The Doha Development Agenda is more than a catchword or a vague expression of shared sentiment. It offers the promise of real development gains. An open trading system will help increase income levels and reduce poverty.
The share of developing countries in world trade has grown to around 30 per cent and it could be made to grow even higher. One way to do this is by improving market access for products of particular interest to developing countries such as agriculture and textiles. In the WTO, developed country members have committed themselves to respond to the concerns of developing countries but more could be done. This one action, opening up markets, will make a huge difference to the lives of millions. We should also remember, trade is not a zero-sum game. It is not just developing countries that will gain from trade liberalisation, developed countries will also benefit. For instance, agricultural support in developed countries which comes close to US$1 billion every day, represents a cost to developed country tax payers and consumers. This is just one example, among others, of a trade practice that hampers the development of poor countries' trade. Of course, market access is not the only factor. Developing countries must also have the capacity to produce products that meet market requirements.
The Doha Development Agenda is not the answer to every problem, nor should it attempt to be. But it provides a chance to make a difference. I believe the prospects to conclude the Round and to make the results serve each and everyone are good. The negotiating framework is in place and substantive negotiations are underway. To further advance the negotiations, we need the active participation of all WTO members to make sure their concerns and interests are taken into account. We also need civil society to be informed about the negotiations and continue to provide their critical inputs. Elected representatives, in particular, need to know about decisions which potentially affect the communities they represent and make their interests and concerns known.
Let me touch on a few areas where progress in the Doha Development Agenda will help poorer countries reap further gains from trade and enhance their potential for sustainable development :
- Agriculture: is and has always been a fundamental sector and for many developing countries, agriculture is an issue of life or death. Agriculture is critical to the successful conclusion of the negotiations. Ambitious liberalization in this sector can offer big potential gains for all countries, particularly developing countries. WTO members are committed to comprehensive negotiations aimed at addressing market access, export subsidies and trade distorting domestic support. Progress in the agriculture negotiations alone amounts to a substantial development agenda. More than 50 developing countries depend on agriculture for over one-third of their merchandise export earnings. I welcome the commitment by the EU to reform the Common Agricultural Policy. The US proposal in the WTO for trade reform of agriculture is another encouraging step. However, there is more which could and needs to be done. The eventual elimination of trade distorting measures which affect agricultural trade will be a tremendous boost for sustainable development. The World Bank has estimated that phasing out restrictions on agriculture could lead to higher income in developing countries of some US$400 billion by 2015. The gains from this are several times larger than all the debt relief granted to developing countries so far.
- Textiles and clothing: this is another key sector where developing countries have comparative advantage. WTO members have reaffirmed their commitment to the full and faithful implementation of Agreement on Textiles and Clothing by 2005. The full integration of this sector into the WTO has a huge potential for generating employment and foreign exchange for many developing countries.
- Tariff peaks and tariff escalation: after many rounds of trade negotiations, average tariffs on non-agricultural products have been significantly reduced. But relatively high tariffs still remain on some products in which developing countries are competitive and tariffs go up as the level of processing increases. Tariff escalation prevents developing countries from moving away from dependence on a few commodities. Tariff peaks and tariff escalation must be brought down by the negotiations, if developing countries are to be able to meaningfully gain from world merchandise trade. Transforming market access opportunities into concrete gains will also depend on the willingness of countries to implement reforms at home to enable their firms to take advantage of market openings abroad.
Particular efforts will be needed to address the marginalization of least developed countries, most of which are in Africa. For instance, the share of sub-Saharan African countries in world trade was less than 2 per cent last year. Improving market access in products of export interest to least developed countries will make a huge difference. I welcome the reaffirmation by this Summit of the commitment taken at Doha to the objective of duty, quota-free market access for products originating from least developed countries. Market access is vital but more is also needed in other areas. Investments are needed in human resources, in institutions and in building the physical infrastructure for trade to take place. The WTO, for its part, has significantly increased its technical cooperation activities. But our expertise lies in assisting countries to implement WTO agreements and to build their capacity to negotiate, not in development assistance. Well defined partnerships and better coordination with other institutions within a coherent policy framework will be key to building the capacity of poorer countries to trade. In this continent, the creation of the New Partnership for Africa's Development (NEPAD) is an inspiration. It is an important African-initiated step forward onto the path of sustainable growth and development, and I commend the efforts of African people and leaders.
The WTO's contribution to sustainable development goes beyond raising incomes and helping to alleviate poverty. Market restrictions and distorted prices result in scarce resources being overutilized. The removal of certain trade restrictive measures and distortions can benefit both trade and the environment. Take the case of the environmental impact of fisheries subsidies – an issue long discussed in the WTO. Negotiations are now taking place under the Doha Development Agenda with a view to clarifying and improving WTO disciplines on fisheries subsidies. Agriculture, energy and fisheries are all sectors where greater market disciplines could have positive effects on the environment.
However, as important as they are, correcting pricing distortions alone will not solve all environmental problems. Lowering tariffs will not stop a deteriorating ecosystem or rainforests from disappearing. Trade is an ally of sustainable development but it cannot substitute for policy failings or gaps in other areas. The solution to environmental and other challenges lies in sound domestic policies and in reaching enforceable global agreements and standards. At Doha, governments committed themselves to negotiations on the relationship between Multilateral Environmental Agreements and the WTO. This will ensure there are no contradictions between the two and will enhance the mutual supportiveness of trade and the environment.
On drugs patents and public health, issues which are vital for sustainable development, a separate Ministerial Declaration from Doha states that the WTO's TRIPS Agreement “does not and should not prevent members from taking measures to protect public health”. This declaration is a boost for global efforts to address the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.
The WTO has moved from the failure of Seattle to the success of Doha. To ensure that we continue to be successful and conclude the Round with balanced outcomes, all members have to understand and accommodate the needs of their partners. Richer countries need to fulfil the promise of a development Round. Developing countries, for their part, need to ensure through their positive engagement in the negotiations that they make the most of their opportunities. It is not so much a question of what developing countries can expect from the Round but what all partners in it can jointly achieve based on workable proposals and multilateral approaches. A strengthened multilateral trading system is in the interest of every country.