WTO news: what’s been happening in the WTO

Geneva, 9 September 2002
World Economic Forum

The Doha Development Agenda: challenges and opportunities for the Arab world

The first world Arab competitiveness meeting

I should like to thank you for inviting me to address the closing session of this important Forum. The Arab world has played a highly visible role in the lifetime of the multilateral trading system; hosting two of our most successful Ministerial meetings. On April 12th 1994 in Marrakesh, the contracting parties of the GATT, concluded the Uruguay Round of trade negotiations and turned the GATT, an ad hoc agreement into the permanent legal body we know today; the World Trade Organization. Addressing Ministers on this momentous occasion, the then Director-General called this “the greatest trade agreement in history”, “a priceless cargo”. And that was no exaggeration. The Uruguay Round built upon nearly fifty years of work by further slashing tariffs which impede economic growth, it strengthened the trading system's dispute settlement mechanism making it more automatic and binding, it tackled non-tariff barriers, it brought agriculture and textiles firmly within the scope of multilateral rules and it extended rules to important new areas of trade such as services and intellectual property rights.

In November last year in Doha, Qatar, WTO Members successfully launched a new round of trade negotiations; the Doha Development Agenda. And it is on the work programme that is underway and the opportunities for economic growth flowing from negotiations that I should like to focus my brief comments today. I will be touching upon the participation of Arab countries in the multilateral trading system – with the strong message that even greater engagement is necessary. And I will give an overview of the WTO Secretariat's efforts to reach out to our Arab colleagues.

The agenda for negotiations is extensive and coming to closure by 1 January 2005 – our target deadline, is a big challenge. We have 144 Members participating in this negotiation and three-quarters of these countries are developing countries. So success will be conditional upon the development principle - which explicitly underlies these negotiations – being translated into concrete, tangible results. This will require flexibility on the part of all countries and it will also require enlightened leadership from the bigger players.

I am, however, encouraged by the concern being shown by international community to the fundamental goals of poverty reduction and sustainable development. I have just returned from South Africa, after participating in the World Summit on Sustainable Development (WSSD). There is a greater realisation and – I believe – a global consensus to focus on the implementation of the results of major summits and meetings; the Millennium Declaration and its targets in 2000, the Doha Development Agenda in 2001, the Monterrey Consensus in 2002 and the recently concluded World Summit on Sustainable Development. At all of these meetings trade policy has been identified as an important component in promoting development and poverty reduction. Although, I must add, not the only ingredient. Trade liberalisation would be most fruitful if placed in the context of a coherent domestic reform agenda, including good governance and the rule of law.

So let me now turn to the state of play of negotiations. The negotiating groups, councils and committees are up-and-running and we have moved from discussions on procedure to discussions on substance. This time next year Trade Ministers will meet in Cancun, Mexico to take stock of progress and take key decisions about the final phase of negotiations.

The negotiations on agriculture have been progressing relatively well. However views on reform put forward by participants still differ widely. One camp pushes for very ambitious liberalization on the part of all countries. Other Members have more limited ambitions, in part reflecting their non-trade concerns.

Agriculture is a sector that is central to the overall success of the negotiations, and liberalisation offers big potential gains. The World Bank, for example, has estimated that if subsidies and tariffs were halved, it would boost the economies of developing countries by US$ 150 billion a year. Expanded market access for agricultural products is of vital importance to the livelihoods of so many of the world's people.

The Services negotiations have likewise been given a new impetus by Doha. Members have already started the phase of exchanging requests and offers. Here too there is great potential for all participants to benefit. The World Bank has estimated that welfare gains from a 50% cut in protection in the services sector would be five times larger than for non-services sector trade liberalisation. The services sector is becoming increasingly important in determining the overall competitiveness of Arab economies. And services have become the biggest creator of employment in most of the Arab world.

While a generally encouraging start has been made in negotiations on the rules for anti-dumping, subsidies and safeguards, hard questions remain ahead. One of the most sensitive topics is perhaps the rules on anti-dumping. These rules provide the instrument to address the distortions caused by imports that are below cost price. For many participants, though not all, significant reforms are a sine qua non for a successful round. Export subsidies will be another difficult topic; here, many developing countries are looking for greater flexibility. Other difficult topics include export credits and fisheries subsidies.

On investment, competition policy, transparency in government procurement and trade facilitation, the current focus of work is to clarify issues to ensure that all countries have an informed basis for taking decisions on modalities for possible negotiations at Cancun. It is only at that point that real negotiations could start.

The commitment to negotiate on trade and the environment is a significant development. It is important for the trading system to continue to advance understanding of the complex linkages between trade and environmental policies.

Today 11 countries of the Arab world are Members of the WTO and five countries; Algeria, Lebanon, Saudi Arabia, Sudan and Yemen, are in the process of accession. However I believe that most of these countries are not fulfilling their trade potential. Some countries have rather low trade to GDP ratios – like Egypt whose trade-in-goods-to-GDP ratio is 9%, and Algeria’s which stands at 14%. These figures do not compare well with other countries of similar population size like Turkey which has a trade-in-goods-to-GDP ratio of 40%. Many other Arab countries who are highly export-orientated, are very dependent on oil and gas exports. These are vulnerable sectors in an interdependent world. With fast-growing populations Arab countries need to find ways of creating more, and better paid jobs. These can’t be found in the energy sectors alone, so more attention should be paid to developing export industries in the services and manufacturing sectors.

The current negotiations offer a unique window of opportunity for Arab countries to integrate more fully into the multilateral trading system – and expand and diversify their exports. And of course, consumers and import businesses would benefit from the lowering of the relatively high bound tariffs that many Arab Members still have in place. We often forget that the impact of tariffs is borne by domestic consumers as well as user industries in the form of more expensive goods and services. The poorest of consumers tend to be the hardest hit and user industries become less competitive.

I am very encouraged, however, by the trend towards greater engagement in the WTO. I know Trade Ministers of Arab Countries, under the auspices of the Arab League, are meeting annually to co-ordinate their positions and responses in the WTO. No doubt this is a reflection of Arab governments increasing tendency to place trade policy at the forefront of their development agendas. This is a really important development, for two reasons. Firstly, coalition-building in the multilateral trading system has been extremely effective in pushing for mutual interests. There is strength in numbers, and I am reminded of the CAIRNS group of agriculture exporting developed and developing countries who clubbed together and successfully put agriculture on the WTO map. Secondly, and perhaps more importantly, it suggests to me that Arab governments have had the foresight to coordinate their efforts to liberalise trade both regionally and multilaterally.

It is absolutely crucial that regional and multilateral initiatives are mutually supportive in building a more open world economy, rather than a world divided into protectionist trading blocks. And this is one of the most important challenges facing trade policy makers today.

Let me be clear, regional trade agreements can be a good thing, and besides they are a reality of the international trading scene. I can understand the attraction – both political and economic - of securing deeper economic ties with neighbours and important trading partners. I can understand governments feeling more comfortable in initially exposing their domestic industries to limited rather than global foreign competition. I know that business demands for better market access can be delivered more quickly through regional deals rather than through relatively slower multilateral processes.

In the context of the Doha Development Agenda, the WTO has taken on an unprecedented level of commitment in providing technical assistance and capacity building to developing countries. And we are focusing our efforts to meet the specific needs of different regions. Until 2001 the WTO relationship with Arab countries collectively received little attention. It was a weakness that needed to be addressed, as there was a clear need for a more structured approach towards trade policy and enhancing information flows on WTO issues.

For the first time we are dealing with Arab Members and Observers as a group. We have started organising regional seminars for Arab Members and Observers. This year alone we organised eleven regional activities in addition to 29 national activities. We will be looking to increase this number in 2003 through co-operation and joint activities with regional partners like the Arab Monetary Fund, the United Nations Economic Commission for Western Asia and the Islamic Development Bank, with whom we have signed memoranda of understanding.

A new unit has been set up in the Technical Cooperation Division dedicated to the Arab and Middle East countries. This provides an institutional focal point for advisory services to Arab delegations. And we are also advising and supporting the five Arab countries currently in the process of acceding to the WTO. While this process is based upon negotiations between the acceding country and all other WTO Members, the Secretariat is providing technical assistance to help these countries join as speedily as possible.

I will be working to ensure that this kind of support is continued beyond the conclusion of negotiations. It is also my priority to work more closely with other international agencies - so we can better co-ordinate the different kinds of assistance we offer to developing countries.

But while the Secretariat can offer support, all of the hard decisions need to be taken in capitols. For those of you here today representing the business and NGO communities, I urge you to feed your governments with the inputs they need to develop policy positions. And at the same time I would call upon governments to develop and strengthen their consultative mechanisms with the private sector and civil society.

It was once said that “Opportunity is missed by most people because it is dressed in overalls and looks like work”. There is no question that reaching a successful result to these negotiations will be tough. But this is an opportunity the world cannot afford to miss. Thank you.