Build up: the road to Mexico
Plenary Session XI of the Partnership Summit 2003
Ladies and Gentlemen,
I am delighted to join you today. This is not the first time I have had the honour to attend this important gathering. But it is the first time I have the opportunity to speak to you as Director-General of the WTO, and this makes my visit particularly special. India has been one of the more central and influential players in the multilateral trading system, a champion of developing country interests. India fought hard for development issues to be placed firmly and explicitly at the heart of the Doha Development Agenda, and succeeded. We have reached a critical time in these negotiations and we need India’s constructive engagement and leadership to help guide the Doha Development Agenda towards a successful conclusion that would benefit all Members.
The Road to Mexico
Ministers at Doha agreed that the current negotiations shall be concluded no later than 1 January 2005. This gives us little time, indeed we now have just under twenty-four months left to achieve this. The Doha Work Programme is the most ambitious and wide-ranging ever undertaken. It includes negotiations on agriculture, services, market access for non-agricultural goods, the environment, WTO rules, regional trade agreements and possible new framework agreements on the relationship between trade and investment, competition, transparency in government procurement and trade facilitation. Members will also be looking at enhancing technical cooperation, special and differential treatment for developing countries, links between trade, debt and finance, trade and the transfer of technology, and the specific circumstances of small economies. The ambition of the Round well reflects the diversity of its membership, the breadth of their interests, and indeed the complexity of globalization itself.
As you know the WTO is, if I may use the cliché, a “member-driven” organization. In the negotiations, Member governments negotiate directly with each other. As Chairman of the TNC, I shall be doing my utmost to keep all Members on board, facilitate their discussions, mediate in their problems and consult with all. And the WTO Secretariat, through its technical assistance work programme, is working hard to help developing and least-developed country Members prepare effectively for the negotiations. But we cannot make any decisions on behalf of Members, we cannot unplug blockages when Members positions’ are intractable and we cannot force consensus. It is Members who have the very difficult responsibility of developing policy positions, negotiating concessions and deciding how far they are able to go in any given area. The fate of the Doha Development Agenda lies very much in the hands of its owners. Members, and the constituencies within their boundaries who have a stake in building a stronger multilateral trading system and a more open world economy, should always be keenly aware of this.
It is worth remembering that while the WTO is an intergovernmental organisation, the rules and market-access commitments which governments are negotiating will apply directly to you and your companies. Governments need the support of the business community. In the Uruguay Round, business leaders associated themselves closely with the multilateral trade negotiations because they recognised the vital importance of trade liberalisation in maintaining economic growth, serving new markets and creating new customers. To succeed in the Doha negotiations your continued support is needed.
Another negotiating reality, which I am sure you all appreciate, is that the DDA must be concluded on the basis of a single undertaking. Hence, it is crucial to make substantial progress now. The Single Undertaking means that nothing is agreed until the whole negotiating package is agreed together. In order for Members to reach final agreement, they need to have an early idea of what shape a final outcome might take – so they can make an overall assessment of the balance of gains and concessions. Members must now give a major push to the negotiations and ensure all areas move forward together in a balanced way. And by the time of the Cancún Ministerial Meeting we must begin to see clarity in negotiating positions and a movement towards convergence. Members must look ahead to deadlines and decisions looming on the horizon, as well as focusing on issues that need their immediate attention. As I have said on a number of occasions, I believe that this time around there may well be no room for a last minute deal, so Members should not wait until the last minute to make their moves.
The Doha Development Agenda has been under negotiation now for over one year and my assessment is rather mixed. The good news is we have moved forward and we have also seen a rising level of participation by Members. I am concerned, however, that there is a certain unevenness in progress between different areas of the Work Programme.
At the end of last year we succeeded in establishing guidelines to facilitate the accession of LDCs to the WTO. However, we were not able to meet the deadlines related to special and differential treatment for developing countries and access to essential medicines for poor countries lacking capacity to manufacture such drugs themselves. Failure to meet these deadlines has been quite disappointing. These two issues are of great importance not only to developing countries but to the Organization itself and to the broader trade negotiations that are part of the Doha Development Agenda. Nonetheless, I have been informed of the Members' commitment to continue to work to find agreement in these complex and difficult negotiations. I am hopeful a solution can be found in the early part of 2003.
On the road to Mexico, a number of further deadlines have been set and I hope these will bring a needed sense of urgency to the negotiations. By spring 2003, we will face deadlines in the negotiations on agriculture, services and market access for non-agricultural products. By the end of May 2003, agreement on improvements and clarifications to the Dispute Settlement Understanding will be required. Meeting the deadlines successfully is of course much more than just a question of keeping an eye on the calendar and thinking ahead. Each of these stages represents a significant moment in a set of complex political processes and issues in the overall negotiations. Whether we meet these deadlines and how we do it, will define the rest of our process. And if they are not met, we run a real risk of overloading the agenda at Cancún, which is already very substantial. At Cancún, Ministers will take stock of progress in the negotiations, provide political guidance and take decisions as necessary – notably, by explicit consensus, on modalities for negotiations on investment, competition and transparency in government procurement.
To help Members keep perspective on the Doha agenda as whole, I have suggested that the Trade Negotiations Committee, the WTO’s main negotiating body, should meet more frequently. I have suggested that Members should not only address the substance of the negotiations, but also the positive linkages between the different negotiations in a broader context. Discussions should be more interactive, with Members turning general statements into more specific ones, they should clarify their positions to help them move towards convergence.
India and the Doha Development Agenda: What is at stake.
This meeting is extremely timely as market access issues are going to be the main focus of attention over the next six months. And I am pleased that the Confederation of Indian Industry and its Members are fully engaged in following these negotiations. In fact I had a very useful exchange with a CII delegation in Geneva only last month. I was left with the strong impression that Indian business has a very clear understanding of the importance of WTO agreements and the implications of the various issues at stake in this negotiation. And I would also commend the efforts of the Confederation of Indian Industry in disseminating information to its Membership and channelling business interests so effectively into the policy-making machinery. This has put India in a very strong position. India has a huge amount to gain from these negotiations. India’s ability to not just sustain, but thrive as a result of structural reform is tribute to the dynamism and entrepreneurship of the Indian business community. Indeed the achievements we see here in this great city – one of the world’s foremost technology centres – is exemplary of this creativity, hard work and vision. I hope that there is an increasing perception that by engaging positively in trade negotiations, India is not selling out, but buying into a global economy in which it has the opportunity to reap considerable benefits.
Negotiations on market access in non-agricultural products have been moving forward after a few early hiccups on procedure. As mandated in the Doha Development Agenda these will include negotiations to reduce or eliminate peak tariffs and tariff escalation in developed countries which tend to fall on labour-intensive manufactures like textiles, often of particular export interest to developing countries. Some very ambitious proposals have already been put on the table in this area, particularly by the United States, the European Union and Japan. I think we should be encouraged by bold proposals like these because they give us an early indication of levels of ambition. It is the nature of negotiations that countries initial positions will reflect their own self-interest, so these should not be seen as a bottom line, but a basis from which to start to negotiate. I would hope that more countries, including India, will come forward with equally bold proposals or counter-proposals.
I hope that India will also be looking at market access opportunities in other developing countries. South-south trade has risen significantly over the last ten years from 30% in 1990 to 40% today, but trade barriers tend to remain high. For example, the average tariff on textile and clothing tariffs in developing and transition economies is 29 percent, this is over three times the average tariff on textiles and clothing in the Quad countries – The U.S., Canada, the E.U., and Japan.
Trade in services, which I recall was one of the controversial subjects when the Uruguay Round was launched, is moving ahead very positively under the Doha Development Agenda. We are seeing an unprecedented level of interest from both developed and developing countries. Members are already engaging in the bilateral process of exchanging requests and offers. As a highly successful exporter particularly of business services, I know that India has a lot at stake in these negotiations. I was very interested to hear Minister Shourie’s recent speeches encouraging industry to look to the opportunities of exporting health and education services. I know that securing access for services exports through Mode Four, the movement of natural persons, is also a key priority.
Negotiations on agriculture are moving. Agriculture is extremely politically and culturally sensitive in some key countries and there are also high expectations for reform from the vast majority of Members — many of whom rely on agricultural exports for a large percentage of their foreign exchange earnings. Finding accommodation will be challenging and I have been urging all Members to consider agriculture in the light of the whole round – not to loose sight of the forest for the trees. As a first step Members need to agree by end March 2003 the formulae and quantitative targets for further liberalisation in the areas of market access, export subsidization and domestic support. At the end of last year, the Chairman of the negotiating group on agriculture produced an overview paper of the proposals submitted so far and this will be the basis on which Members will work towards a modalities agreement by March.
Special and differential treatment, of course, must be part of the negotiations in recognition of the particular difficulties that many developing countries have in reaping the benefits of international trade. The objective, however, must be to develop proposals that will assist their development efforts, complement domestic reforms and so help them use trade liberalisation as a tool for economic growth and poverty reduction.
The Doha Development Agenda is operating under a significantly different mode from previous rounds. All participants have a big stake in the negotiations and they all must feel full ownership of both the process and outcome. For this reason I think that developing countries did the system a big favour to the system by insisting that technical assistance and capacity building play a central role in the negotiations. It is clear to me that the significant increase in funding for technical assistance activities, and hence our ability to upgrade the quality and quantity of technical assistance programmes has really helped move the negotiations forward. This is certainly the case for services, but also for the new areas like competition and investment. We have seen a more and constructive working atmosphere as Members have come to a better understanding of the issues at stake.
I pledged when I arrived at the WTO to put in place a long-term strategy for technical assistance and capacity building. A strategy that would look beyond the current negotiations, to the implementation of agreements reached and to the integration of trade into countries’ development strategies. Throughout this process, I envisage much closer cooperation between the WTO and other development agencies – regional and international, with a more marginal role for the WTO if necessary. Greater coordination among agencies could help to address the supply-side constraints that prevent developing countries from benefiting from improved market access. It could be useful, for example, to help countries effect a transition from over-reliance on customs duties, for government revenue, to other systems of domestic taxation, which becomes more urgent as tariffs are lowered through trade negotiations.
The full participation of each WTO Member in such a broad and complex negotiation, as I said before, places a large responsibility on the shoulders of the various sectors of society with a stake in the system – from NGOs to business groups — to help governments define their interests and policy priorities. I am really pleased that the CII is rising to this challenge.