WTO NEWS: SPEECHES DG SUPACHAI PANITCHPAKDI
14 June 2004, São Paulo, Brazil
Dr. Supachai calls on UNCTAD XI to deliver clear message in support of the Doha Round
Your Excellencies, Ladies and Gentlemen,
I am very pleased to be here today at the opening of UNCTAD XI. When we last met 4 years ago in Bangkok, I had the great honour and pleasure to preside over UNCTAD X. I now look forward to participating actively at UNCTAD XI and to seeing again so many good friends. Let me first of all congratulate Brazil on taking up the baton for the next four years. You have made a great start to UNCTAD XI and I am sure that much more of the same lies in store.
UNCTAD XI is a very special conference for two reasons. The first is obvious. It's UNCTAD's 40th anniversary! That alone is cause for celebration. I congratulate the UNCTAD Secretariat — and its Secretary General. Four decades have passed since UNCTAD was founded. The debate over trade and development in the early 1960s was one of the main reasons for establishing the Conference on Trade and Development. Today, the mission of trade and development remains just as relevant as forty years ago.
The second reason why this meeting is special is that UNCTAD XI, comes at a critical juncture in the Doha Development Agenda round of global trade negotiations. Four years ago UNCTAD X, which took place just a few weeks after Seattle, was part of the process to rebuild confidence in the multilateral trading system and gave a very important boost to the launch of the Doha negotiations. UNCTAD X concluded with a very positive and constructive message in support of the WTO. It succeeded at bringing back confidence in the WTO system after the traumatic experiences of Seattle. It reconfirmed the complementary roles of UNCTAD and WTO, and it forged a stronger partnership.
UNCTAD XI can also leave a positive mark on the future of the Doha Round. We need UNCTAD XI to give a strong message of support for the Doha Development Agenda. UN Secretary General Kofi Annan in his letter to the G-8 has given just such a message. Secretary General Kofi Annan has been very clear that enhanced trade may be “even more important” for developing countries in alleviating poverty than increased official development assistance. And he has reminded us all that “The Doha Round is the first set of multilateral trade negotiations in which the needs and interests of developing countries have been officially declared a priority” and whose conclusion is essential.
I would strongly urge you to take the opportunity of UNCTAD XI to join Secretary-General Kofi Annan in his call to “put the Doha round back on track” and to stay focused and committed to the negotiations.
We are at a crucial juncture. By the end of July, which is just a few weeks away, we need to secure a framework package for agriculture and industrial products, and an accord which better defines how we address cotton subsidies and the so called Singapore Issues. These were among the most difficult areas faced by Ministers at our 2003 Ministerial Conference in Cancún. It is clear that, without movement on these issues, there will be no movement at all.
July is not the end of the Round but agreement on a framework package by July is indispensable, if we are to have a successful outcome to these negotiations. If that does not happen, we will not be able to make any significant progress during the remainder of the year and that would mean a highly uncertain future for everyone.
We do not have the luxury of time on our side. Nor, as I see it, do we have much of a choice. If we want trade to work as an engine for growth and development, it is indispensable that we succeed in the Doha Round. As I said in Bangkok four years ago, we should not lose sight of the fact that we have only one multilateral trading system and that our ultimate objective should be to ensure that the system is strengthened, operates efficiently and works for the benefit of all countries and their people.
UNCTAD has a special responsibility to assist developing countries in maximising the opportunities and benefits from the multilateral trading system. It accomplishes this task not in isolation but by interacting and working closely with other international organizations. We need UNCTAD to work together with the WTO to create a coherent and balanced multilateral trading system.
As I see it, UNCTAD XI can play a vital role by helping to build on the sense of momentum which is now emerging to make the July package a success. The alternative, which I am sure nobody wants, is that 3 years of intensive effort would have been in vain, and that we would be back to square one.
I hope very much that UNCTAD XI will seize the moment and deliver a clear and unequivocal message in support of the Doha Round. Let there be no doubt, we are seeing strong and growing resolve from all quarters of the WTO membership to advance the negotiations in a concrete manner. I have personally seen a much needed new level of political commitment at important ministerial gatherings such as the OECD Ministerial Conference in Paris, the LDC Trade Ministers' Meeting in Senegal, the African Union Trade Ministers meeting in Rwanda and most recently the APEC Trade Ministers meeting in Chile. Also, just last week G-8 Leaders gave their full support to the Doha Development Agenda and instructed their Ministers to finalize the frameworks by July and to put the negotiations back on track.
Ministers are engaged and starting to show flexibility in key areas. At this stage, our challenge is to translate these general expressions of political commitment into concrete progress. The time for political declarations and fixed positions is over. This is the time for creative problem solving and constructive offers. In agriculture, for instance, we have now on the table a historic offer from the EU to eliminate all export subsidies. This is a ground breaking offer in an area which has been controversial for many years. Of course, some differences remain but the important point is that we need all participants to make constructive and determined efforts to narrow gaps so as to enable deals, acceptable to all, to be reached by the end of July.
Anything which now distracts our attention away from achieving a successful July package will be counter-productive and would risk losing the advances made so far. For once, we have a real chance to achieve substantial reform in trade in agricultural products, a sector which is so important to so many developing countries. Advances that we only dreamed of just a few years ago could actually become reality if we all work together to achieve this breakthrough. And as you all know, a breakthrough in agriculture will unlock the Round.
I know that some of you may have concerns about taking on additional commitments. Let me, however, recall that the July package will consist of framework level agreements. It does not require all the details, in particular reduction commitments, to be specified. These will be negotiated later. We should resist the temptation to pre-empt or pre-determine the final outcome. If we want to succeed at this stage, we need to show some restraint and faith.
Let me also recall that in agriculture and non-agricultural market access WTO Members are ready to accommodate the different capacities of developing countries. There is also increased understanding that we should not overload the weaker and more vulnerable Members. For example, in agriculture, the prevailing view is that LDCs should be exempt from commitments to reduce tariffs and that account should be taken of preferential access which developing countries enjoyed in other markets.
Furthermore, in non-agricultural market access LDCs are not expected to apply any agreed reduction formula to their tariffs or to necessarily take part in any sectoral approach. In both areas there is recognition of the need to address meaningfully the question of erosion of preferences. Moreover, recent signals from major players have also given an indication of their relatively modest levels of expectation from the smaller and more vulnerable developing countries. There is also a growing body of opinion among WTO Members that favours including in the July package the important work, which will be ongoing, to make existing special and differential treatment more precise, effective and operational. We now need a constructive response — a response which will strengthen the sense of convergence for a July package. Let me stress that this is an appeal that I am making to all governments, developed and developing.
We should be mindful that there are no guarantees that this window of opportunity will still be open if framework agreements are not secured by July. The global political landscape is continually evolving. .Failure to secure a framework agreement may mean the unravelling of commitments made by developed countries to eliminate agriculture export subsidies and other subsidized forms of export competition. I don't believe that anyone genuinely believes that such unravelling can be viewed as progress. Indeed, it would surely make matters much worse. I cannot put it any better than President Kagame of Rwanda, who in his very recent address to the African Union Ministers of Trade very wisely said:
“This window of opportunity is a real one, and we cannot allow it to slip away. Clearly, we should seize the occasion, use real imagination and be as constructive as possible..............We all have our priorities and interests. This would be a complicating factor in any negotiation. That is why the search for compromises is of paramount importance. And let no one think that flexibility and a predisposition to compromise is a sign of weakness or a sell-out. Rather, it should be seen as a willingness to advance our common interests, resulting in a win-win situation”.
I certainly understand the difficulties that some developing countries have and I know that some of you may still have mixed views on further liberalisation of global trade. The WTO is not perfect and the multilateral trading system is certainly capable of improvement. But it is also unrealistic, if not possibly harmful, to believe that there is an alternative to the WTO. It is unrealistic because no other system has delivered the same depth and scope of market access or the legal certainty of a global rules-based trading environment. It is harmful because any distractions at this critical stage in the negotiations risks undermining our very objectives of trade and development as established at Doha.
There are, of course, broader considerations also to bear in mind. If governments and their constituents lose faith in the ability of the Doha Development Agenda to deliver results we shall, no doubt, see a growing imbalance between multilateral and bilateral deal making. This could rock the foundations of non-discrimination and transparency upon which the multilateral trading system is built. These core principles not only help level the playing field between developed and developing countries, but also make the international trading environment a more predictable and less complex place to do business. I am convinced that the world's poorest and most vulnerable countries would be the biggest losers from a focus on other deals at the expense of multilateralism.
While some may attribute importance to bilateral, regional or plurilateral agreements, including deals between developing countries on selected sectors, as alternatives, there is little evidence to suggest that they can match the potential gains from a round of global trade negotiations. Moreover, we all know that there are certain subjects, such as agriculture and anti-dumping, where comprehensive reform can only be obtained through a WTO round of global trade negotiations.
It is particularly important that the Doha Round is used to encourage the expansion of South-South trade. Developing country trade patterns are changing. Thanks to their active participation in the Uruguay Round and new accessions to the WTO, as well as through their unilateral liberalization measures, many developing countries have substantially lowered their applied tariffs since the mid-1980s. These reductions have contributed to an expansion of South-South trade. Over the 1990s, South-South trade expanded twice as fast as world trade, 12 per cent versus 6.5 per cent, and increased in value terms by over 200%. Today, South-South trade amounts to $780 billion and represents over 12% of global trade. The potential for further expansion is enormous.
However, despite these advances, developing countries still face on average higher tariffs when exporting to other developing countries than they do to developed countries. And their exporters also pay in absolute terms more duties to developing countries' than to developed countries' governments. Around 70% of the tariffs faced by developing country exporters are applied by other developing countries. It is of great concern that developing countries should face higher barriers to trade between themselves than they do in their trade with developed countries.
I welcome the efforts made by UNCTAD XI to further South-South trade liberalization. It is long overdue. I also appreciate the efforts that are being made to revive the General System of Trade Preferences (GSTP) scheme. As much as I commend the efforts to revive the GSTP, let us not lose sight that the greatest gains are still to be made in the successful completion of the Doha Development Agenda round of global trade negotiations. The GSTP was designed to be complementary to WTO global trade negotiations and not a substitute.
History has shown us that it is only with the critical mass of trade-offs that can best be achieved in a global “single undertaking” round that we will obtain tangible market access improvements in North-South trade, as well as South-South trade.
We are on the verge of making history by pushing through fundamental agricultural reform in the Doha Round. At this late stage, it is of paramount importance that we avoid creating any unnecessary divisions among governments or place additional obstacles in the path of the negotiations. This is not the time to falter in our commitment and resolve to meet our objectives as established at Doha three years ago.
Since the Cancun Ministerial Conference in September 2003, I have flown more than 250,000 kilometres, met with a large cross section of WTO Ministers and participated in 11 ministerial meetings in an effort to find common ground among governments. I have paid particular attention to developing countries, particularly the smallest and most vulnerable, and in the last nine months I have made eight trips to Africa and six trips to Latin America and the Caribbean.
Every Minister, as well as Head of State and Government, that I have met have told me that they want the Doha Development Agenda to succeed. They want the Doha Development Agenda to succeed because they know that it is the best way to unlock the trading potential of their countries and to usher in a new era of prosperity for all.
The Doha Development Agenda is at a crossroads, a watershed. Common ground must be found, and quickly. Otherwise the trading system — and the two key inter-governmental pillars that support it — mainly UNCTAD and the WTO — will have failed in some of their important objectives. International business and the global trade machine will certainly not wait for us to move. Discriminatory market access arrangements will become common place and the law of the jungle will prevail. The losers — every time — will be the poorer, developing countries.
To avoid such a fate, we need everyone — Ministers of UNCTAD and WTO Member governments — to pull in the same direction. This is the time for us to take together a right step in the right direction.