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> Supachai Panitchpakdi's speeches
This year marks the 10th Anniversary of the WTO. It is an occasion for
us to reflect on the 10 years that have passed and consider ways of
preserving and improving those things we have done well, while
addressing areas where we can do better.
But it is also an occasion which warrants some celebration because, ten
years after its foundation, the WTO has never been more relevant and
more important. Robert Zoellick says the World Trade Organization is the
most important organization created in the last 50 years, and I agree
with him. Ours is an organization where trade disputes are resolved in a
systematic and orderly fashion, where trade policies are analysed and
debated rigorously and where the governments of the world come to
negotiate the continued reduction of trade barriers and to set the rules
which govern international business activity.
These ten years have transformed the way in which nations interact
commercially and have brought the WTO a lot of attention. The GATT, the
General Agreement on Tariffs and Trade, while instrumental in reducing
industrial tariffs in the post World War II period, was a small,
relatively tranquil institution to which most people paid little
The WTO has been anything but this. True, these years have brought us
Seattle and Cancun. Some commercial disputes in the WTO era have been
given far greater prominence, whether they concerned turtles, bananas,
tax incentives or steel.
Sometimes, I am amazed that an organization which spends the vast
majority of its time deciding matters of a supremely arcane nature has
attracted so much media attention and controversy.
Yet there can be no doubt that, in an era of ever increasing economic
integration, there is real need for such an organization. The global
economy has advanced with remarkable speed over the past decade.
Developments that no one could have foreseen in 1995 are today shaping
the way we live. Products which many of us had never imagined and which
few people owned are now a central part of everyday life. Countries like
China, India, Brazil and Mexico now play a major role in the global
economy and in international economic policy making.
Technological change and global economic integration have not come
without cost. There has been displacement in the work force and anxiety
about the future in many countries, particularly in the industrial word.
For this reason, the concept of globalization has sparked much debate.
But, with or without the WTO, global integration is a reality and there
is every indication that it will continue to be so.
It was into this maelstrom that the WTO was born. Many of the fears and
concerns that have arisen from this remarkable economic transformation
have been laid at the feet of the World Trade Organization. The WTO is a
soft target. But the factors driving globalisation are numerous and
complex. The WTO is not the problem but rather part of the solution.
There is no escaping the fact that global problems require multilateral
solutions. Absent global rules which address the problems that stem from
an often unpredictable and sometimes unsettling phenomenon, we are left
with uncertainty, heightened international tensions and possibly chaos.
Absent the rule of law, we have the law of the jungle.
It was the United States, perhaps more than any other nation, which
recognized the importance of the rule of law during the Uruguay Round
and sought to broaden and deepen its relevance to international trade.
Weary of the unreliable dispute settlement system in the GATT which
enabled a respondent party to block the establishment of dispute panels
and the issuance of panel reports, Washington sought and achieved a
strengthened dispute settlement system which follows predictable
procedures and delivers outcomes within a reasonable time frame.
The United States has been among the most active users of this system,
bringing more case to the WTO than any other member — nearly 80. It has
been involved as a party in over 60% of all cases brought before dispute
panels and the Appellate Body.
In establishing the current WTO Dispute Settlement System, the United
States and other WTO member governments have proven that multilateral
solutions to global conflict are not only possible — they are desirable.
One of my predecessors, Peter Sutherland, said earlier this year that no
one foresaw 10 years ago that the WTO Dispute Settlement System would be
so successful that it would be used more often in 10 years of activity —
325 cases have been brought to date — than the old GATT system was
used in nearly a half century. But that is in fact the case.
This system has been successful largely because WTO member governments
have been prepared to implement panel and Appellate Body rulings and to
bring their laws and regulations into conformity with WTO rules should a
panel decision go against them. The United States has a reasonably good
record here: when the matter can be resolved administratively (such as
with respect to removing an import safeguard measure or revising an
anti-dumping order), Washington has responded quickly and decisively.
When the problem requires action by the Congress, the process is
inevitably more complicated and to no one's surprise the U.S. record is
more mixed. On the positive side, Congress did pass legislation in 2004
to bring the United States into compliance with adverse WTO rulings in
the Foreign Sales Corporation and 1916 Anti-Dumping cases. In several
other cases, however, there has been political resistance and Congress
has yet to act, despite requests from the Bush administration to do so.
I can only say that the durability of WTO rules rests on the principle
that governments will abide by those rules, which after all they
themselves have written and approved.
Beyond dispute settlement, it was the United States which pushed most
aggressively for the incorporation of agriculture, intellectual property
protection and services trade into the global trading rules. Today these
areas represent vital elements of our negotiating agenda, an agenda
which has once again been largely shaped through US leadership.
You will also recall that, on 1 January 2005, WTO Members eliminated
quotas on textile and apparel trade, marking the end of more than 40
years of managed trade in this sector. The increased competition
resulting from this will surely bring significant benefits to consumers
everywhere, and it is the poorest consumers who pay a much larger share
of their incomes on clothing, who shall benefit most.
The information age has been given a significant boost through our 1998
agreements on telecommunications and information technology products.
Trade in information technology products rose sharply after this
agreement and it is notable that the gains have been registered not only
in industrial countries, but in developing countries as well. From 1996
to 2002, developing countries' share of world exports in this sector
have risen from 40% to 52%.
The smoother flow of capital around the world has been supported by the
WTO’s 1998 Financial Services agreement which established global rules
on trade in this sector and which has provided greater certainty and
Surely, one of the most important achievements of the last 10 years has
been the enhanced integration of developing countries into the WTO
system. Never before have so many been such active participants in the
global trading system. The rise to prominence of the “G-20” in the
agriculture negotiations, the high level of dispute settlement activity
by developing countries, and the important place that cotton holds in
the Doha negotiations, are clear illustrations of greater participation
by developing countries. With respect to cotton, for example, it would
have been unimaginable 10 years ago that four poor West African nations
could have persuaded the global community to include a trade topic of
great interest to them on the global negotiating agenda. Regardless of
your substantive position on the cotton issue, we can all agree that
active participation in the trading system by even the poorest member
countries is a positive development.
This level of participation is due, at least in part, to the
significantly improved delivery of technical assistance. Technical
assistance funding has increased manifold in recent years and this
increase has greatly enhanced the capacity of developing countries to
participate in the system. The process has also been facilitated by our
much improved coherence with other international organizations. Better
working relations with the United Nations, its agencies, the World Bank
and the IMF have also allowed us to better address the trade adjustment
concerns that members have expressed.
We have brought 23 new Members into the global trading system, including
major trading economies like China and Chinese Taipei as well as small
and vulnerable countries like Nepal and Cambodia.
Chinese membership has brought under global trading rules an economy
which is growing at an astounding rate and which has already become one
of the world's three largest trading nations.
But as important as these achievements are, there can be no doubting the
fact that we can improve in all areas of our work including reforming
the Dispute Settlement Understanding, improving our operating procedures
and improving our links with other international organizations and with
It's probably fair to say as well that our image could use a bit of
How can we best address these challenges? How can we ensure the WTO's
continued relevance to the goals of economic growth, development and
international co-operation? The answer is both simple and complex:
conclude the Doha Development Agenda in timely fashion and with an
ambitious outcome. Easier said than done, I know.
But I don't think there is any doubt, that the single most important
thing WTO member governments can do to strengthen this organization and
the global trading system is to conclude as rapidly as possible an
ambitious agreement on the Doha Development Agenda Round of
Negotiations. Such an outcome would be a considerable contribution to
the global fight against poverty. Better market access for poor country
exports, steep reductions in trade-distorting farm subsidies, and more
equitable trade rules would present developing countries with a once in
a generation opportunity to help to use the trading system as a vehicle
for sustainable development.
Advanced countries too will reap the benefits arising from expanded
trade. An ambitious agreement would result in greater market access for
services providers, farmers, and manufacturers; wider consumer options
and greater certainty for exporters. Increasing prosperity among
developing countries is a win-win situation as they become the markets
of tomorrow. These achievements would greatly assist governments in
their efforts to keep their economies expanding.
WTO member governments are now giving positive signals that they want to
conclude this round by 2006. Their objectives for the Hong Kong
Ministerial Conference in December are: agreement on “modalities” for
trade in agriculture and industrial products, a critical mass of market
opening offers for trade in services, significant progress in areas such
as rules and trade facilitation and a proper reflection on the
development dimension. This would indeed provide a springboard for the
I believe the political commitment is there on the part of all
governments and I know that in Geneva ambassadors are prepared to expend
every effort towards the objectives of a early conclusion to the Round.
WTO member governments deserved considerable praise for agreeing on a
framework deal in agriculture last July, but I sense a degree of
complacency that concerns me.
I am particularly concerned about the pace of negotiations on trade in
services. Services make up more than 50% of economic activity for nearly
all WTO members. Trade in services makes up nearly a quarter of overall
global trade. Member governments committed themselves in Doha to
negotiating an agreement further liberalising trade in services and
establishing more equitable rules for such trade.
And yet, there are more than 40 countries which have yet to make even an
initial offer in this area of negotiations. This is unacceptable.
Governments cannot expect others to show interest in areas of concern to
them, if they are unwilling to participate in negotiations in a sector
as vital to the global economy as services. I have written to the
Ministers of these countries encouraging them to put in offers, and
pointing out that the future of this round, a round dedicated to
improving the trading prospects of developing countries, is at risk
unless they participate.
One of the more troubling elements of the hesitation of some Members to
participate is that they are hurting themselves. The data are clear on
this point. In transportation for example, in 168 countries the barriers
to access in provision of transport services are more onerous than
tariff barriers. This constraint on competition means higher fees. In
developing countries, transport costs are an average of 70% higher than
in developed countries. Freight costs in Africa are twice as high as the
world average. Improvement of a country's transport infrastructure has
obvious benefits for trade and one study says such improvement could
lift trade volumes by as much as 68% (1).
Telecoms services are essential to virtually all economic sectors and
positively affect trade volumes. Advances in this sector means lower
costs and greater access to other services.
The quality and price of financial services are key factors in overall
trading costs. Greater competition in this sector has proven to be
central to increased efficiency and diversity of these services.
We have a deadline of May 31 to submitted improved offers.
Understandably those 72 members which have submitted offers (the one EU
offer covers 25 countries) will be reluctant to submit improvements when
so many of their trading partners have refused to come forward. Should
this deadline be missed it is inevitable that there will be a spill over
into other areas of the negotiations and the delicate balance and steady
progress we have achieved will be undermined.
It is always difficult to translate political energy into concrete
action but unless we begin to show real progress in services — and
across our very large agenda of negotiations as a whole — we will not
have sufficient time to deliver an ambitious outcome at the Hong Kong
meeting. Progress in other areas like industrial goods, rules and the
environment have lagged behind. Even in agriculture many of the most
difficult elements remain far from resolution.
We have an unfortunate tradition in this organization of waiting until
the very last minute before we negotiate in earnest. It's a tradition
which has outlived its usefulness. We have too many governments in the
negotiations and our agenda is simply to large and too complex to expect
that Ministers in Hong Kong can resolve all differences in a matter of
three or four days. This is why it is essential for governments to be
clear by the Spring what they want from Hong Kong and to deliver
significant progress toward that objective by the end of July.
Fortunately, Ministers seem to have learned this lesson, which is why
they have urged negotiators in Geneva to agree this July to build on the
achievements of last summer, reduce the number of differences between
them, narrow the gaps in other areas during the autumn and bring to Hong
Kong a manageable number of politically difficult issues for resolution.
It's a tall order, I realize, but it is the only way negotiators at the
Hong Kong Ministerial conference can attain the objectives they have set
for themselves and the only way we can conclude this round by the end of
I would note that successful conclusion of the Doha Round will also
depend on the outcome of the congressional debate this spring on two
important WTO related items — the two-year extension of the Trade
Promotion Authority for President Bush and the second five year review
of the US participation in the WTO. I have spent a large part of the
last two days on Capitol Hill discussing these issues with congressional
leaders and I came away optimistic.
Not all our problems can be addressed through the Doha round, I know.
There are questions about our processes, our sometimes inefficient
methods of decision making and our budget. These problems will need to
be addressed through actions by governments after the Round has been
You may know, that I commissioned a group of distinguished trade
experts, chaired by Peter Sutherland and including the Council's own
Jagdish Bhagwati, to ponder these subjects and offer their
recommendations for the future. These men have performed an extremely
valuable service for which I thank them and congratulate them. As
Director-General I cannot take a position on their suggestions — though
I may have something to say about them after I step down from this
position on 1 September. But I urge you all to read this report and form
your own conclusions.
On balance, I can say with confidence that these past 10 years have been
a success. A qualified success perhaps, but certainly a success. We have
learned important lessons about transparency and inclusiveness, about
more effective management of the secretariat and about how to better
manage the negotiations themselves.
But we have also learned that there is no alternative to the global
trading system in international commerce. No other route to rule making
offers such compete coverage of sectors and countries. Absent global
rules, the problems we face would not go away, they would merely become
more difficult to resolve.
I have no doubt that the next 10 years will bring difficult times, but I
am also confident that the lessons learned during our first decade will
help future leaders to chart the course for greater equity, stability
1. Limão, N. + Venables, A. (2001),
“Infrastructure, Geographical Disadvantage, Transport Costs and Trade”,
WORLD BANK Economic Review 15:451-474. back to text