Mc11 in brief
DG letter to all journalists attending MC11
'Buenos Aires: Strengthening the multilateral trading system' - 9 December 2017
Welcome to Buenos Aires and the WTO's 11th Ministerial Conference (MC11). At the outset, I would like to thank Argentina for their tremendous efforts in hosting this important event. Over the course of the coming days, here in Buenos Aires, you will have the chance to observe and report on issues of fundamental importance to the future of international trade.
The WTO has built a record of success over recent years. At MC9 in Bali four years ago, WTO members struck the historic Trade Facilitation Agreement which could reduce trade costs by more than 14% and lift world trade by roughly $1 trillion annually. Two years later at MC10 in Nairobi, ministers agreed to eliminate agricultural export subsidies, to eliminate duties on 201 information technology products with a trade value of $1.3 trillion a year and to put in place a package of trade measures that will make it easier for least-developed countries to export to the world's richest markets. Taken together, these achievements represent the most important trade reforms in two decades.
MC11 is an opportunity to continue this journey. It will be a moment to take stock of the significant progress that we have made in recent years, to deliver wherever we can, and to set the direction for our future work. In uncertain times, MC11 will also be an opportunity to reflect on the importance of trade and the multilateral trading system.
Many people do not fully grasp the contractual nature of the WTO. Under this system, the rules of the game are well defined and traders know well the terms of doing business in the markets of other WTO members. WTO rules provide benchmarks and thresholds on what is permissible and what is not. For instance, most WTO members have negotiated tariff ceilings on all imports. This means everyone knows the limits to which imported products can be taxed.
This system of shared rules and commitments did not exist in the 1930s when tit for tat protectionism contributed to a collapse in world trade, which shrank by two-thirds from 1930 to 1933. The temptation towards protectionism still exists today but WTO rules and the organization's impressive dispute settlement system are a deterrent to such policies. And we know that they are effective. This was proven most clearly in response to the Great Recession which began a decade ago, and which wracked the global economy. This was the most severe economic shock since the 1930s – but, unlike the 1930s, the trade policy response was restrained.
While the crisis did lead to an immediate contraction in global trade of 12.2% in 2009, the multilateral trading system weathered the storm, and by 2010 trade growth had rebounded by 14.5%. The framework of shared rules and practices was critical in ensuring that WTO members exercised restraint in the application of trade-restrictive measures. Protectionism did not take hold. In fact, since 2008 less than 5% of global trade has been impacted by trade-restrictive measures. The multilateral trading system served – and continues to serve – as an essential guarantor of stability in economic relations.
Of course, the temptation towards protectionism still exists – driven today by the widespread labour market disruptions (which are, in fact, largely due to technological advance rather than competition from abroad). Thanks to the trading system, this temptation has mostly been resisted, but the system is only as strong as the members' commitment to it.
In Buenos Aires, members will be considering how we might continue to strengthen and improve the system, to ensure that it is more responsive and that it better reflects the priorities of the citizens we represent. To this end, WTO members have put a range of ideas on the table. They have shown renewed vigour and commitment in many areas over recent months – working hard, coming alive with new proposals and new approaches to our work.
Since MC10 we have seen an extraordinary burst of creativity, with members discussing how we might find agreements in agriculture, less burdensome regulations for trade in services and disciplines on fisheries subsidies. Since last year, more than 20 new proposals have been tabled in agriculture alone, introducing new means for addressing vitally important issues like public stockholding of grains, trade distorting domestic farm subsidies and greater transparency. In addition, some members have been advancing conversations in areas like investment facilitation, e-commerce and facilitating the participation of micro, small and medium-sized enterprises (MSMEs) in the global marketplace.
Prospects for progress on specific issues in Buenos Aires are unclear. Members remain divided on many issues. Ministers may seek to reach agreement where possible, or commit to launching work programmes to take work forward. The successes of recent years have provided invaluable lessons in the kinds of processes that work, and those that don't. We know, for instance, that agreements involving the participation of all 164 WTO members must be tailored to provide flexibility to accommodate the interests of countries across the full range of development. Adequate transition periods and technical assistance are required if poor countries are to take part. Such an approach was one of the keys to success in the Trade Facilitation Agreement negotiations. WTO rules allow a lot of flexibility in terms of how agreements can be structured – including if only some members want to move forward with a particular issue.
The work we accomplish here this week and in the years to come must translate into concrete outcomes which support people's lives and livelihoods. That means delivering results that will lead to a more inclusive, sustainable trading system. It means scaling back bureaucratic entanglements so that smaller companies can participate in international trade. It means ensuring there is a level playing field on which farmers from all countries can compete on equitable terms. It means creating an environment in which women entrepreneurs can thrive in the global marketplace.
All of these issues will be the subject of ministerial attention over the course of the coming days. We won't find the answers for all of these issues in such a short span of time, but we can make real progress. This Ministerial Conference is a platform upon which we can build a WTO that is more responsive to the needs of our members and the people they represent. In recent years we have put the organization on a very positive path. So we must keep making progress. We will harvest whatever we can in Buenos Aires, and lay the groundwork for further successes in future.
A final thought: for all this to happen, it will require that everyone be a champion of the trading system. It will mean that members reticent to lead in the past take up the mantle of leadership. The WTO and the trading system have proven their worth in the past and will do so again in the future. We should all be working to preserve and strengthen this vital resource.