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21 February 2000

Prospects for the Developing Countries in the Next Round

Address to the Development Committee of the European Parliament

Two billion extra souls will share our crowded planet within the next 30 years. We will have to double food production within 20 years. We face a world of incredible opportunities and challenges. Trade and trade policy must play their role as part of a wider development scenario. We all know that trade on its own is not enough. We have Members in Geneva who are paying up to nine times more on debt than on health. We read that more people died of Aids last year in Africa than in all the civil wars. A newspaper reported recently that 25% of people in one African country have AIDs.

Trade is an important element in development: the winners of today and the lessons of history show this to be true. Greater integration of developing countries into the world trading system has been paralleled by an unprecedented reduction in levels of human poverty. World Bank figures indicate that over an eleven year period, from 1987 to 1998, the number of people living on less than $1 a day in East Asia, for example, plummeted from 418m to 278m. The period between 1990 and 1998 witnessed a growth in flows of inward foreign direct investment to developing countries increase from US$20 billion to US$ 150 billion. The ratio of exports of goods and services to GDP has also risen sharply. In east Asia, this ratio nearly quadrupled from 1980 to 1998. Those who condemn freer international trade as serving the interests of the rich at the expense of the poor should perhaps take a closer look at the evidence.

In the WTO, development-related issues are at the forefront of the new work programme which was endorsed by our General Council on 7 and 8 February. Let me say at the outset that this work programme is not an end in itself. It represents an essential set of first steps back towards the goal of a more ambitious and wide-ranging trade negotiation round, which I remain committed to, as I know does Commissioner Lamy.

Let me take this opportunity to recommend to those of you who have not yet read his speech of 17 February to the European Institute in Washington that they do so without delay. It is as fine an exposition of what we are collectively trying to do as I have seen, and I would like to express my appreciation of Pascal's insight into the problems we face. The days of the Torquay Round are indeed gone, but the challenges we face now –  of diversity and different levels of development – should be the strengths of the WTO as surely they are its policy imperatives.

The mandated negotiations in agriculture and services are of vital importance to the economic future of countries at all levels of development. In agriculture, improved market access and reduced competition from richer countries' subsidies are crucial for most developing countries, both to develop their present structure of trade and to diversify into products with potential for new development.

Services trade development and diversification can also bring considerable gains to developing countries, not only in themselves, but as a precondition for efficiency enhancing reforms in main infrastructural sectors such as telecommunications, finance, insurance, and transport. Liberalization of services trade is thus an essential ingredient for any successful economic development policy.

Outside the mandated agenda, there are four priority areas on which the Members have agreed that the General Council Chairman and I should carry out further consultations.

We are working now on a package of measures to assist the least-developed countries. As we all know, LDCs account for less than half of one per cent of world trade, and get less than 1 per cent of foreign direct investment. Taken together, they are the most marginalized group of countries in world trade. They need both free access to markets - both developed and among their other developing partners - and, even more importantly, assistance to build up their institutional and human capacity, and their infrastructure, to produce and trade a diversified range of goods and services.

The European Union has already moved a long way towards giving free market access for LDCs, and has promised to give free treatment to "essentially all products" by 2005. This is a good step. But we must extend this as far as possible towards all products, and to all markets: and we must do more to build capacity. I was disappointed that we could not achieve these two important results at Seattle. Many of your member States supported my efforts in major statements last week in Bangkok at UNCTAD 10. The General Council has asked me to report positive results in Geneva before Easter. Let’s make sure this is done by then.

The best response to LDCs' problems should be an integrated response by all donors and international agencies. We already have the Integrated Framework for Trade-Related Technical Assistance, or in short the IF programme. Let's be honest - at present it's more like the "IF only". This framework represents an opportunity to do something really valuable for, and together with, least-developed countries. Making it work better, in cooperation with UNCTAD and other organizations, is a major priority of mine this year. But we also need support from bilateral donors, including Europe.

Another priority is to improve and regularize the funding of the WTO's Technical Co-operation activities. I was shocked to discover that the WTO’s core budget for technical assistance is only half a million dollars, although we receive additional funds from generous donors, including many of your member States. But we need a regular budget sufficient to enable us to plan two to three years ahead and respond to the increasing demands for technical assistance programmes, not just individual projects. We are undertaking a major review of technical cooperation – in its scope and quality – this year and are fully accountable to Members for what we do. In the light of this I am seeking an extra 10 million Swiss francs for the regular technical co-operation budget, and I hope you will support this proposal in capitals.

The issue that took most time before Seattle was implementation of the WTO Agreements. Transition problems with some WTO Agreements are only the most immediate aspect of the whole complex of implementation-related issues. None of us can be in any doubt about how important these issues are, especially - but not only - to developing countries. The WTO membership as a whole has shown a real willingness to work constructively together in order to resolve them.

We were close to doing so in Seattle. We had on the table a set of detailed proposals combining immediate action with the establishment of a mechanism to review implementation issues. I see a collective willingness among WTO Members in Geneva to engage in a constructive, sensitive way on this area.

Lastly, Members, Ministers and the media have focused on the issue of the WTO internal procedures for consultation and decision-making. This became a high-profile issue before and at Seattle, where a number of developing countries, especially smaller ones, felt excluded or marginalized. The culture is changing. Originally the GATT had less than 30 Members. Now there are usually more than 30 in the so-called Green Room. There clearly is a problem to be resolved here, although I should also mention that many Members have cautioned against a simplistic or hasty approach. In particular, the consensus principle which is at the heart of the WTO system - and which is a fundamental democratic guarantee – is not negotiable. The membership has agreed that consultations should be held in which all would be able to express their views, and I have urged all Members who wish to do so to submit suggestions. We will approach transparency in a most transparent way. We will do a thorough job. We can lift our play. We will.

In the few months since I became Director-General, I have made it a personal priority to include all our members. My first visits as Director-General were to meetings of the G77 and the OAU, and I have put special emphasis on bringing our non-resident Members - those who do not have the resources to maintain a permanent mission in Geneva - more fully into the WTO's work. In October 1999 we held the first Geneva week for non-resident Members, and this will be a regular event in future.

Establishing a relationship with the ACP group here in Brussels, where many of our non-resident members are present, has also been an important element in this strategy. I have visited the ACP headquarters twice in my five months in the job, the first Director-General to do so. I should like to congratulate the European Union and the ACP on having concluded negotiations for the post-Lome trade arrangements and look forward to receiving notification of these in Geneva. I also hope that an ACP office can be opened in Geneva as soon as possible to strengthen our contacts.

Ironically, one immediate result of increased participation has also been increased dissatisfaction. As, for example, the small island states of the Caribbean are taking a more active part in the WTO they have found things about our ways of doing business that they don't like. And they have a point. No organization can remain unchanging and unresponsive to changing demands if it wants to stay relevant. And we are changing. We have 31 applicants waiting to come inside. Each has its special needs. Their Governments representing 1.5 billion people want to be part of the future. We must make sure our work is inclusive.

This, then, is our immediate programme of work. It is already underway in Geneva. Representatives are working hard. We are travelling and seeking advice. There are also many contacts going on among Ministers and officials in capitals to advance it and build on it.

I count on your support and your suggestions –  and your constructive criticism too. I want to go on working closely with you and with my good friend Pascal Lamy to ensure that the expression "Development Round" and the hope it represents really means something.