WTO news: what’s been happening in the WTO

Conseil général: Réunion informelle
Jeudi, 18 janvier 2001

Coherence in global economic policy-making: WTO cooperation with the IMF and the World Bank

Speaking note for the Director-General

Our “Coherence” mandate from Marrakesh gives us the opportunity to take a broader view than usual of the importance of the work we are doing in the WTO — to place it in the context of the inter-actions between trade, structural, macroeconomic, financial and development aspects of economic policy-making, and to review our institutional cooperation with the World Bank and the IMF so as to ensure that in these areas we are following consistent and mutually supportive policies.

As I have indicated to you in my annual report on Coherence for 2000, over the past twelve months our cooperation with the World Bank and the IMF has focused in particular on assisting developing and least-developed countries to take greater advantage from their involvement in international trade, and from their participation in the multilateral trading system. This has coincided closely with the attention that finance and development ministers have been giving to steps that must be taken to rid the world of the problem of widespread poverty. Poverty alleviation is the predominant development challenge for our generation, and it is one of the main benchmarks against which the success of economic globalisation is to be measured.

I think we can all agree that bringing developing and least-developed countries more fully into the WTO is a major priority, and it can make a major contribution to the fight against poverty. These countries want trade to play a central role in their economic development. But many are saying that they need help, and they need it urgently. That came through more clearly than ever in the course of our work last year on Implementation issues. Responding to requests from developing and least-developed countries for assistance in implementing their Uruguay Round commitments is one of our core responsibilities, and one I am particularly attached to. But these countries need help also in training their trade officials, so as to be able to play an effective role in the WTO's institutional machinery. And help in developing their domestic trade-related capacity more broadly still, through institution-building and infrastructural development.

In the WTO, we are maintaining a high level of activity on technical assistance and training, and I shall continue exploring with Members the possibility of expanding our efforts in these areas. We are looking at ways to facilitate the day-to-day participation of non-resident and smaller Members in the work of the WTO. We shall shortly be holding our Integrated Framework Seminar, on “Mainstreaming Trade into Country Development Strategies”. And in the period ahead, I intend to build on initiatives such as Libreville 2000, Geneva Week, and the provision of Reference Centres, to further support the efforts of delegations to participate in the WTO's work programme.

But there is only so much that the WTO can do on its own in these areas. The great strength of our cooperation agreements with the World Bank and the IMF is that while each organisation continues to focus on its core responsibilities, we are able to explore ways of leveraging our collective resources in areas where our activities converge.

A tangible reflection of this was the result of the IMF/World Bank Development Committee meeting last April. Trade figured large in Ministers discussions, alongside implementation of the enhanced HIPC debt initiative and of the new Poverty Reduction Strategy process.

I drew two important conclusions from the discussion on Trade issues:

  • One is that further trade liberalization, in both developed and developing countries, is an essential element of a comprehensive strategy for accelerating growth and reducing poverty in developing countries. Debt relief and aid are not enough.
  • The second is that improved market access opportunities must be backed up by more focused and generous support for developing countries, particularly the poorest among them, to help them build the human and physical capacity they need to become diversified, world-class, trading nations.

You will find these two conclusions reflected in the communiqués of both the Development Committee and the IMF's International Financial and Monetary Committee. I know that Trade Ministers share the same conclusions. We have, then, agreement at the highest policy-making level among the international trade, finance and development communities:

  • Trade's role in the development process has never been more widely accepted:
  • We know that if developing countries are to grow their way out of poverty, more must be done to remove barriers facing their exports of goods and services.
  • We know that the timing and sequencing of their own trade reforms is a critical issue.
  • We know that trade must be seen as part of a wider and more comprehensive development strategy.
  • We also know that bringing developing countries more fully into the global trading system is key, not only to a more equitable world economy, but a more secure and stable one as well.

The real question we have to tackle in WTO is how to move a meaningful trade and development agenda forward. What should be our next steps?

First, we need to make real progress this year on the mandated WTO negotiations on agriculture and services.

  • Rural poverty is the most endemic and corrosive form of poverty in the world. Continuing high barriers to agricultural trade are a large part of the problem. We have got to start bringing them down.
  • Services liberalization is central to successful development strategies. It brings with it essential access to modern technology, more efficient infrastructure, lower transport and communications costs, stronger and better functioning financial markets.

Second, we need make progress quickly on a generous package of measures to assist the least developed countries. With over ten per cent of the world's population, they account for less than one-half of a per cent of world trade - and their share is shrinking. Tackling that requires a comprehensive approach, to encourage trade diversification, to correct policy impediments that hamper the development of competitive exports, to help them build their human, institutional and physical capacity to trade. These problems will take time to resolve.

  • What can be done immediately is to improve their market access opportunities. It is shameful for their wealthy trading partners to continue to maintain tariffs and quotas against the products in which the least-developed countries have a clear comparative advantage. That is also completely at odds with the notion of “Coherence” in global economic policy-making. As my colleagues Jim Wolfensohn and Helmut Köhler have been pointing out, debt relief will help the poor countries save more of their existing resources; but only increased exports will allow them to generate new ones. I shall continue to press hard on this issue in the months ahead. I must thank those countries that have already made offers. I would like others to report to capitals and advise us if they can do more.

Third, we need to take a more integrated approach to trade-related technical assistance and capacity building.

  • Here, I believe the new Poverty Reduction Strategy process (PRS) of the World Bank and the IMF will play a central role. We must support it. I very much welcome the fact that trade policy reform and trade-related capacity building is being made an integral part of the PRS process. Given the resources that can be mobilized by the PRS, not only by the World Bank and the IMF but also by all other development partners involved, it is natural for the WTO to view the PRS process as the focal point for our own technical assistance and support efforts.
  • In particular, the WTO's Integrated Framework for least-developed countries can provide an essential input to this approach. Like the PRS process, it is demand-driven and owned by governments, and it is inclusive of each country's full range of development partners. By aligning the IF with the PRS process, we can substantially increase the possibilities for attracting generous donor financing to it.
  • For the WTO to be an effective partner in this process, we need to increase our resources for technical assistance and training. Even with much greater involvement in future of the Bank and the Fund, providing assistance in all matters relating to implementation of WTO obligations remains the responsibility of the WTO and its Members. That is why I am continuing to look to improve and regularize the funding of the WTO's technical co-operation activities. We need a regular budget sufficient to enable us to plan two to three years ahead and respond to increasing demands. We have made some progress here, and new avenues for resources are being studied.

Fourth, and finally, we must advance on our goal of launching a new Round of multilateral trade negotiations. This is central to the trade interests of developing countries, and I was very encouraged to hear finance and development ministers at the Fund/Bank meetings last year echo my sentiment. As important as unilateral, bilateral or regional initiatives have been, history shows that multilateralism offers the most powerful means for achieving deep and lasting trade liberalization, with benefits guaranteed by WTO rules. Only through a balanced negotiation will countries achieve the cross-sectoral trade-offs that help to drive liberalization forward. Only an inclusive approach — based on the principle of non-discrimination — can ensure that the weakest and poorest countries are not marginalized. It is not always politically correct to say so, but the major economies also have needs, we all need the great importing countries to do well. The recovery from the Asian crisis was to a great extent based on rich markets staying open.

I want to finish on a personal note. The success of our cooperation agreements with the IMF and the World Bank — the benefits that the WTO is deriving from them — suggests to me that Member governments should not be shy in thinking through how the WTO can improve its cooperation with other organisations, UN and otherwise, in areas where our core activities converge with theirs.

  • I know that this does not fall formally under our Marrakesh “Coherence” mandate, and I am not suggesting that mandate be changed.
  • Nor am I trying to open a back door to contentious issues.

But in the Secretariat we see more and more evidence that other inter-governmental organisations have incorporated a core trade component into their work programmes, and in some cases a formal position on trade-related issues. I am thinking of organisations such as the UN, UNDP, FAO, WHO — organisations with which we are already cooperating at the technical level, and where there is no doubt scope to extend that cooperation further. But where we find ourselves operating at present mostly on parallel tracks, and lacking policy guidance from our governing bodies on how to make those tracks converge. These organisations are setting international standards, some of which we use in our work in the WTO; they are delivering capacity-building to developing countries, some of it directly trade-related; they are conducting policy surveillance — again, some of it trade-related; and they are conducting research, some of it with a heavy trade component. As long as all of these components are being generated in relative isolation from one another, there is a clear risk of duplication and overlap — and of the WTO being distracted from its core responsibilities to try to fill gaps elsewhere.

This is, I believe, a subject that warrants more of our attention. Perhaps not in this setting, of our Coherence mandate. But I would urge you to reflect further on it, and I would be grateful to hear your views.

This is a personal view, it's outside our mandate and ministerial instructions. However, after attending ACC meetings and pushing for better cooperation and seeking to cooperate with our sister organizations, I think it would be of assistance if we all did a stocktake, to better define our core missions, and our jurisdictions, and to make better use of resources.

I have suggested privately that an EPG or a group of wise men and women, with no vested interests, could do a study of the goals, objectives and outcomes of all the institutions. How we can do our jobs better, and be more accountable and transparent to our owners, the Governments.

Most of the international agencies are now middle aged, born out of the experiences of great depression and world conflict, bonded together by the cold war.

Globalisation, the accelerated movement of products, services, and most important, ideas, poses new challenges. This is an idea that needs polishing, it needs an owner and it's something our institutions cannot do by themselves. So, middle-age is about regular checks, an audit of programs, and a collective vision.

I must report my personal admiration for those heads of Agencies/Organizations who work on your behalf. Some of the finest people I've met since I took this job have been international public servants.