The WTO and the Arab world: preparations for Doha
UNCTAD High-Level Meeting for Arab countries
Communiqués de presse
Allocutions: Mike Moore
Allocutions: Renato Ruggiero 1995-1999
It is a great pleasure to be here today. These are exciting times at the WTO. Five months from now, we will hold our fourth ministerial conference in Doha. Our aim, as you know, is to launch a new WTO round of multilateral trade negotiations there. It is an ambitious challenge, but I strongly believe we will succeed.
I. Benefits of the WTO for the Arab world
We are very grateful to Qatar for its hospitality. Qatar will be the first country in the Arab world to host a WTO ministerial. From 9-13 November, the ministerial will bring the WTO closer to the Arab region than ever before. It will offer the region a unique window into the workings of the multilateral trading system. The conference should be seen as an opportunity for the Arab region to raise awareness about WTO and the importance of international trade. It should also be seen as an opportunity for the region to join hands with the rest of the international community in dismantling trade barriers that have kept nations apart for far too long. From our side here in Geneva, the ministerial will enable us to learn more about the issues that matter to you.
Today, 11 countries in the Arab world, Bahrain, Djibouti, Egypt, Jordan, Kuwait, Mauritania, Morocco, Oman, Qatar, Tunisia, and the United Arab Emirates, are WTO members. Five are observers - Algeria, Lebanon, Saudi Arabia, Sudan and Yemen.
From time immemorial trade has been important for the Arab world. In fact, history is filled with images of Arab merchants travelling the world to market their textiles, spices, and other goods. Today, the Arab world's share of world trade is rising. The merchandise exports of our 16 Arab WTO members and observers amounted to approximately US$ 220 billion in the year 2000, reflecting a significant rise from 1999, while imports totalled US$ 146 billion. Commercial services have also been extremely important for them, with exports at approximately US$ 31 billion in the year 2000, and imports at US$37 billion.
Through the WTO, these figures can be made to rise even further. For Arab countries, as well as for the rest of the world, the WTO offers a rules-based system within which to liberalize international trade. It is only through such a system that the world can protect the legal trading rights of individual countries, big or small, and create a level playing field in international trade. The principle of non-discrimination, which is the back-bone of the WTO system, guarantees fairness in commercial relations. It prevents WTO members from privileging the products of one region over those of another, or from privileging domestically produced products. This particularly serves to protect all countries against the unilateral whims of the strong. Membership is also a signal and commitment to the rule of law and good governance.
In WTO, even the smallest member has a say in setting the rules, because every country has a veto. That means every voice must be listened to. In exchange for opening their markets to others—which is good in itself because it boosts competition, lowers prices and increases choice—members gain access to new markets for their exporters. This is particularly important for small export-reliant developing countries and for fuel-exporting countries in the Arab world that want to diversify their exports. Moreover, by committing themselves at the WTO to keep their markets open, members can attract invaluable foreign investment and the new technologies that come with it.
II. The case for free trade
The multilateral trading system has probably done more to boost living standards and lift people out of poverty than any other government intervention. The 17-fold rise in world trade since 1950 has gone hand-in-hand with a six-fold rise in world output. This has benefited both developed and developing countries: in both, living standards have risen three-fold. Life expectancy in developing countries has risen from 41 to 62 years, infant mortality has more than halved, while the adult literacy rate is up from 40% to 70%.
The countries that have done spectacularly well over the past half-century, such as Japan, South Korea and Singapore, have all been trade-oriented. This has also been true in the Arab region. Dubai, for instance, enjoys a vibrant status because of international trade. This is confirmed by a new study, "Trade, Growth, and Poverty", by David Dollar and Aart Kray of the World Bank. They find that whereas GDP per person fell by 1.1% in the 1990s in non-globalising developing countries, it rose by 5.1% a year in globalising ones. Moroever, the incomes of the poor rise in line with overall growth. The bottom line is this: freeing trade boosts economic growth, and so helps to alleviate poverty. Thus, it helps pay for the things we value most: jobs, health, education, a cleaner environment. And it promotes freedom and buttresses our security and peace.
III. The case for a Round
This year is crucial for the multilateral trading system. The world economy is looking fragile. After years of heady growth, the US economy is slowing. Europe’s economy has lost some steam and Japan’s is in the doldrums. Developing countries are particularly vulnerable to a global downturn. Launching a new round in Doha would help steady nerves and send a powerful signal that governments do not intend to let the huge gains from freer trade slip away.
The danger is that an upsurge in protectionism will turn a global downturn in into a global bust. Even during the good times, there has been a worrying increase in anti-dumping and anti-subsidy investigations in both developed and developing countries. Over 400 were launched in 1999, up from only 166 in 1995. And the OECD has noted that producer support estimates for agriculture are rising again.
Things could turn nasty if companies squeezed by falling profits convince governments that they need protection from foreign competition. The virtuous circle of trade liberalisation and economic growth could all too easily become a vicious spiral of protectionism and stagnation.
This could ultimately jeopardize the multilateral trading system itself. A global rules-based system based on non-discrimination could give way to a patchwork of discriminatory regional deals and even potentially hostile blocs, combined with aggressive unilateralism by the big guys. Everyone would lose from this. But the biggest losers would be the poor and the weak.
It need not come to that. A shared sense of vulnerability need not lead to beggar-thy-neighbour policies. It can also encourage greater co-operation among governments. That, after all, was the rationale for setting up the multilateral trading system after the protectionist nightmare of the 1930s. Anxious politicians ought to see fresh moves towards trade liberalization as a way to tide the economy through hard times.
Cutting barriers to trade in agriculture, manufacturing and services by a third would boost the world economy by $613 billion, according to a new study by Robert Stern of the University of Michigan and others. That is equivalent to adding an economy the size of Canada to the world economy. Doing away with all trade barriers would boost the world economy by nearly $1.9 trillion: the equivalent of adding two more Chinas to the world economy.
Of course, these are only estimates. Reasonable people can quibble about the exact size of the gains from a new round. But the basic message from study after study is clear: a new round brings huge benefits to all parts of the globe.
IV. The Agenda for Doha
The agenda for Doha is not yet fixed. But its outlines are becoming clear. For starters, there is the in-built agenda of agriculture and services. Freer trade in agriculture is vitally important for all Arab countries, be they food exporters such as Mauritania, or net food importers, such as the Gulf states. So too is trade in services, which is the backbone of any economy. Cheap and efficient telecoms and financial services are vital, whether you export tomatoes or textiles. Tourism can be a big export earner. And easing the granting of temporary visas to cross-border workers is another important issue under discussion. Trade in services already accounts for around a fifth of exports in the 11 WTO members from the Arab world.
Negotiations in agriculture and services are already into their second year. Progress so far has been good. But we urgently need to broaden the negotiating agenda.
Why? Because it creates political trade-offs. Take agriculture. The European Union and Japan have stated that they are willing to negotiate meaningfully on reducing agricultural protection. They are committed to negotiate by Article 20 of the WTO's Agreement on Agriculture. The looming expiry of the Peace Clause in 2003 gives them a strong incentive to negotiate in earnest. Yet agricultural liberalization is extremely sensitive politically. There is a much greater chance of reducing agricultural support in Europe and Japan if other countries are willing to make concessions in areas where Europe and Japan have demands, such as competition, investment, and anti-dumping.
A similar logic applies to the so-called "implementation" issue. Many developing countries have concerns about the burden of implementing their Uruguay-Round commitments and its perceived iniquities. They have raised a number of issues which are being discussed in the WTO's General Council and in WTO committees. Some modest progress has been made, notably at a special session of the WTO General Council last December. But there is now a growing recognition that further efforts to rebalance past agreements require new negotiations. Instead of being a stumbling-block, implementation could thus become yet another building block of a new round.
Another important building block is manufacturing, which has been at the heart of every previous round. There are still many damaging trade barriers in manufacturing. And most of their burden falls on developing countries. Manufactures now account for around three-quarters of developing-country exports, up from around 30% in the early 1980s. They account for 82% of Tunisia’s commodity exports, for instance, and 49% of Jordan’s. Moreover, developing-country exports of manufactures face much higher trade barriers that exports from developed countries, as a study by Thomas Hertel and Will Martin of the World Bank points out. They estimate that barriers to manufacturing exports account for around 70% of the total export barriers faced by developing countries and that three-quarters of the gains from further manufacturing liberalization would go to developing countries. Clearly, then, manufacturing has to be at the heart of a new round if it is truly to benefit developing countries.
Setting the agenda for a new round is not just about including issues. It is also about excluding some. WTO members will never agree to use trade sanctions to enforce labour standards. It is a line in the sand that developing countries will not cross. They fear that such provisions could be abused for protectionist purposes. However, the social implications of globalization do need to be addressed. The question for governments is where and how.
The environment issue is different. Our work at the WTO dovetails with environmental aspirations in potentially important ways. It is part of our process now. In areas like agriculture and fisheries, some existing subsidies can compromise environmental quality. We should work together to address these issues. More importantly, poverty is no friend of the environment. The virtuous circle of open trade and growth contributes to poverty reduction, and the WTO has a positive role to play here too. But potential conflicts also exist, most notably when it comes to environmental quality issues that spill across national frontiers. Here we need greater cooperation among governments. The WTO cannot solve these problems alone. Punitive sanctions in the absence of international agreements are hardly the answer. It should not be impossible for governments to square their commitments at the WTO with those in MEAs.
Over the next month or so, we shall make every effort to hammer out an agenda for a new round so Ministers can put the final touches to it in Qatar in November. We need always to keep in mind that this is about launching a round – not concluding a round. The agenda has to be broad enough to have something in it for everyone, but must exclude issues that are inappropriate or where compromise is impossible. It has to be detailed enough to be meaningful, but not so detailed that it becomes a pre-negotiation.
What we need now is the political will to compromise. As storm clouds gather over the world economy, the prospect of launching a new round is a ray of sunlight. It is time to move from words of support for a new round to making the compromises needed to launch one.
V. WTO stategy for the Arab region
As we move towards Doha, we in the WTO are working on a Strategy for the Arab Region. There is a lot to do and it should have been done earlier. For the first time ever, we organized a meeting with Ambassadors from the Arab region to receive their advice on our strategy. We are also seeking guidance from other sources in the Arab region.
The principal objectives of our strategy for the Arab region are:
- First, to raise awareness in the Arab world on WTO. It is important to explain to the Arab world what the WTO is, what it does, and what to expect of its upcoming ministerial. Awareness must also be raised on the importance international trade for economic growth.
- Second, to facilitate the flow of information. There is of course an undeniable language barrier confronting Arab members of WTO in the day-to-day work of the Organization. Another barrier to information flow is the dearth of Arab authors, and Arabic language publications, on WTO. These barriers must be overcome through improved information flow.
- Third, to assist the Geneva-based missions of Arab delegations, particularly small missions, in dealing with the very demanding work of WTO. The WTO is an organization in which large numbers of meetings can run simultaneously, and whose meetings require careful preparation as well as follow-up. Missions must be assisted in confronting this workload.
- And, fourth, to prepare Arab countries for a potential round.
This strategy is still in its infancy. I urge you, therefore, to let me know how best to tailor it to your needs. The Arab world is as important for WTO as the WTO is for the Arab world. Let us work together to make this Arab strategy a success. Let us work together to make a new round a reality.