Thank you to Denis Bélisle for the invitation to address a few words to
this Forum, and congratulations to the ITC for the initiative of
bringing together public sector officials and business representatives
to discuss commercial opportunities and governmental strategies on
Coming to Montreux and talking about services is a welcome opportunity
to breath some fresh air, after weeks of meetings in the offices of the
WTO building. With the exception of the few days I spent in Washington
for meetings in the IMF and World Bank and contacts with US Government
and Congress representatives two weeks ago and my official visit to
Bern, I have had little opportunity to leave Geneva and meet with the
business community and government officials.
I was pleased, therefore, to be able to accept the invitation by the ITC
to meet with you, who are the hands-on professionals in services. This
invitation also gives me the opportunity to pay a tribute to the ITC.
Denis Bélisle knows that my interest for this institution predates my
arrival in Geneva as Director-General of the WTO. We have had fruitful
contacts before and I am witness to the good and concrete work performed
by the ITC. I also wish to express the satisfaction with which WTO staff
has been cooperating and joining forces with ITC on many occasions — I
will do my best to foster and strengthen this cooperation in the future.
Let me start these remarks with a general overview of the state of play
of negotiations in the run-up to our Sixth Ministerial Meeting in
December and give you a bit of background of where we are in terms of
calendar, main issues and preparations.
First, the timing: we are today precisely 69 days — or less than 10
weeks — from the start of the Conference and there remains an immense
amount of work to be done by Ministers, Ambassadors, delegates and the
Secretariat if we are to achieve meaningful results in Hong Kong. The
next days will be crucial to the definition of success in our
Ministerial Conference later this year.
What are the landmarks in these 10 weeks that remain before us ?
By mid next week, i.e. the meeting of the Trade Negotiations Committee
on 13 October, we will assess the movement in terms of positions of
Members in key areas of negotiation. A series of high-level meetings
will be taking place in the course of next week. We are hopeful that
these meetings, if not resulting in convergence to agreements, will at
least bring about new proposals which allow the discussions to advance
towards our objective of arriving at two-thirds of the way to the end of
Negotiating Groups will continue to work on the technical aspects of the
negotiations throughout the months of October and November. By
mid-November, we should see a first draft of the Declaration, to be
considered in capitals. Some delegations may need more time than others
to fully review the draft and react to it. In early December, we must
have a clear sense of areas where there is initial agreement and those
where gaps exist which Ministers will be called upon to bridge during
The time, as you see, is extremely short. In my first meeting as Chair
of the Trade Negotiating Committee — the body which oversees the
negotiations and gathers representatives of all Members of the WTO — I
said that we were entering into a training camp phase, where all players
should be primarily devoted to achieving the goals we are mandated with.
If we take into account that the Doha Round must end in December 2006,
we must play now with all our energy.
Second, the issues to be tackled from here until December. The list is
not short and I will spare you the details. Suffice to say that, at this
stage, we still need to see some basic movement on issues which are
incomprehensible to the man in the street, but which may affect our
daily lives in the future — and therefore carry a high political
sensitivity. These are issues with cryptic names such as domestic
support, blue box, AMS, specific and sensitive products, to mention just
a few in the area of Agriculture. To these, one should add another set
of somewhat unintelligible formulae and flexibilities, unbound tariffs
and preference erosion, having to do with Non-Agricultural Market Access
(NAMA) — and again, this is a non-exhaustive list of issues in only two
of the main areas of negotiations.
As you can see, the level of ambition we had four years ago in Qatar,
when this Round was launched, was quite formidable. It is our task now
to deliver results that match that ambition, and to be faithful to the
title we gave to this Round: the Doha Development Agenda.
There is a clear link between development and the benefits brought about
by the opening of services markets. Proof of these benefits is that
developing countries which have embraced and invested in the
establishment of a services industry are clearly in the forefront of the
battle against poverty and illiteracy. Countries with open services
markets have seen greater product and process innovation, based largely
on their access to foreign capital and world-class technology. The
explosive growth of the Internet — and of Internet-related sectors — in
liberalizing countries is only one example, however breathtaking. It
clearly shows how modern services can help to overcome the constraints
of economic poverty, geographic periphery, and social exclusion.
What I wish to underline briefly are the current framework, the problems
and challenges in the services negotiations in the WTO.
Starting with the political framework: it is difficult to overstate the
difference between the spectrum of positions in services negotiations at
the time of the Uruguay Round and the situation today. We have moved
from a picture where most developing countries were reticent, if not
outright opposed, to negotiating services, to a new set of positions,
where some important developing countries have become strong demandeurs
in the negotiations. Availability of world-class services has enabled
exporters in developing countries to capitalize on their competitive
strength, whatever the goods and services they have to offer.
An increasing number of developing countries, building on foreign
investment and expertise, have been able to make impressive inroads in
international services markets. Services opening has become an
indispensable element of development strategies. In turn, this has
prompted many initially sceptical governments to change track. Having
largely remained on the sidelines of the Uruguay Round, they now play an
increasingly vocal role in the services negotiations.
The phenomena of outsourcing and cross-border supply of services,
facilitated by IT and FDI, have introduced new strategic elements in the
negotiations. Modes of supply of certain services, which were difficult
to conceive in the past, have not only materialized in practice but in
some instances have become commonplace.
Outsourcing of services has become an important feature of international
trade in services. Developed countries have gained access to a new pool
of talent abroad and have boosted productivity. Developing countries, on
their side, have seen the establishment of high-tech industries and
gained a substantive increase in income related to services jobs.
Outsourcing is thus influencing policy decisions in both developed and
developing countries, in ways which require complex examination of
trade, economic and social factors.
Countries like India have seen exports of services such as software
development, back-office support and services supplied by call-centres,
expand in a significant way. Some African countries have also seen an
increase in their exports of non-traditional services. The positive
spin-off effects of liberalizing services have been felt in the form of
increased Foreign Direct Investment and the creation of new businesses
to support the new services providers. Matched with sound educational
policies and investment in infrastructure, the services sector has
proven a powerful engine for growth and development.
Not all of these changing features in international trade in services
have been fully reflected in the negotiations. Also, these changes have
brought about new concepts and problems. An array of challenges remain
The first set of problems and challenges has to do with the political
sensitivities of market opening in different services sectors. Several
NGOs and civil society groups consider that opening services markets is
a dangerous path to follow for less competitive economies. They claim
that there is an intolerable level of intrusiveness by the WTO rules in
areas of national policy competence such as education and health care.
The water distribution sector is a often cited as a good example of this
debate. Water distribution is obviously a basic service in any country.
It is difficult to conceive social and economic development without this
service. On one side, this a service of general public interest, and as
such it is generally owned and operated by the government, through
public companies. On the other side, many governments simply do not have
the financial capacity to put in place the infrastructure of water
distribution in all areas where it is needed. Therefore, if the market
is not open to private investment, a water distribution system will take
much longer to be established, and delay productive investment in other
What must be stressed in this debate is that the GATS does not require
the opening, privatization or deregulation of any service. In respect of
water distribution and all other public services, different policy
options are perfectly legitimate and are open to all WTO Members. I wish
to underline this point: neither the current rules in the GATS, nor the
new round of negotiations will force WTO Members to open the totality of
their services sectors to private or foreign competition. WTO Members
are free to maintain a service as a public monopoly if they so wish.
What also needs to be stressed are the economic benefits of opening
services markets such as helping exporters and producers capitalize on
their competitive strength; enhancing consumer savings; fostering
innovation and technology transfer.
A second set of problems and challenges has to do with inexperience with
the GATS. Participation in services negotiations is more demanding than
government officials were used to in old-fashioned trade negotiations on
goods. The services economy is not only larger than agriculture and
manufacturing in most countries in the world, it is also far more
diversified. And the services agreement, the GATS, is far broader than
conventional trade agreements for goods. It covers not only cross-border
trade, but movements of consumers, of producers/investors, and of
persons. Negotiations are thus more complicated — and so are the
country-internal processes of preparation, coordination and
implementation. Services negotiations generally require Trade Ministers
to work with their colleagues who have regulatory responsibility in
different services sectors — and the difficulties of such internal
coordination should not be underestimated.
The complexities of services are also quite clear in the negotiations in
the rule-making areas, that is on the disciplines for domestic
regulation, the question of an emergency safeguard mechanism, as well as
the need for and scope of rules on government procurement and on
subsidies. Leaving aside the practical difficulties of some of these
instruments, several Members argue that progress in rule-making would
provide them with some degree of comfort to enable them to make further
specific commitments. These Members point out that, if they knew they
could count on a mechanism such as an emergency safeguard, more
commitments could be made. In contrast, others are concerned that such a
mechanism could unnecessarily undermine the predictability of the
commitments sought in the Round.
For the moment, many governments continue to be more hesitant in their
approach to services trade than they use to be in manufacturing.
Although one can understand this situation, it is nonetheless
unfortunate, since the benefits of services liberalization are key to
any development strategy. Barriers are still far higher and less
transparent in services than in most goods markets (with some notable
exceptions such as agriculture).
What can be done about this? On our side in the WTO, a key factor is
technical assistance. Based on donor funds, the Secretariat has been
conducting a broad range of technical assistance activities. These
include seminars in national capitals (some 20 to 25 per year), regional
seminars, as well as workshops and symposia in Geneva. Tellingly, the
most recent symposium dealt with the challenges and opportunities of
cross-border trade in services.
Two further points need to be added to my list of negotiating
'challenges' in services.
One is the idea that one will only negotiate services once there has
been movement in other areas of negotiations. Of course, bearing in mind
a long and painful negotiating history in areas such as Agriculture,
this is understandable. However, the quality of results of negotiations
in services may be seriously affected by the delay in tabling requests
Services negotiations do not lend themselves to the same formula-based
approaches as agriculture or goods. Rather, they are advanced mostly
sector-by-sector in a host of bilateral meetings. There might not be
sufficient time to successfully complete this time — and
resource-intensive process if it is not allowed to advance at its proper
This would be problematic especially for an area of focal interest to
many developing countries: Mode 4 — the presence of natural persons. It
is the most protected, most sensitive and, by the same token, most
challenging area under discussion. I am fully aware of its particular
importance for small and medium-sized companies that cannot maintain
permanent offices in export markets, but need the flexibility to move
staff as the opportunity arises. Any meaningful outcome, however, needs
time — time for negotiation in Geneva and time for preparation,
coordination and persuasion in capitals. Given the tight schedule before
us, we cannot afford to wait any longer.
Finally, there is an urgent need for political guidance and orientation
to services negotiators. It has become increasingly relevant in recent
months that political input is badly needed to advance services
negotiations. The main concern is no longer the absence of a sufficient
number of offers — three-quarters of the Membership has participated in
the process to date and submitted at least initial offers of new or
improved commitments. But it is widely recognized that the quality is
poor and, if implemented, would open hardly any new access opportunities
for service providers.
We are at a crossroads. Should the bilateral request-and-offer process
simply be continued, or do we need to develop complementary mechanisms
that would (re-)launch this process on a higher plain? If so, what would
these mechanisms look like — and how could they be translated into clear
guidelines to be endorsed by Ministers in Hong Kong? Members need to
focus further on these issues as a matter of priority — and arrive in
Geneva with fresh instructions from their political leaders.
Services are a core element of the Doha Development Agenda — and a
satisfactory result is a condition sine qua non for the whole project.
Therefore, my message to you is: your support for the services
negotiations is crucial to the whole Round.
Let me finish by emphasising my unwavering commitment to the Round and
to keeping the negotiations on course. History has shown us that a fair
and balanced trading system is a precondition for peace and prosperity.
I am strongly inspired by the vision expressed by Victor Hugo in his
address to the Third International Congress for Peace, held in Paris in
“Un jour viendra où il n'y aura plus d'autres champs de bataille que les
marchés s'ouvrant au commerce et les esprits s'ouvrant aux idées ...”
[“A day will come when the only fields of battle will be markets opening
up to trade and minds opening up to ideas ...”]
Victor Hugo, Discours au 3ème Congrès international de la paix, Paris
Thank you very much and my best wishes for the success of this Forum.