WTO - Never been so close to an agreement

This just slid across the inbox from the WTO. Sounds like hope for a WTO agreement is hard to kill. From the WTO:

Director-General Pascal Lamy, in his remarks at the opening of the “Global Partnership for Development” conference in New Delhi on 12 August 2008, said that at the end of the Geneva talks last month “members told us very clearly that the negotiations should not be abandoned ... too much has been achieved now to simply leave it aside”. This is what he said:

Excellencies, ladies and gentlemen, dear friends. I wish to start by congratulating Pradeep Mehta for his perfect sense of timing. It would be difficult to think of a better time for this Conference to take place — and I am particularly grateful to CUTS for the invitation and for opportunity to come to India at this stage.

Before entering into the subject of “Global Partnership for Development”, I wish to share with you what we were told by the WTO Members last month, two days after the ministers failed to reach an agreement on the Agricultural and industrial pillar of the Doha Round modalities: we have never been so close to an agreement. This is not rhetoric. This is the truth of where we stand: what Ministers and senior officials managed to achieve in the week they spent in Geneva late July is absolutely remarkable.

In fact, in purely technical terms, the issues already agreed by the group of Ministers with whom I was holding the most intensive consultations — and whose countries represent more than 80% of world trade — would be sufficient for the drafting of schedules of commitments in Agriculture and NAMA.

The political reality, nonetheless, is that we must wrap up a few remaining issues, and build consensus amongst all Members, before we can start the scheduling process, which would lead to the conclusion of the Round.

Among these few remaining issues, the most difficult one is the question of the Agricultural Special Safeguard Mechanism for developing countries. There are two diverging views on the so-called SSM, which proved to be impossible to reconcile during the meeting in July.

One view is that developing countries need to have a safety net against import surges of agricultural products, in order to be able to protect their farming systems, and that this safeguard should be easy to use.

Another view is that, like all safeguards in the GATT and WTO, the SSM should be subject to certain conditions and limitations, in order to ensure that that it does not hamper normal trade flows and that it should not be abused.

In spite of these differences, what Members told us very clearly during the plenary meetings held at the end of the talks, is that the negotiations should not be abandoned at this point. In the view of our Members, too much has been achieved now, to simply leave it aside.

If I say this, it is because I remain convinced that the WTO's mandate regarding the gradual removal of obstacles to trade, framed with multilateral trading rules, constitutes an essential contribution to development and to the improvement of collective well-being. Trade is a development tool. A successful conclusion of the Round, by addressing obstacles to trade which today penalize particularly developing countries, can be a powerful instrument to fight for development in the hands of countries.

Let me give you one figure: if the Round is successfully concluded, the world would reduce by half the amount of imports tariffs paid today. There would be savings in the order to US 150 billion in tariffs. Developing countries would contribute to 1/3 of the savings, and would benefit from 2/3 of it. Developed countries would contribute with 2/3 of the savings. So, at the end of the day, developing countries would benefit from 2/3 of the increased market access resulting from the Round, and developed countries would benefit 1/3. This is truly a development Round.

This is just a snapshot of what could be saved but it does not say how much more trade would grow with the reduction of barriers. A lot of studies have been published with result varying depending on the assumptions made.

It also does not tell us how the gains from trade would be shared within each country. This is in the hands of each government and depends largely on domestic policies which span beyond the WTO reach.

Let me give you another example: if the Round is concluded with success, the US could see the amount of trade distorting subsidies reduced to US 14.5 billion. True, this is more than the US currently spends. But if this ceiling is not set, the US will be able to spend much more than that in trade distorting subsidies as soon as food prices decline. In fact it has done so in 8 of the last 10 years. True also that this figure is still high and that many of you would think that the amount would be zero. But let me clear, without the Round the amount could reach US 48 billion.

To come back to the WTO, the basic underlying philosophy shared by all WTO members is that gradual market opening is good. At the same time, we know that market opening is not, in itself, sufficient to create and ensure development. I cannot overstress this point: opening up of trade will only deliver real benefits if it is accompanied by other policies, which allow for flexibility and job security: education policy, employment policy, research or innovation policy to name a few.

Some of these must be implemented at national level while others are effective only if applied internationally through the joint-action of specialized agencies. And this is where a discussion on Global Partnership comes in.

Coherence between the various international public policies — and they are eminently complementary — is absolutely essential.

Harnessing globalization and ensuring global partnerships for development presupposes balanced international cooperation across the board. The best trade policy cannot alone promote growth and development. Sound macro-economic policies must be supplemented by structural policies.

The WTO favours trade openness as playing a vital role in members' growth and development. But as I said, this is only part of the task. An open economy is not a panacea for all the challenges of development, neither is it necessarily easy to accomplish, nor in many circumstances can it be effective unless it is embedded in a supportive economic, social and political context and in a coherent multi-faceted policy framework. And this is also about international coherence.

To use a phrase crafted by our Appellate Body, the WTO does not live in “clinical isolation”. Global problems require global replies — and the WTO must be part of the process of finding such replies.

Let's take the example of the Food Price Crisis. The negotiations in the WTO on agriculture subsidies and market access are part of the medium and long term solution to the food shortage. We know that we need to increase agriculture production in developing countries and one of the reasons why their production and exports have been discouraged is because of trade distorting subsidies and high tariffs in rich countries. Trade can play the role of better connecting supply and demand. This is true locally, regionally and world wide.

In this field, as in many others, the WTO is in constant dialogue with other international organisations and indeed gives legal weight to norms developed by them, as evidenced on many occasions by decisions made under the WTO's Dispute Settlement Understanding.

In practice, there are day-to-day exchanges that take place amongst secretariats of international organizations — UNCTAD, FAO, UNEP, World Bank, IMF, regional development banks, World Customs Organisation, OECD etc. Cooperation in global economic policy-making goes much beyond the WTO's formal and specific arrangements.

Trying to find solutions through global partnerships also helps reinforce more global governance, which I believe is needed if we want the world we live in to be less violent, be it social, political, economic or environmental violence, and more peaceful, plentiful and prosperous. Stable and updated trade rules, and a strong WTO, reinforced by a successful conclusion of the DDA, would be a key step in that direction.

I know that CUTS share this view and acts, through its various programmes, as an interface between civil society, government and international organisations, which is why we are very glad to see its presence reinforced with the opening of a new office in Geneva.

In these turbulent times, at a moment when multilateralism and international cooperation are challenged on many fronts, we need more organisations like CUTS to help us all build the necessary bridges.