- Development & Aid
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Tuesday, May 31, 2016
Roberto Azevêdo is the Director General of the World Trade Organization (WTO)
- In 2015 the international community took some huge strides forward on a number of vital issues.
There was the agreement on the United Nations new Sustainable Development Goals.
There was the remarkable breakthrough in Paris in the fight against climate change.
We must seek to capitalise on this progress in 2016.
Let me explain in a bit more detail what was delivered in Nairobi.
The Nairobi Package contained a number of important decisions including a decision on export competition. This is truly historic. It is the most important reform in international trade rules on agriculture since the creation of the WTO.
The elimination of agricultural export subsidies is particularly significant in improving the global trading environment.
WTO members especially developing countries have consistently demanded action on this issue due to the enormous trade-distorting potential of these subsidies. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago. So this decision corrected an historic imbalance.
Countries have often resorted to export subsidies during economic crises and recent history shows that once one country did so, others quickly followed suit. Because of the Nairobi Package, no-one will be tempted to resort to such action in the future.
This decision will help to level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least-developed countries.
This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.
And it will provide a better framework for international food aid maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.
Members also took action on other developing-country issues, committing to find a permanent solution on public stockholding for food security purposes, and to develop a Special Safeguard Mechanism.
And members agreed a package of specific decisions for least developed countries, to support their integration into the global economy. This contained measures to enhance preferential rules of origin for these countries and preferential treatment for their services providers.
And it contained a number of steps on cotton helping low-income cotton producers to access new markets.
Finally, a large group of members agreed on the expansion of the Information Technology Agreement. Again, this was an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade that’s 1.3 trillion dollars worth of trade, making it the WTO’s first major tariff cutting deal since 1996.
Altogether, these decisions will provide a real boost to growth and development around the world.
This success is all the more significant because it comes so soon after our successful conference in Bali that delivered a number of important outcomes, including the Trade Facilitation Agreement. (TFA)
The TFA will bring a higher level of predictability and transparency to customs processes around the world, making it easier for businesses especially smaller enterprises to join global value chains.
It could reduce trade costs by an average of 14.5 per cent – with the greatest savings being felt in developing countries.
The Agreement has the potential to increase global merchandise exports by up to 1 trillion dollars per annum, and to create 20 million jobs around the world.
That’s potentially a bigger impact than the elimination of all remaining tariffs.
So the challenge before us is very significant.
For instance, during or the last two years, we have been trying to reinvigorate the Doha agenda on development, exploring various ways of overcoming the existing difficulties. We tested different alternatives over several months of good engagement, but the conversations revealed significant differences, which are unlikely to be solved in the short term.
But the challenge is not limited only to the question of what happens to the Doha issues, it is about the negotiating function of the WTO. It is about what members want for the future of the WTO as a standard and rule-setting body. And the challenge is urgent.
The world won’t wait for the WTO. Other trade deals will keep advancing.
The wider the gap between regional and multilateral disciplines, the worse the trade environment becomes for everyone, particularly businesses, small countries and all those not involved in major regional negotiations.
But the outlook is not bleak. I said at the outset that 2016 was full of promise. I truly believe that because, while we face real challenges, there are also real opportunities before us.