With the 3rd UN Ocean Conference (UNOC3) set to take place June 9-13 in Nice, and co-chaired by France and Costa Rica, Europe’s environmental leadership is under the spotlight. The EU has made ambitious pledges on ocean protection, but its progress on ratifying the landmark High Seas Treaty has been slow. So far, only a handful of member states have signed on, threatening to hinder progress on a landmark agreement for ocean protection.

By Pascal Lamy and Geneviève Pons
PARIS / BRUSSELS , May 9 2025 (IPS)

If one so wished, it would be entirely possible to spend a lifetime travelling from one international environmental conference to the next, without ever returning home. But the relentless pace of these meetings does not always translate into equally rapid action.

Instead, the result is often painfully slow progress, watered down commitments and timelines that can stretch into years if not decades. Public frustration is mounting, tired of broken promises. It wants action to tackle the climate and biodiversity crises before it is too late.

In this void of global environmental leadership, the European Union has an opportunity to step up on the stewardship of our planet’s greatest shared resource: the ocean.

Credit: Josh Sorenson

The ocean is Earth’s life support system. It covers over 70% of our planet, regulates the climate by absorbing carbon dioxide, produces at least half of the oxygen we breathe, sustains millions of livelihoods, provides food for billions, and holds mysteries we’ve only just begun to uncover.

Yet, despite its fundamental role in planetary health and human survival, the ocean remains under constant assault from climate change, pollution, overfishing, and habitat destruction.

Most alarmingly, vast areas of the ocean — especially the High Seas — remain dangerously under protected.

That is why it is both remarkable and welcome that, as EU Council President Antonio Costa highlighted, all 27 EU Heads of State and Government reached – for the very first time – ambitious conclusions on the ocean at the March 2025 European Council.

Among these was a commitment to swiftly ratify the new High Seas Treaty, a landmark international agreement finalized in 2023 after nearly two decades of negotiations.

This treaty, also known as the Biodiversity Beyond National Jurisdiction (BBNJ) Agreement, is a cornerstone of marine conservation and was hailed as a major victory for multilateralism. It holds enormous potential to protect marine life in High Seas — the two-thirds of the ocean that lie beyond national borders. But treaties do not protect ecosystems — countries do.

And unless 60 nations ratify the agreement so it can enter into force, its historic potential will remain nothing more than words on paper.

Here, the EU has a chance to lead by example — and by numbers. With its 27 member states, it holds the key to being a game-changer in accelerating the process of entry into force. The EU finalized its ratification in June 2024, but progress among individual member states has lagged.

As of now, only France and Spain have formally deposited their ratification instruments with the United Nations. Several others are close, but the overall momentum is insufficient. In a positive development aimed at facilitating ratification and preparing for implementation, the EU Commission has recently proposed a Directive for transposing the BBNJ Agreement into EU law.

Member states must urgently speed up their national processes to complete their ratification and send a strong signal of global leadership. This urgency and roadmap are outlined in detail in Europe Jacques Delors’ most recent policy brief, which highlights the key institutional, legal, and diplomatic levers available to the EU and its member states.

The stakes could not be higher. 40% of EU citizens live in coastal areas, which contribute around 40% of the EU’s GDP. The EU, together with its overseas territories, also has the largest Exclusive Economic Zone in the world. From economic stability to energy security and food supply, the ocean is inextricably tied to Europe’s prosperity. A degraded ocean means a less secure, less resilient, and less prosperous Europe.

True leadership means more than making bold declarations, it is about delivering results.

This June, the 3rd UN Ocean Conference (UNOC3) will take place on European soil — in Nice. The Conference has been designated as the key political moment to secure the 60 ratifications needed to trigger the Treaty’s entry into force.

Achieving this goal is essential not only to uphold the EU leadership and credibility on ocean governance, but also to meet broader international commitments — including the Kunming-Montreal Global Biodiversity Framework’s goal of protecting 30% of the ocean by 2030 (30×30).

The EU must intensify its ‘blue diplomacy’, leveraging initiatives like the High Ambition Coalition for the High Seas Treaty, which it helped establish, to drive global ratification and implementation efforts of its 52 members. This conference needs to prove that once again environmental multilateralism can still deliver when it matters most.

The EU has set an ambitious course on ocean governance. The imminent launch of the European Ocean Pact, which builds on the foundations laid by the Manifesto for a European Ocean Pact initiated by Europe Jacques Delors and Oceano Azul Foundation, and the recent EU Council conclusions on the Ocean, are strong signals of intent.

With the global order in flux and geopolitical alliances shifting rapidly, the EU must work together and embrace its role as both a stabilizing force and a champion of the ocean. Delivering on the High Seas Treaty — through swift ratification, diligent preparation for implementation, and the establishment of a robust governance framework — will be a defining moment for the EU. It is a test of its credibility, leadership, and vision for the future.

The world is watching. The ocean is waiting. And the clock is ticking.

Pascal Lamy is the Vice-President of Europe Jacques Delors and former Director-General of the WTO. Geneviève Pons is the Vice-President and Director General of Europe Jacques Delors and a leading advocate for ocean conservation.

IPS UN Bureau

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Marine life photographed on National Oceanic and Atmospheric Administration (NOAA) survey of deep-sea habitats. Credit: NOAA

By Nancy Karigithu and Pascal Lamy
DAVOS, Switzerland, Jan 17 2025 (IPS)

Deep-sea mining may not be on the official agenda next week at the World Economic Forum in Davos (January 20-24), but restoring public trust in international cooperation is.

Perhaps the most significant commitment African and European leaders can make here to restore trust in their ability to solve complicated problems, and one that safeguards our planet’s health and interconnected ocean, is to call for a pause on deep-sea mining in international waters.

As co-chairs of the Africa-Europe Strategy Group on Ocean Governance, an initiative of the European Commission, in partnership with the African Union Commission, and facilitated by the Africa-Europe Foundation, we have already begun discussing how both continents could benefit from greater collaboration in fisheries management, marine pollution, and habitat protection, especially in the face of climate change.

Now, with Global North mining corporations pushing the International Seabed Authority (ISA) to approve commercial deep-sea mining in 2025 with no agreed regulations and no environmental safeguards, we must urgently turn our attention and global influence to the ocean floor.

Already, permits have been granted to prospect for potato-sized polymetallic nodules that contain elements like cobalt and nickel. Unfortunately, the mining process amounts to dragging bulldozers across the seafloor thousands of meters below the surface and vacuuming the nodules back up to ships where they are cleaned with high-pressure hoses, leaving vast clouds of silt in their wakes.

Scientists have increasingly been sounding the alarm about the potential impacts of the operations on fragile marine habitats, with the likelihood that deep-sea mining could irreversibly destroy species and ecosystems.

Once thought to be nearly devoid of life, and contrary to the traditional knowledge of indigenous and coastal communities, new research has revealed an environment teeming with numerous species of fish, squid, and crustaceans (many only recently discovered) that play an essential role in the wider global ocean system, including African and European fisheries.

Other research suggests that disturbing seabed sediments could disrupt our planet’s largest carbon sink and potentially release carbon into the atmosphere and compound the climate crisis when we can least afford it.

Both continents depend on a healthy marine environment for fisheries, tourism and food security. Yet, even as they struggle to manage unprecedented pressures from over-exploitation, rapidly warming waters, pollution and acidification, deep-sea mining looms as a potentially catastrophic threat with far-reaching impacts that do not recognize national borders.

Proponents of the mining, possibly even some in Davos, argue that it is necessary to satisfy growing demand for batteries used in the burgeoning electric vehicle market. But with research suggesting that deep-sea metals are not needed to fuel the green transition, including the astronomical costs and growing liabilities with the industry, companies have already begun moving away from the industry to invest in alternatives, including innovative battery chemistries and recycled materials.

It is unlikely that deep-sea mining would ever be profitable without large government subsidies that could be better spent on improved refining and processing capacity, renewable technologies and energy efficiency.

Given these enormous risks (and questionable benefits), an Africa-Europe led pause on deep-sea mining is simply a prudent application of the precautionary approach that has guided marine conservation and international environmental treaties for decades. It would also align with key principles set out in the UN High Seas Treaty, such as conservation, sustainable use and benefit sharing.

Moreover, it would lay the groundwork for even greater collaboration, including ocean research initiatives, marine genetic resources found in the deep ocean, ocean planning, applied local community and indigenous knowledge, and the establishment of dedicated research institutions that draw on the immense talent and experience available in both continents.

Political momentum against deep-sea mining is building. Today, 32 countries have announced their support for a moratorium, a precautionary pause, or an outright ban, joined also by scores of indigenous and civil society groups, major companies, financial institutions, science and policy experts from around the world. .

If we have learned one lesson from working on global challenges over the past few decades it is how enormously difficult it is to bring about change once powerful interests become entrenched. This year, deep-sea mining corporations are pressuring the ISA to approve full-scale commercial operations.

Without immediate action from world leaders at Davos, deep-sea mining and its destruction, could become entrenched for decades. Africa and Europe have a unique opportunity to demonstrate the value of international cooperation by stopping this harmful practice before it starts.

Pascal Lamy, Co-chair of the Africa-Europe Strategy Group on Ocean Governance, Vice-President of the Paris Peace Forum, Former Director-General of the World Trade Organisation, and Former European Commissioner on Trade Commissioner; and Ambassador Nancy Karigithu, Co-chair of the Africa-Europe Strategy Group on Ocean Governance, Kenya’s Ambassador and Special Envoy & Advisor to the President on Maritime and Blue Economy and former Principal Secretary for Shipping and Maritime Affairs for the Government of Kenya.

IPS UN Bureau

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Penguins gather on the Antarctic Peninsula. Credit: Antarctic and Southern Ocean Coalition (ASOC).
 
According to a UN press release, the Sixteenth meeting of the Conference of the Parties to the Convention on Biological Diversity (COP 16) will take place October 21-November 1, in Cali, Colombia. Parties to the Convention will review the state of implementation of the Kunming-Montreal Global Biodiversity Framework, adopted last year at COP15. More information here. It will be broadcast live on UN Web TV.

By Pascal Lamy and Geneviève Pons
CALI, Colombia, Oct 21 2024 (IPS)

COP16, the much-anticipated follow-up talks to the 2022 Kunming-Montreal Global Biodiversity Framework (GBF) agreement, which aims to reverse an alarming loss of nature on land and sea, opens in Cali, Colombia.

Sometimes described as the “Paris Agreement for nature”, this legal framework agreed under the Chinese Presidency of the UN’s Convention on Biological Diversity’s 15th COP, calls on the international community to reverse the biodiversity crisis, including by protecting 30 percent of the world’s land and 30 percent of its marine areas by 2030.

But, two years later, the world remains alarmingly off track. In the marine realm, for example, only 8.35 percent of the world’s ocean is currently protected. It is inconceivable that the 30X30 commitment will be met without a rapid expansion of protections in the high seas and Southern Ocean, which encompass nearly two-thirds of the global ocean.

Now time is running out.

A new report from the Antarctic and Southern Ocean Coalition (ASOC) highlights how record heat waves and sea ice loss, driven by climate change, are reshaping the frozen continent and the waters surrounding it.

Such impacts are particularly alarming because research has shown that the Southern Ocean helps to stabilize the global climate by circulating cold water and nutrients to higher latitudes in a process known as the carbon pump. Its krill populations alone—with schools large enough to be seen from space—may store over 20 million tons of carbon annually, equivalent to taking 35 million cars off the road.

The problems in the Southern Ocean have been compounded in recent years by a rise in tourism, plastic pollution, and industrial-scale fishing in a place that not long ago was largely inaccessible to human activity.

Fortunately, study after study have shown that marine protected areas (MPAs) are one of the best ways for vulnerable ecosystems to build resilience as they adapt to new and increasing ecological pressures, and continue to provide the ecosystemic services humanity needs.

Additionally, talks over the fate of proposals to create four new MPAs in the Southern Ocean are now entering their final days at the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) in Hobart, Australia. CCAMLR, established in 1982, is the only representative body with the mandate to designate these MPAs by consensus.

The Commission already demonstrated global leadership in science-based marine resource management and committed to create a representative network of MPAs in the Southern Ocean in 2009. It took time, but despite political differences, in 2016, the body created the world’s largest marine protected area in the Ross Sea, which now serves as a vital refuge for krill, fish, whales, and birds.

The Ross Sea Region MPA also demonstrated a willingness by the international community to put aside its differences for the sake of conservation and scientific discovery in the world’s last wilderness. Moreover, leaders at the most recent Group of 20 meeting, called on all nations with a stake in Antarctica to complete the approval process for a robust system of MPAs in the region.

Now, the commission’s members are considering four scientifically robust MPAs: Weddell Sea Phase 1 MPA, East Antarctic MPA, Domain 1 (Antarctic Peninsula) MPA, and Weddell Sea Phase 2 MPA. If all four MPA proposals are agreed, with existing protections, it will protect 26 percent of the Southern Ocean and nearly 3 percent of the global ocean.

This would be the largest act of ocean conservation in history and make a major contribution toward achieving 30×30.

The coalition of champions Antarctica2030, which we co-chair, is fully aligned with this objective, supporting every effort to ensure the protection of these critical marine areas and to help meet the global 30×30 target.

It hasn’t been easy, but time and again nations have shown we can find solutions that support our mutual political and environmental interests, even when we have other, significant differences.

Now CCAMLR nations, including China, have a rare opportunity to meet their international obligations and take a leadership role, potentially making the Southern Ocean the first large ecosystem in the world where the 30×30 objective is attained.

Geneviève Pons is the co-chair of Antarctica2030 and CEO of Europe Jacques Delors; Pascal Lamy is the co-chair of Antarctica2030 and Vice-President of the Paris Peace Forum.

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By Pascal Lamy
GENEVA, Aug 21 2013 (IPS)

On Aug. 31, I will be stepping down after eight years as Director-General of the World Trade Organisation (WTO).

We have lived through eight transformational years. We have seen the rise of China to number one world exporter, and significant progress in meeting the Millennium Development Goals. And developing countries now account for more than half of the world’s economic activity and more than half of global exports.

Pascal Lamy

But we have also seen challenges such as two food crises, the biggest financial and economic crisis since the 1930s, pandemics and natural catastrophes which have severely impacted the functioning of global production chains.

More than 100 years ago, the Spanish philosopher George Santayana said “those who cannot remember the past are condemned to repeat it”.

The founders of the global trading system took him at his word. They saw the merit in creating the system in part because they remembered the past so well.

They remembered U.S. congressman (Willis C.) Hawley and senator (Reed) Smoot, whose pictures I have in my office to remind me of who the real founders of the WTO were. And they remembered how their notorious protectionist act accelerated the downward spiral that led world trade to contract by two-thirds from 1929 to 1934.

A system for opening trade through international rules and within the principles of non-discrimination, transparency and predictability has provided us with an insurance policy against the kinds of policy excesses of the 1930s. And it has provided a platform for growth, development and poverty alleviation around the world.

Over time, the General Agreement on Tariffs and Trade (GATT) evolved into the World Trade Organisation, and the WTO itself has evolved in ways both large and small. Our dispute settlement system, unique in the field of international conflict resolution, has contributed to peacefully resolving trade differences.

The Aid for Trade Programme which we oversee has mobilised 200 billion dollars since it was launched in 2005. The organisation’s monitoring and surveillance capacity has helped to keep protectionism in check.

Trade has changed a great deal in the past ten years. Today, the patterns of trade, the actors involved with trade and the obstacles to trade are very different than they were a decade ago.

Global value chains have profoundly changed the way we trade. Whereas before we traded in goods, today we trade in tasks.

The fact that goods are increasingly made in the world rather than in any single country means we need to measure trade in value-added rather than gross terms to better understand how global value chains contribute to local economies and to help us devise more effective and realistic trade policies.

The actors have changed too. In 1980, China had one percent of the world’s exports; by 2011 the proportion was 11 percent. During that same time, South Korea more than tripled its share of global exports and Mexico doubled its share. For the first time in history, the South is responsible for more than half of the world’s economic activity and more than half of global exports. South-South trade now comprises 24 percent of world trade, double what it was in 2000.

Moreover, the emergence of powerful developing countries like China, Brazil, India, Mexico and Indonesia has altered the dynamics of multilateral negotiations; in trade, certainly, but elsewhere too including climate change.

These large and rapidly growing economies have also changed the way we think of developing countries. Are they rich countries with many poor people, or poor countries with many rich people?

In the past, trade negotiations were simpler: between rich countries, reciprocity was the template for negotiations while the main theme for poor countries was flexibility. Today, these lines have blurred and emerging countries have taken on greater commitments than ever before.

And the barriers that we encounter in trade today are very different from the standard tariff, the measure of choice for centuries because of its effectiveness in protecting producers. When one talks to businesses today, however, you quickly learn that tariffs are not the problem they find most onerous. Rather, they say the real difficulty is non-tariff measures.

Today, the barriers that exporters encounter are more likely to be of a regulatory nature pertaining to car emission limits, bank regulations, product and food safety standards or customs procedures.

While we can never predict anything with complete certainty, we are confident that these trends will continue into the future. As Santayana suggests, when charting a course for the future, history is among our best tools. Examination of the way that trade has changed in the last decade offers clues that can make navigating the future more manageable.

But history is a compass, not a roadmap or a GPS. History tells us what routes have been successful thoroughfares and which have been culs-de-sac. But it won’t identify every sharp turn or bump in the road.

We cannot foretell every economic shock or the impact of the next technological breakthrough. But we know there will be future economic turbulence and we know that tomorrow’s technological innovations will shape the trading environment of the future just as computer tablets, mobile telephony and satellite navigation influence the patterns of trade today.

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A cornerstone of Africa’s planned Free Trade Area will be improved production capacity. Credit: Kristin Palitza/IPS

By Pascal Lamy
GENEVA, Jun 4 2013 (IPS)

The old theories governing the way that countries produce and trade are being replaced. The pattern of trade is being transformed by increasingly sophisticated technology and innovations in transportation; and the topography of actors is shifting to reflect new poles of growth.

This is no longer the clearly delineated North-South order of the 20th century. A large number of developing countries have now emerged. And Africa, both as a continent and as the sum of individual sovereign states, is poised to lead the new patterns of growth for the foreseeable future.

Six of the world’s ten fastest-growing economies over the past decade were in sub-Saharan Africa. Five years into the global financial crisis, Africa as a region has shown great resilience, with an average growth rate of over five percent over the last decade. This is in contrast with the advanced economies, most of which are yet to fully recover from the economic downturn.

The World Trade Organisation (WTO) recently published the trade figures for 2012 and the outlook for 2013. World trade grew by just two percent in 2012. And this slow growth should continue into 2013 where we are projecting trade growth of only 3.3 percent, which is below the previous 20-year average of around five percent.

With structural flaws in some economies due to remain for the foreseeable future, I expect the global economy will move at three speeds: flat growth in the euro zone; a slightly better outlook in the United States and Japan; and faster growth in most developing countries, especially in Africa. Prospects for economic growth are thus greater in developing and low-income countries.

Pascal Lamy, director-general of the World Trade Organisation (WTO). Credit: Courtesy WTO

Several factors have contributed to Africa’s rebound in growth. These include higher investment and savings; stronger export growth, particularly resulting from the higher commodity prices; an improved legal, regulatory environment; and overall macroeconomic stability.

Consumer demand by its growing middle class is also an engine for growth. According to a recent World Bank report, consumer spending accounted for more than 60 percent of sub-Saharan Africa’s recent economic growth, which is forecast to accelerate to more than five percent over the next three years, outpacing the global average.

Africa has also made remarkable progress in the areas of political stability and governance, which are fundamental to growth.

But if I had to name one single factor, I would say it is “confidence”. Africans today are more confident and hopeful about the future than ever before. This is also the great transformation that I have seen in the attitude of African negotiators in the WTO: confidence that trade, if coupled with domestic policies and Aid for Trade, can be an engine for growth.

The real challenge for Africa lies in sustaining the growth process, enabling it to reach its full potential and ensuring the growth is inclusive.  Widespread and sustained poverty reduction, which is, in effect, the ultimate aim of growth and development, is only possible if the domestic policies are in place to ensure that the deliverables from this success story translate into real impact on the ground.

Trade is one of the strategies that can be exploited to solidify and enhance the growth prospects. The recent African Union decision on boosting intra-African trade and moving forward on the Continental Free Trade Area are testaments to the political attention being given to trade as a real engine of growth in the continent.

Africa has a number of regional trade agreements, all of which aim to expand trade among its members. These regional agreements can be complementary to multilateral trade opening, provided they are crafted in a coherent manner.

I must specifically highlight the East African Community (EAC) for its progressive regional integration efforts. The creation of a customs union and a common market, and the ongoing discussions on a possible monetary union, are smart and economically robust decisions.

I also believe that the formation of a tripartite among the EAC, the Common Market for Eastern and Southern Africa (COMESA) and South Africa Development Community (SADC), should help address the complexity of the tariff regimes imposed by the different regional trade agreements and facilitate freer and less costly trade amongst members.

But the fact remains that inter and intra trade in Africa is still constrained by non-tariff barriers and poor connectivity. Cumbersome border procedures increase trade costs and the likelihood of inaccurate documentation and raise the chances of malpractices such as corruption.

According to a recent study by the Organisation for Economic Co-operation and Development (OECD), reducing global trade costs by one percent would increase worldwide income by more than 40 billion dollars, most of which would accrue to developing countries. Furthermore, trimming border procedures could lead to more than a five-percent increase in gross domestic product (GDP) in many African countries.

African countries, in particular, stand to benefit substantially from the ongoing negotiations at the WTO for a multilateral Trade Facilitation Agreement which, with its focus on reducing the thickness of borders and removing customs-related red tape, will ease access to markets and boost trade flows including agricultural commodity trade and time-sensitive products such as horticultural and other highly perishable goods.

It is in the interest of all WTO members to deliver a Trade Facilitation Agreement at the WTO Ministerial Conference in December. It will not only be an injection of confidence into the multilateral trading system ­ and to the notion of multilateralism ­ but it would lead to concrete economic deliverables on the ground.

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By Pascal Lamy
GENEVA, Mar 27 2013 (IPS)

For decades, commodity trade has been understood from the point of view of “commodity dependent” exporting countries, those whose revenues are largely generated by commodities exports. The trend of decreasing agricultural commodity prices was the focus of attention. However, from the beginning of the 2000s, there was an upward trend in agricultural commodity prices culminating in the price peak of 2007-08.

Pascal Lamy. Credit: Couresy of WTO.

Following this period, food prices have started to ease but remain at relatively high levels underpinned by continuing strong demand resulting, among other factors, from the “nutritional transition” that goes hand in hand with poverty reduction, rising costs of inputs and often slow reaction of supply to price signals, stemming notably from partial “marketisation” of livelihood farming.

Nominal prices of agricultural commodities are expected to trend upwards over the next ten years, or even more, and are projected to average 10 to 30 percent above those of the previous decade.

These developments have shifted the focus from commodity trade, and more specifically food commodity trade, more towards importing developing countries and the bill they have to pay for their food commodity imports. This is the “food security” concern, which is an important one for the global community.

Does looking at the two faces of the same “commodity coin” imply some contradiction as regards the role of the World Trade Organisation (WTO) in opening trade and the disciplines applicable to international commodity trade? On the contrary, the WTO can contribute to ensuring that commodity trade can address both import and export priorities.

Export subsidies are recognised as the most egregious form of trade distorting support. In the past, export subsidies contributed to decreases in already low world prices, with negative consequences for producers and exporters from developing countries. While agricultural commodity prices are generally higher now, it remains true that eliminating export subsidies and agreeing on further disciplines on export credits, exporting state trading enterprises and food aid modalities would contribute to a less distorted and more predictable international trading system.

Export restrictions can contribute to unpredictability and price volatility. By promoting consistent and predictable trade measures through binding and transparent rules, the WTO could bring a more positive contribution.

Policies that support domestic prices, or subsidise agricultural commodity production in some other way, artificially encourage production. These policies end up discouraging imports or leading to subsidised exports having a direct impact on more efficient producers in other countries. Reducing trade distorting domestic support would therefore increase global welfare by eliminating inefficiencies introduced by government intervention and offer producers a fairer price.

Regional and bilateral agreements tend to leave domestic support out of their scope. The multilateral negotiating table remains the sole forum for ensuring a fairer trade in agriculture products, one that allows countries to better capitalise on their comparative advantages.

Consider the case of cotton. A number of poor countries are dependent on cotton exports for their economic development. However, the cotton sector remains highly subsidised, especially in some developed countries as well as in some emerging ones. These subsidies depress prices and increase the difficulties faced by countries such as Benin, Burkina Faso, Mali and Chad. Progress has been made in this area, especially on strengthening the development support aspects, or on improving market access for cotton exporters but more remains to be done, in particular to address the trade distorting subsidies that remain.

Bound tariffs on agricultural goods remain substantially higher than those on manufactures almost everywhere around the world. Furthermore, tariff escalation where tariffs increase with value addition to commodities is frequent in agriculture. Reduction in peak agricultural tariffs increases market access opportunities for countries enjoying a comparative advantage, can lower the cost of food for consumers and also allows for the diversification of production, including value-added processing, and export markets.

Trade opening has created opportunities for agrifood firms to reorganise their production and distribution systems around value chains. A particular challenge is to ensure that smaller companies in poorer countries can join in value chains. Aid for Trade has an important role to play here. This is why the WTO’s Fourth Global Review of Aid for Trade, to be held next July, will focus on connecting to value chains including in the agrifood sector.

With the help of surveys by companies on the ground, we will examine the barriers which developing countries face in entering, establishing and moving up value chains, something that is of key importance for commodity exporters too.

Recommitting to commodity sector development in all its aspects is crucial to the objectives of promoting growth and eradicating poverty.

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By Pascal Lamy
GENEVA, Mar 4 2013 (IPS)

The global economy is facing strong headwinds that have set back world trade and output growth. Despite the measures implemented in many countries to contain the slowdown, production and employment trends continue to be negative. In the light of these developments, the World Trade Organisation (WTO) recently revised its forecast for world trade growth in 2012 to 2.5 percent, down from the previous 3.7 percent forecast. We foresee a volume of trade growth of 4.5 percent in 2013, below the long-term annual average of five to six percent that we have enjoyed for the last 20 years.

Pascal Lamy. Credit: Couresy of WTO.

In times of hardship, governments are subject to protectionist pressures. But in the present economic situation, trade opening is not part of the problem. In fact, trade could be part of the solution for recovering economic growth, promoting competitiveness, and creating jobs. Although protectionist pressures still exist, the collective vigilance exercised by WTO members is an important asset to contain them.

Unfortunately, the WTO is not yet delivering in one crucial aspect and that is in its ability to update its rulebook in order to make it more responsive to current realities and to facilitate the way in which trade can promote development.

In November 2001 in Doha, Qatar, we launched multilateral trade negotiations under a broad agenda to modernise the WTO rules. More than 11 years later, this process remains deadlocked. The goal of achieving a Doha package encompassing all of its 20 topics among the WTOs 157 members remains elusive and will not be available in the short term.

Regrettable as it is, the present deadlock in the Doha Round does not mean that we cannot advance in smaller steps in some areas of trade negotiations.

For instance, WTO members are negotiating the expansion of the Information Technology Agreement, originally drafted in 1996 among 20 members and now encompassing 97 percent of trade in IT products. It has been a win-win deal and I am confident that we may see progress on this topic in the coming months.

Another obvious area that we could advance in is trade facilitation, the task of finding a more efficient and effective way to process trade, or in other words to reduce the thickness of borders. This area of policy has a profound impact on competitiveness. The longer a producer has to wait for a needed imported component, the less competitive it becomes.

At its core, trade facilitation is about making trade easier and less costly. In a world increasingly focused on value chains and trade in intermediate products, effective trade facilitation is not just a choice – it is an essential element for any country.

The evidence is clear. The Organisation for Economic Cooperation and Development (OECD) estimates that for its members, customs procedures, paperwork and border delays constitute roughly 10 percent of the value of any trade transaction. Globally, these costs are close to two trillion dollars. A WTO deal on trade facilitation to curtail fees and paperwork, create greater transparency and reduce obstacles to goods in transit would cut those transaction costs in half.

Trade today is unlike what it was a few decades ago. World growth has become more dependent on trade: as a share of gross global product, trade has risen from 38 percent in 1980 to around 55 percent now.

The evolution of technology and transportation has greatly reduced the costs and uncertainty of distance. The rapid growth of global value chains, the preponderance of new regulatory-based, non-tariff measures and the shift in trade patterns as South-South trade grows rapidly are all elements that have accelerated since the turn of this century and which, if current trends are maintained, will continue to expand in the years ahead.

China has become the worlds second-largest economic power and the biggest exporter of goods. Many other trading powers have emerged Brazil, India, Mexico and Malaysia are all now at the table of the top 25 leading exporters, and all posted export growth of 15 percent or better in 2011. Developing countries share of trade is 47 percent today compared with a global share of around one-third in 2008.

The nature of trade has also changed. High-tech products used to be made in the U.S., Japan or Germany. Today, they are made in the world, with components and parts fabricated in many countries. The country where the final assembly takes place may contribute only a small fraction of the final value of the product. Currently, roughly 60 percent of the volume of world merchandise trade is trade in components. In Asia, the figure is closer to two-thirds. The import content of the average export is 40 percent, up from 20 percent two decades ago, and will keep growing in the future as multi-location supply chains keep extending.

These value chains have not only changed the way companies trade, they are also changing the nature of the trade debate. When products were made in a single country, the argument that exports were good and imports bad was more easily defended. This mercantilist approach was, for centuries, a driving force behind trade policy.

Value chains have turned all of this on its head. Companies that wish to be competitive in the global marketplace need access to the best possible inputs goods and services at the lowest possible prices.

To hinder companies seeking such imports is to render them less competitive globally. It is self-defeating. This factor, together with strict monitoring by the WTO, may explain why countries have by and large avoided taking massive trade-restrictive measures during the crisis.

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Multilateralism is at a crossroads. This is a crucial matter for environmental and sustainability issues, as we have seen in the Rio+20 Summit, and for trade and other economic matters. The G20 Summit in Los Cabos, Mexico, focused precisely on improving our collective response to the current economic turbulence, which is at the heart of developments in the European Union (EU) as well.

More than three years have passed since the beginning of the 2008-09 crisis and the world economy remains very fragile. World Trade Organisation (WTO) projections indicate that trade growth will further decelerate this year to 3.7 per cent, down from 5 percent in 2011. Moreover, WTO economists believe that downside risks of an even sharper slowdown in trade growth remain high. Many of the achievements in poverty reduction over the past decade could be threatened with unravelling.

The impact of the crisis is being felt not just in developed countries but also in the developing world. China’s dynamic economy is expected to grow more slowly in 2012. India’s growth is decelerating. Many poor countries are seeing their exports to major markets such as the EU and the U.S. slow down.

Pascal Lamy. Credit: Courtesy of WTO.

While the crisis continues to loom, the world has not remained static. New economic players and new patterns of trade have emerged, dramatically changing the nature of trade and resulting in greater economic interdependence.

In the past decade, developing and emerging economies’ share of global gross domestic product (GDP) has risen from one-third to half. Developing countries’ share of global exports has jumped from 33 to 43 percent over the last decade.

Global trade patterns are also changing rapidly. Not too long ago, goods were referred to as “made in China” or “made in Germany”. Today, the expansion of global value chains means that most products are assembled with inputs from many countries. In other words, today’s goods are “made in the world”. At a growth rate of six percent a year, trade in intermediate goods now comprises close to 60 percent of total trade in goods and has become the most dynamic sector in international trade.

The map of global greenhouse gas emissions has also changed. Emissions of the developing world are rising fast, and China’s emissions are said to be either equal to, or to have actually overtaken, those of the U.S.

The same can be said of macroeconomic cooperation. As subsequent G20 summits have demonstrated, whether monetary policies, fiscal policies, currencies, the fight against tax havens or regulation of financial activities, a virtuous path requires global cooperation.

However, the rules governing multilateral cooperation have not kept pace with these changes. We are to a large extent living by the global rules created in the 90s.

The last couple of years have seen the emergence of a worrying attitude towards multilateralism. In stark contrast to the calls for greater and improved international regulatory coherence that dominated the headlines during the outbreak of the global financial crisis in 2008, international cooperation has slumped into an ever more precarious state.

Cynical observers would say that over the past decade international efforts to forge legally binding agreements have continued to set the threshold of expectations so low that even an agreement to continue to talk is considered a successful outcome.

Such cynicism ignores the fundamental lessons about international cooperation that we have learned over the past century. Most of all, it disregards the fact that for most countries more multilateralism and more international cooperation remain the only sustainable way forward.

Certainly, the changes of the past few years demand a re-configuration, rethinking and adjustment of traditional multilateral cooperation, including in the WTO. The proliferation of different informal coalitions and groups of countries and civil society ­the G8+, G8+5, G20, B20 and L20, to name but a few­ are symptomatic of the constantly evolving nature of international relations.

However, their effectiveness will depend on whether they are representative enough to address the increasingly complex challenges on our agenda. A stable global economy cannot be built without including all key stakeholders in the decision-making process.

More fundamentally, I believe that while the crisis continues to hit national systems hard, it will be very difficult to achieve high-standard multilateralism.

Contrary to conventional wisdom, international agreements necessitate a high quantum of political energy at home. They require strong political leadership because they are about bringing domestic constituencies on board.

This situation is a dangerous one and risks turning into a vicious circle: exiting the crisis sooner rather than later implies strong leadership to craft the necessary international cooperation agreements. But governments’ legitimacy is weakened by popular discontent generated by economic and social hardships. This erodes the ability to act together, which in turn further prolongs the crisis, leading to the syndrome of “too little, too late”.

For these reasons, I believe that multilateralism is at a crossroads. Either it advances in the spirit of shared values and enhanced cooperation, or is allowed to falter, at our own peril. Without global cooperation on finance, security, trade, the environment, and poverty reduction, the risks of division, strife and war will remain dangerously real. Waiting for better times will simply not suffice. A consensus on inaction would simply mean a consensus on more pain for all. We must, together, be bolder if we are to cope with the growing risks of today’s world. (END/COPYRIGHT IPS)

* Pascal Lamy is the director-general of the World Trade Organisation (WTO).

This column is available for visitors to the IPS website only for reading. Reproduction in print or electronic media is prohibited. Media interested in republishing may contact romacol@ips.org

By Pascal Lamy and - -
GENEVA, Nov 24 2011 (IPS)

The relative dynamism of emerging economies over the past several years has meant that these countries, many of them in Asia, have come to play an ever-growing role in the world and to account for a larger share of economic activity. Adjusting politically and organisationally to shifts in economic power takes time. As we work towards a new equilibrium in international cooperation, new relationships and leadership patterns will inevitably emerge, just as they have throughout history.

While this transformation is in progress, multilateralism is going through a difficult time. It is not just about trade. Climate change, financial regulation, and macroeconomic coordination are also effected. A core challenge of our time is managing change in a manner that avoids conflict. Let us hope that the leaders of today can show the way as their predecessors did in the past.

In trade matters, we need to address competing views among governments as to what constitutes a fair distribution of rights and obligations within the trading system. Before the World Trade Organisation (WTO) was established in 1995 there was, in broad terms, an arrangement whereby developed countries agreed to open their markets, while more emphasis was placed on special and differential treatment for developing countries. Developing countries were not called upon to open their markets in a substantial manner. This arrangement reflected basic differences in development levels and capacities.

Over time, the differences between developed and at least some developing countries have narrowed. As developing- country growth has outstripped developed-country growth and the gap between them has narrowed, it is becoming harder to find a balance that is regarded as legitimate and fair in the eyes of all parties concerned. While these tensions began to manifest themselves well before the creation of the WTO and the accession of China, they have clearly increased since.

Underlying all this is the question of what constitutes reciprocity. For some, the emerging economies have attained a level of competitiveness and efficiency in key sectors that warrants treating reciprocity as parity in obligations. Others emphasise that emerging economies still face formidable development challenges in many areas and are still far from enjoying the income levels and standard of living of industrialised economies. In this world, it is argued, treating reciprocity as equality of obligations is not appropriate, fails to meet a fairness standard, and handicaps development policies.

While it is not my role as WTO director-general to take a position on this issue, in many ways it has made it impossible for the Doha Round to reach agreement on a big package of new regulations of world trade.

The second challenge to the trading system relates to the way technology and transport costs, backed by open trade and investment policies, have changed production structures. A vast and growing amount of international trade involves global supply chains in which parts cross many borders as production is spread across many locations. This production sharing is very different from the traditional way of working, where a single country would import the necessary parts, add local inputs plus labour and capital, and then export final goods. These new arrangements render traditional trade statistics misleading.

The third challenge was the explosion of regionalism and its impact on multilateral trade arrangements. More than 300 preferential trade agreements are in effect around the world. The World Trade Report for 2011 argues that a good deal of activity, especially in Asia, is driven by a desire to create conditions favouring supply chain production, where there is a premium on eliminating tariffs and creating a friendly regulatory environment. This is not problematic as far as it goes.

But it also highlights that, with regulations and behind- the-border policy regimes becoming so important in preferential agreements, we run the risk of regulatory divergence and a resulting fragmentation of markets. Segmented markets reduce trading opportunities, hamper economies of scale, tend to exclude some countries and introduce discrimination. Addressing these potential sources of difficulty in international trade relations is becoming an increasingly important defy for the WTO.

Regarding the Doha Round of world trade negotiations, it is no secret that governments are finding agreement elusive and that in ten years we have not been able to complete the negotiations. The challenges I have referred to above partly explain this -governments are struggling to agree upon how to balance rights and obligations among dissimilar nations. We will be ill-equipped to address this situation if we cannot break the stalemate.

I do not believe we can afford to add further burdens to the world economy or to undermine the authority of international institutions. I therefore hope that all WTO members and, in particular, those with greater influence than others, seek common cause with their trading partners in order to move the trade agenda along.

Excerpt:

By Pascal Lamy and - -
GENEVA, Nov 22 2011 (IPS)

The relative dynamism of emerging economies over the past several years has meant that these countries, many of them in Asia, have come to play an ever-growing role in the world and to account for a larger share of economic activity. Adjusting politically and organisationally to shifts in economic power takes time. As we work towards a new equilibrium in international cooperation, new relationships and leadership patterns will inevitably emerge, just as they have throughout history.

While this transformation is in progress, multilateralism is going through a difficult time. It is not just about trade. Climate change, financial regulation, and macroeconomic coordination are also effected. A core challenge of our time is managing change in a manner that avoids conflict. Let us hope that the leaders of today can show the way as their predecessors did in the past.

In trade matters, we need to address competing views among governments as to what constitutes a fair distribution of rights and obligations within the trading system. Before the World Trade Organisation (WTO) was established in 1995 there was, in broad terms, an arrangement whereby developed countries agreed to open their markets, while more emphasis was placed on special and differential treatment for developing countries. Developing countries were not called upon to open their markets in a substantial manner. This arrangement reflected basic differences in development levels and capacities.

Over time, the differences between developed and at least some developing countries have narrowed. As developing-country growth has outstripped developed-country growth and the gap between them has narrowed, it is becoming harder to find a balance that is regarded as legitimate and fair in the eyes of all parties concerned. While these tensions began to manifest themselves well before the creation of the WTO and the accession of China, they have clearly increased since.

Underlying all this is the question of what constitutes reciprocity. For some, the emerging economies have attained a level of competitiveness and efficiency in key sectors that warrants treating reciprocity as parity in obligations. Others emphasise that emerging economies still face formidable development challenges in many areas and are still far from enjoying the income levels and standard of living of industrialised economies. In this world, it is argued, treating reciprocity as equality of obligations is not appropriate, fails to meet a fairness standard, and handicaps development policies.

While it is not my role as WTO director-general to take a position on this issue, in many ways it has made it impossible for the Doha Round to reach agreement on a big package of new regulations of world trade.

The second challenge to the trading system relates to the way technology and transport costs, backed by open trade and investment policies, have changed production structures. A vast and growing amount of international trade involves global supply chains in which parts cross many borders as production is spread across many locations. This production sharing is very different from the traditional way of working, where a single country would import the necessary parts, add local inputs plus labour and capital, and then export final goods. These new arrangements render traditional trade statistics misleading.

The third challenge was the explosion of regionalism and its impact on multilateral trade arrangements. More than 300 preferential trade agreements are in effect around the world. The World Trade Report for 2011 argues that a good deal of activity, especially in Asia, is driven by a desire to create conditions favouring supply chain production, where there is a premium on eliminating tariffs and creating a friendly regulatory environment. This is not problematic as far as it goes.

But it also highlights that, with regulations and behind-the-border policy regimes becoming so important in preferential agreements, we run the risk of regulatory divergence and a resulting fragmentation of markets. Segmented markets reduce trading opportunities, hamper economies of scale, tend to exclude some countries and introduce discrimination. Addressing these potential sources of difficulty in international trade relations is becoming an increasingly important defy for the WTO.

Regarding the Doha Round of world trade negotiations, it is no secret that governments are finding agreement elusive and that in ten years we have not been able to complete the negotiations. The challenges I have referred to above partly explain this -governments are struggling to agree upon how to balance rights and obligations among dissimilar nations. We will be ill-equipped to address this situation if we cannot break the stalemate.

I do not believe we can afford to add further burdens to the world economy or to undermine the authority of international institutions. I therefore hope that all WTO members and, in particular, those with greater influence than others, seek common cause with their trading partners in order to move the trade agenda along. (END/COPYRIGHT IPS)

(*) Pascal Lamy is director-general of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Jun 28 2011 (IPS)

Globalisation dominates our era, but it is an increasingly fragile dominance. Even as global integration delivers enormous benefits -growing wealth, spreading technology, the rise of billions of people in the developing world- it also creates new risks -financial instability, economic imbalances, environmental stresses, growing inequalities, cyber penetration- that we seem to have difficulty managing.

This is not a new concern. Since the industrial revolution, market capitalism’s power to generate both incredible progress and enormous disruption -what Joseph Schumpeter called “creative destruction”- has preoccupied governments. And globalisation is nothing if not the worldwide technology-driven spread of market capitalism, a process that has been unfolding, in fits and starts, for three hundred years.

Karl Marx was wrong about a few things, but he was surely right about capitalism’s inherent tensions and contradictions. “Capitalism has created more massive and more colossal productive forces than have all proceeding generations together,” he wrote in 1848, but it also represents the “uninterrupted disturbance of all economic and social conditions, everlasting uncertainty and agitation.” Market capitalism, Marx fatalistically argued, contains the seed of its own destruction.

A century later, Karl Polanyi used similar arguments to explain why the open economy of the 19th century suddenly collapsed in the early 20th century, Â overtaken by war, economic depression, and totalitarianism. Open markets need social and political cohesion to work, he argued, but paradoxically free markets, left unconstrained, soon undermine this cohesion. Individualism and competition are rewarded, but at the expense of equality and community.

The catastrophic end of the 19th century’s version of globalisation offers a cautionary tale for our age. Beneath the progress of this first age of globalisation, problems and tensions were building. Many sparks ignited the First World War but the one unifying cause was the disintegration of international trust and the break-down of political co-operation. It took thirty years, two world wars, and the Great Depression for the world to begin to rebuild the economic system it had lost.

The post-war economic order succeeded spectacularly -so spectacularly that globalisation is now eclipsing it.

Perhaps the biggest change is globalisation’s impact on the geopolitical landscape. Globalisation has both enabled and rewarded a shift in production, investment, and technology to emerging economies. The result, as Martin Wolf put it recently, is that the periphery is becoming the core and the core is becoming the periphery. The US remains a key player but it is no longer dominant. Fast-rising powers like China, India, Indonesia, and Brazil play a role that was unimaginable even twenty years ago while smaller developing countries want a say in a system in which they have a growing stake.

Make no mistake, globalisation is a revolutionary force. The world economy is eight times larger than it was in 1950 Â and world trade has expanded 33 times since then. Two decades ago, the internet did not exist. Now two billion people -a third of humanity- use the internet every day; four billion people have mobile phones. Over three billion people in China, India, Indonesia and other developing countries are achieving in a generation what it took the West a century or more to achieve.

Yet for all our successes, globalisation remains a discontented dream. The recent financial crisis -and the “Great Recession” which followed- was merely the most cataclysmic in a series of global financial shocks that included the collapse of the European Exchange Rate Mechanism in the 90s, the peso crisis in 1995, the Asian crisis in 1997, the Russian crisis in 1998, and may include Europe again if the current sovereign debt problems are not resolved.

The essential problem today is that there is too little governance of globalisation. Our institutions, policies, and mind-sets have not caught up with the integrated and interconnected world that we have created. The first age of globalisation fell apart because there was no effective political and policy response to profoundly changing economic and social conditions.

Stating the problem is the easy part. Providing answers is more difficult, and implementing them is more difficult still. One challenge is to re-invent international institutions, which were once universally idealised and are now almost universally disparaged. Replacing the G-8 with the G-20 was an important step, an acknowledgment of today’s multipolar world, and a tangible sign that the system can reform and adapt.

But this is clearly insufficient. And re-inventing our institutions is not about building more agencies and more vertical silos. It is about “networking” institutions in a better way ensuring that the WTO, the IMF, the World Bank, and the vast UN system operate as a more coherent whole, not a patchwork of fiefdoms.

The real challenge today is to change our way of thinking, not just our systems, institutions or policies. We need the imagination to grasp the immense promise -and challenge- of the interconnected world we have created. The future lies with more globalisation, not less: more co-operation, more interaction between peoples and cultures, an even greater sharing of responsibilities and interests. Multilateralism may be messy, frustrating, two steps forward and one step back. But the fiction that there is an alternative is naive and dangerous. Naive because it ignores that we are becoming more, not less, dependent on one another. Dangerous because it risks plunging us back into our divided past -with all of its conflicts and tragedies. It is too often tempting for politicians to mobilise proximity, which defines belonging and identity in opposition to “the others”, the “foreigners”. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Mar 1 2011 (IPS)

Why did Africa move from being a net exporter to a net importer of food in the 1980s when the prices of its key commodity exports tumbled and its agriculture slowed down? Its food trade deficit is now around USD 20 billion and, given the current rise in prices, could get much worse.

While it is vital to understand how the continent became a net importer, it is also important to understand how African agriculture can become more efficient and competitive.

A country can have a perfectly efficient and competitive agricultural system yet still be an important importer of food, or even a net importer. Europe, for example, exports 9 percent of the world’s food and imports 12 percent. The United States exports 10 percent and imports 8 percent. Being a food export powerhouse does not preclude being a major importer too.

African agriculture needs to become more efficient, and in that efficiency it needs to discover specialisation.

As a fraction of the continent’s total merchandise exports, African agricultural exports have also fallen sharply over the years, from 42 to 6 percent between 1960 and today. But this in and of itself is not a bad sign. In fact, it simply mirrors what has happened at the global level. In 1960, agriculture comprised about 50 percent of world trade; today that figure is about 6 percent. All this says is that the world, including Africa, has industrialised.

One of the principal findings in a recent publication by the Consumer Unity & Trust Society (CUTS) is that African agriculture has been shackled by: first, colonial patterns of trade that have locked Africa into commodity exports; and second, macroeconomic and trade policies aimed at import substitution and food self-sufficiency that have achieved the exact opposite of their goal. In taxing agriculture and shielding it from international competition, these policies made African agriculture less competitive.

The publication documents incredible infrastructural bottlenecks in Africa, which for trade in perishables is a very serious problem. It also points out the limited regional food trade that exists in Africa, sometimes because of a lack of product complementarity though also because of a simple lack of regional integration. Indeed I have often heard it lamented that in Africa a food-surplus and a food-deficit country located side by side can be unable to trade with one another. Another problem is shortages of agricultural inputs, many of which are imported. In fact, I know from first-hand experience that animal vaccines and improved seeds are often considered a luxury in Africa.

Another astonishing statistic from CUTS is that “about 80 percent of trade in agricultural produce and food in the East African region is informal and not statistically recorded”.

Stagnant agriculture, combined with a population growth rate higher than the world average, is obviously leading to food insecurity in Africa. In fact, expenditures on food there comprise a very high percentage of total expenditures and a far higher percentage than in the OECD. In Gabon, the figure is about 50 percent. Clearly, then, food security is also about food affordability. Greater competition and international trade helps bring down the price of food.

African agriculture has clearly passed through various phases: state control and import substitution in the 1960s, when Africa’s food deficit started building; then the structural adjustment era of the 1980s, marked by the gradual privatisation of state-owned farms; and then the dismantling of marketing boards for key commodities. Nonetheless, Africa’s food deficit has persisted. What preoccupies me the most, however, is that its agricultural productivity continues to languish.

The CUTS study sets out a very important menu of recommendations for our consideration: increasing agricultural productivity, promoting regional trade, “facilitating” trade through better infrastructure, and educating and building the capacities of farmers and traders. But this menu also includes the rapid conclusion of the Doha Round of trade negotiations, which is considered a priority.

Contrary to what some have been saying about international trade somehow being responsible for the plight of African agriculture, this publication, as well as several others, demonstrates that import-substitution policies and a lack of investment in agriculture have been the principal culprits.

In my view, here is how the Doha Round can make a modest contribution to helping boost African agriculture. It will give least-developed countries duty-free, quota-free access to export markets. It will deal with the colonial patterns of trade by reducing the phenomenon of tariff escalation: for example, the high tariffs imposed on processed coffee and chocolate relative to coffee and cocoa powder. The Round will also reduce the subsidies in the rich world that have made it difficult for Africa to compete in international markets and have flooded its markets with cheap imports. The world needs cheaper food, but food that is produced under conditions of fair competition. In short, the Doha Round will help level the playing field for Africa, correcting historical injustices in the world trade rule-book. (END/COPYRIGHT IPS)

(*) Pascal Lamy, Director-General of the World Trade Organisation.(WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Jan 27 2011 (IPS)

Barely out of the 2008 food price crisis, the world appears to have entered yet another phase of higher prices. Rising food prices are now stoking global inflation, not to mention political unrest of proportions that we could have seldom imagined.

The United Nations’ food agency FAO has informed that food prices have hit a record high last December, above 2008 levels. Contrary to 2008, one overriding factor appears to be at play in today’s crisis: bad weather. What we are looking at is mainly a supply constraint. Last year, US wheat futures rose by 47%, buoyed by a series of weather events, including the drought in Russia and its Black Sea neighbours. While supply constraints are the main culprit of today’s crisis, there are other contributing factors too.

In examining food price crises in general, our point of departure must necessarily be an exploration of the consumption and production pictures distinguishing within them between transitory and structural factors.

World food consumption is driven by three principal long-term, structural, factors: income growth rates, population growth rates and dietary preferences. The most extraordinary development of our times is that food consumption is also driven by energy production. In pumping biofuels into our tanks, we are in fact pumping corn, sugarcane, and other foods into our transportation systems.

The OECD and FAO tell that, if current policies continue, by 2019 about 13% of the global production of coarse grains will be used for ethanol, 16% of vegetable oil, and 35% of sugarcane.

Globally, income is rising and will continue to rise, although unevenly. With rising incomes comes rising demand. Population growth rates, on the other hand, have been falling for almost 30 years now, and the world has certainly passed its peak growth rate of the late 1960s. But the absolute rise remains.

At the global level, dietary preferences are converging for many reasons, like the spread of food chains, and greater exposure to North American and European dietary habits: meat, milk, and dairy consumption in the developing world, in particular, are rising.

Will world production be able to keep up with this increased demand? There are three main sources of growth of crop production: expanding the current agricultural land area; boosting the frequency with which that area is cropped; and trying to boost actual yields (through mechanization, better irrigation, or biotechnology for example).

But contrary to popular perception, it is not the amount of new land that is brought into cultivation that will be the determinative factor but, rather, increasing yields. In fact, over the past four decades, rising yields alone have accounted for 70% of the increase in crop production in the developing world.

Like most other industrial sectors, agricultural production will also remain dependent on fluctuations in the price of oil. A rise in fuel prices makes it more expensive to produce fertilizer, and to deliver products.

The factors that influence production and consumption are linked at the global level by international trade, which balances supply and demand and brings products from the land of plenty to the land of less. But when this mechanism is disrupted by trade barriers, turbulence besets the markets.

Export restrictions play a major role in food crises. There are other trade barriers too, which harm agricultural production, such as tariffs and subsidies, and which prevent food from being produced where this can be most efficiently done. But export restrictions play a very direct role in aggravating food crises.

Export restrictions lead to panic in markets when different actors see prices rising at stellar speed. They were the single most important reason for the 2007-08 price explosion on the rice market; there was no fundamental market imbalance at the time. Equally, the 2010-11 price rise for cereals has much to do with the export restrictions of Russia and Ukraine; imposed after both countries were hit by severe drought.

Clearly, these restrictions have a logic, they do not wish to see their own populations starve. So the question is what alternative policies could allow them to meet this goal? The answer must reside in more food production globally, more social safety nets, and more food aid and possibly food reserves. But we must also reflect on the Doha Round. Export restrictions are but one element of the trade barriers that prevent efficient agricultural markets from emerging. The Doha Round of world trade negotiations can contribute to the medium-to-long term response to food price crises by removing many of the restrictions and distortions that have harmed the supply-side picture. The Round would greatly reduce rich world subsidies that have stymied the developing world’s production capacity and which have, in certain commodities, cornered it completely out of the market. The worst kinds of subsidies, which are export subsidies, would be completely eliminated. It would also bring down tariffs, although with certain flexibilities; thereby increasing consumer access to food.

As to the response measures: clearly we need greater investment in agriculture, a sector in which we have under-invested for a while. In particular, to prepare our agricultural system for the impending climate change that we are likely to witness. This will be vital to prettying the supply-side picture. (END/COPYRIGHT IPS)

(*) Pascal Lamy, Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy
GENEVA, Nov 30 2010 (IPS)

Is globalisation, which is shaping our societies whether we like it or not, a threat to identity? If we were to believe all that we hear, the winds of globalisation are wreaking havoc everywhere, uprooting identities and cultures which for centuries have been shaping human relations, sweeping away all local values and customs, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO).

This globalisation, often seen as a pervasive homogenizing force that threatens the enormous diversity of identities that contributes so much to the world we live in, appears to be provoking a sudden reassertion of identity as a counter reaction to the perceived domination of one culture over another, depriving us of what makes each one of us unique. In a world where physical boundaries are disappearing, identification with a place or a group becomes the only refuge against the threat of uniformity.

Is the revival of nationalism, the emergence or resurgence of political movements defending national, ethnic or religious identity, not concrete proof of this trend?

But is there really a clash? When it comes to new information technologies, capital movements, the opening up of trade, and the increasingly globalised production chains that go hand in hand with economic globalisation, borders and proximity no longer count. Identity, on the other hand, has its roots in a location, in history, in culture, in values, in a language, or in a belief. Globalisation means movement, perpetual change, while identity means roots. Identity is sedentary while technological progress is nomadic.

(*) Pascal Lamy, Director-General of the World Trade Organisation (WTO).

//NOT FOR PUBLICATION IN CANADA, CZECH REPUBLIC, IRELAND, POLAND, THE UNITED STATES, AND THE UNITED KINGDOM// (END)

Excerpt:

By Pascal Lamy and - -
GENEVA, Nov 23 2010 (IPS)

Is globalisation, which is shaping our societies whether we like it or not, a threat to identity? If we were to believe all that we hear, the winds of globalisation are wreaking havoc everywhere, uprooting identities and cultures which for centuries have been shaping human relations, sweeping away all local values and customs.

According to this view, globalisation is a sort of homogenization that is sapping our strength and causing us to decline. There are plenty of examples to illustrate this widespread view. Thanks to the spectacular development of transportation and new information technologies, our planet has apparently become a village whose inhabitants are developing increasingly similar lifestyles and consumption patterns. In Paris, Brasilia, Shanghai or Montreal, the same restaurant and clothing chains are invading the shopping districts, the same films are flooding the cinemas, and the same music has taken over the radio waves.

This globalisation, often seen as a pervasive homogenizing force that threatens the enormous diversity of identities that contributes so much to the world we live in, appears to be provoking a sudden reassertion of identity as a counter reaction to the perceived domination of one culture over another, depriving us of what makes each one of us unique. In a world where physical boundaries are disappearing, identification with a place or a group becomes the only refuge against the threat of uniformity.

Is the revival of nationalism, the emergence or resurgence of political movements defending national, ethnic or religious identity, not concrete proof of this trend?

The question is a perfectly legitimate one. It is indeed tempting to interpret these events as a “clash of civilizations”, to quote the well known phrase of Samuel Huntington.

But is there really a clash? Do globalisation and identity belong to two diametrically opposed universes? When it comes to new information technologies, capital movements, the opening up of trade, and the increasingly globalised production chains that go hand in hand with economic globalisation, borders and proximity no longer count. Identity, on the other hand, has its roots in a location, in history, in culture, in values, in a language, or in a belief. Globalisation means movement, perpetual change, while identity means roots. Identity is sedentary while technological progress is nomadic.

As I see it, there are three ways of managing the relationship between globalisation and identities.

The first consists of reflecting on global values, the values that guide our actions, whether we live in Ouagadougou or Moscow. These values are of three kinds. First of all, there is “togetherness” which, in connection with governance, means the shared feeling of belonging to a community.

This feeling, generally strong at the local level, tends to weaken significantly as the entity involved expands. How many people today, when asked which country they come from, would answer, like the ancient Greek philosopher Diogenes of Sinope, “I am a citizen of the world”?

There is also “common believing”, involving shared values. This notion, for a long time alien to our societies, emerged with force after World War II. The adoption of the United Nations Charter in 1945 marked the foundation of a system of common values and principles that has been growing in size and strength ever since.

The dissemination of human rights values and of the economic and social rights from which, in my view, they are inseparable, is unquestionably one of the most spectacular successes of globalisation.

Finally, there is the concept of “global civics”, the idea that in an increasingly interdependent world, where the actions of some will inevitably have an impact on the welfare of others when it comes to the environment, for instance, each one of us has a civic responsibility towards everyone else.

The second way to give more weight to the concept of identity involves the negotiation of specific global agreements that allow for the expression of identities. I have in mind, in particular, the 2005 UNESCO Convention on cultural diversity, which is now an integral part of the arsenal of rules governing international relations.

The third way of promoting the expression of identity in a globalised world is to incorporate flexibilities in the rules governing globalisation so as to preserve margins for manoeuvre in specific cases. In this respect the World Trade Organisation, for many the symbol of globalisation, is a good example: the WTO agreements provide for a whole range of flexibilities. The Agreement on Trade in Services, for instance, leaves WTO members considerable leeway. They are free to exclude whatever sectors they choose from the scope of their commitments to open up trade. Thus, the vast majority of members, have chosen not to assume commitments in the cultural services area so as to preserve the room they feel they need to protect and promote what for them constitute a key component of their identity.

Moreover, a number of WTO Members, actively support their cultural industry in the interests of preserving their identity, through minimum “national content” quotas for films, television or radio, and exemptions or subsidies for the audiovisual industries.

These are some of the areas that help us resist the fatalistic attitude that we so often encounter when it comes to the relationship between globalisation and identity.

Globalisation that respects the values, the cultures and the numerous histories that make up the fabric of our world is not a utopia. It is up to each one of us to work towards that goal, to contribute to the development of a “project identity. (END)

(*) Pascal Lamy, Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Oct 13 2010 (IPS)

The global trade landscape has changed profoundly in the past decade ­more profoundly, I suspect, than we fully understand. These changes are being driven partly by market opening, but mainly by transport, communications and information technologies. It now costs less to ship a container from Marseille to Shanghai ­half way around the world­ than to move it from Marseille to Avignon ­100 kilometres away. Multinationals routinely organize their activity around three “shifts” corresponding to the three main times zones ­Europe, North America and Asia­ and deliver on-line services, data inputting, software writing, help-lines ­from practically anywhere in the world.

One result of these changes is the continuing globalization of trade. Despite the recent crisis, world exports were 30 percent higher in 2009 than in 2000 and 150 percent higher than in 1990. Not all sectors are expanding at the same pace: manufactured exports are surging; raw material exports are growing steadily; and agriculture exports are largely static. But overall the trend is towards accelerating growth. And with the exception of East Asia, trade between regions is growing faster than trade within regions. Never before has the world economy been as inter-linked by trade as it is today.

Another result is the rapid shift in economic power East and South, as developing countries harness globalization to “catch-up” to the industrialized West. Developing countries’ share of world trade has grown from a third to over half in just fifteen years ­and China has just passed Japan as the world’s second biggest national economy, and Germany as the world’s top exporter. In 1990, less than a third of developing-country trade was with other developing countries; today over half of their trade is South-South. Not all developing countries are sharing in this growth, and for too many Raul Prebisch’s concerns about dependency and an uneven trade playing field remain true. But for export powerhouses like China, India, Brazil and others ­growing at historically unprecedented rates­ the Argentine economist Prebisch (1901-1986) is being turned on his head.

A third result is the spread of globally-integrated production chains ­in effect, global factories­ as companies locate various stages of the production process in the most cost-efficient markets. In this process, expanding trade links with emerging economies are mirrored by expanding foreign direct investment links ­as trade growth fuels investment and investment growth fuels trade. We still think in terms of Adam Smith’s world of trade between nations, but in reality most trade now takes place within globe-spanning multinational companies and their suppliers. It is not competition between China and the US that is relevant, so much as competition between Nokia’s and Samsung’s value chains. Instead of “Made in China” on the back of an iPhone, the label should read “Made in the World”, reflecting Japanese microchips, US design, Korean flat-screens and Chinese assembly.

These new global realities also force us to re-examine how we analyze and measure the whole concept of “international trade”. With so much trade now involving foreign companies operating within national jurisdictions ­and with so many components now criss-crossing the same border multiple times­ we need a new approach to trade statistics which measures the value-added at each stage in the production chain, and not just the last place from which a product was shipped.

Here is the paradox: Open trade is more central than ever to the world economy ­and a rule-based multilateral trade system has never been more critical to global prosperity and peace. Yet this system is struggling to cope with the fast-globalizing world it has helped to create.

This is not easy. The trading system has become more complex to manage as it has become more important. The dramatic reduction in border barriers has exposed deeper structural differences between economies ­in standards, regulations or legal systems­ that are generating new “systems frictions” and, because they are more tied up with values-based domestic objectives, are proving harder to resolve.

Because trade has become so important to development strategies, development issues have become increasingly important for the system ­indeed, development is centre stage in the current Doha trade negotiations. And overall the system’s rules have had to become more technical, more intrusive and more binding in order to remain relevant to economies that are still diverse, but far more interdependent.

As the system becomes more important, it also exerts a huge gravitational pull on countries to join and participate. The World Trade Organisation (WTO) has expanded to 153 Members ­up from just 23 in 1947­ and this number could easily grow to 180 within a decade. The US, the EU and Japan remain key players but they are no longer dominant. Fast-emerging powers, like China, India and Brazil, play a role that was unimaginable even twenty years ago. As recently as 1997 some four-fifths of WTO disputes were initiated by industrialized countries; this year almost two-thirds were initiated by developing countries. But as the number of players grows and their participation increases, cooperation becomes more difficult ­especially when interests diverge. (END/COPYRIGHT IPS)

(*) Pascal Lamy, Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Apr 26 2010 (IPS)

Economists have long analysed trade, why nations need it to prosper, and what governments do to reap the gains while managing the costs. But if the economics of trade policy are clear, the politics of trade are highly complex. Trade policy, like so many other areas of policy, has ramifications on how resources are distributed, and this inevitably creates competing interest groups within society.

The public debate that inevitably accompanies the formulation of contested trade policy challenges the notion that open trade brings overall societal benefits. At the same time, contested policy provides fertile ground for the incubation of urban legends and misconceptions with popular appeal. One such widespread fallacy is that it is unhealthy for trade to grow faster than output.

After the Second World War, international trade grew much faster than world production. The ratio of international trade to world Gross Domestic Product (GDP) has risen from 5.5 percent in 1950 to over 20 percent today. Some argue that this development poses a danger to the health of the global economy. However, in reality it is simply a reflection of the international fragmentation of production and the rise of trade in intermediate products.

Reductions in transport costs, the information technology revolution, and more open economic policies have made it easier to distribute production across a range of countries. The parts and components that make up a final product are manufactured in different countries around the globe, including many developing countries.

These intermediate goods may cross national borders several times before they are assembled as a final product. Thus some of what passes for international trade is in reality intra-firm trade, exchanges of intermediate inputs and goods for processing between establishments that belong to the same company. By allowing each country in the supply chain to specialise in the part or component in which it has a comparative advantage, the internationalisation of supply chains creates enormous economic benefits.

This growth in the trade of parts and components means that statistics on imports overstate the degree of competition that comes from one’s trading partners. In international trade theory, trade in goods is seen as a substitute for the movement of factors of production. Thus, a country’s imports of goods from a trading partner are seen as additional supplies of the partner country’s labour and capital, which compete with the importing country’s own workers and entrepreneurs. But the share of value added by the country originating a traded product is considerably lower than in the past.

Take the example of an iPod assembled in China by Apple. According to a recent study, it has an export value of USD 150 per unit in Chinese trade statistics, yet the value added attributable to processing in China is only USD 4; the remaining value is produced by workers and enterprises from the United States, Japan, and other Asian countries.

Consequently, the degree to which a given volume of imports implies competition between the factors of production in the country of origin and those in the importing country is overstated.

Focusing on gross values of trade or imports from a particular country also understates the degree to which the importing country’s own firms benefit from trade because part of their output is incorporated in the imported good.

Relying on conventional trade statistics gives us a distorted picture of trade imbalances between countries. What counts is not the imbalances as measured by gross values of exports and imports, but how much value added is embedded in these flows. Let us take again the bilateral trade between China and the United States. According to data from the Institute of Developing Economies (IDE-Jetro) and WTO estimates, in 2008 the domestic content comprised 80 percent of the value of the goods exported by the US. The comparable figure was 77 percent in the case of Japan, 56 percent for Korea, and 42 percent for Malaysia and Chinese Taipei, meaning that about half the exported value originated from other countries. Conventional trade statistics would overestimate the US bilateral deficit vis-a-vis China by around 30 percent as compared to measuring in value-added content. This figure would reach more than 50 percent when the activity of export processing zones is fully taken into account. It makes sense for us to start measuring trade in value added rather than in gross value, as is the case today.

Debunking fallacies about trade is not enough. We need debate and informed choices, because trade has an impact on our lives, whether as workers or as consumers. (END/COPYRIGHT IPS)

(*) Pascal Lamy is director-general of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Feb 15 2010 (IPS)

The history of the relationship between trade and human rights is a history of suspicion, and to some extent of deliberate reciprocal ignorance. Yet, trade goes hand in hand with human rights. Trade presupposes human interaction, respect and understanding. If conducted with respect, “trade polishes and softens the most barbarous mores”, to quote Montesquieu and his theory of “sweet trade”.

Human rights and trade rules, including World Trade Organisation (WTO) rules, are based on the same values: individual freedom and responsibility, non-discrimination, rule of law, and welfare through peaceful cooperation among individuals. Not only are they based on the same fundamental values; they are also the result of common concerns.

Both human rights and global trade rules were considered a key element of the post-World War II order, a rampart against totalitarianism. It is no coincidence that the seeds of the multilateral trading system were planted at the same time as the Universal Declaration on Human Rights was being drafted in the mid-1940s. Both were seen as indispensable to world peace. In spite of these common underpinnings, for decades the interaction between the trade and human rights communities seemed to be governed by distrust.

What role do human rights play in trade? First, civil and political rights are a key ingredient of good governance, which in turn is essential to the proper conduct of trade relations. Freedom of expression, for example, brings transparency, one of the core principles of the world trading system. Secondly, social, economic and cultural rights, often seen as the main victims of globalization and of the opening of markets, are important ingredients for successful trade liberalization.

Besides, trade measures are the most commonly used instrument in developed countries to put pressure on states violating human rights.

But more importantly, trade is a means to raise the standards and conditions of living of all. The opening of markets creates efficiency and helps spur development, thereby contributing to the implementation of the fundamental human rights that are social and economic rights.

The reduction of trade barriers in agriculture, enhanced market access for agricultural products and the gradual decrease in subsidies provided by rich countries to their farmers, for example, all contribute to the same objective: the implementation of the right to food for all.

Contrary to a misconception that is unfortunately too widely spread, the primary vocation of the WTO is to regulate, not to deregulate trade. By putting in place norms to regulate trade flows and remove trade distortions, the WTO aims to create a global level playing field, where fairness is the rule and where the rights of individual members are safeguarded.

Of course, trade rules are not perfect. They may, in some cases, have unintended consequences on human rights. Some claimed so, for example, with respect to intellectual property rights. I sense, however, a growing awareness among trade experts of the importance of human rights and of the role trade can play in promoting and anchoring such rights. The concerns sparked by certain provisions of the Trade-related Intellectual Property Rights Agreement led negotiators to agree, in 2005, to amend the TRIPS Agreement to facilitate access of developing countries deprived of domestic pharmaceutical production capability to affordable medicines. Similarly, discussions are underway about the possible protection of folklore and traditional knowledge.

While trade can promote development and contribute to the reinforcement of human rights, it is not a panacea. Trade liberalization can entail social costs. To be successful, the opening of markets requires solid social policies to redistribute wealth or provide safeguards to the men and women whose living conditions have been disrupted by evolving trade rules.

This is what I have called the “Geneva consensus”, under which the opening of markets is necessary to our collective well-being, but does not suffice in itself, unless strong safety nets help correct the imbalances between winners and losers at the national level. It does not suffice unless the countries which do not enjoy sufficient human, technical, and financial resources to build the necessary infrastructure or to put in place such safety nets domestically are assisted by the international community.

For trade to act as a positive vector for the reinforcement of human rights, a coordinated international effort is needed. A coherent approach, which integrates trade and human rights policy goals, should be developed. Coherence should become the guiding principle in fostering development and human rights: coherence between the local and the global, between the world of trade and the world of human rights, between the WTO as an institution and the various organizations active in the field of human rights.

Today’s world may be flat, to paraphrase Thomas Friedman, but it is not united. It is, on the contrary, more fragmented than ever. The wind of globalization, which has been blowing during the past few decades, has dispersed our energies. We now need to bring them together and act in a coordinated way. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation.

Excerpt:

By Pascal Lamy and - -
GENEVA, Dec 22 2009 (IPS)

In February of this year, the global economic downturn was peaking. The collapse of industrial output and exports was approaching a 40 percent year-on-year on average. Trade was shrinking dramatically. The outlook was indeed gloomy.

Now, at the end of 2009, progress has been made, but we are not yet out of the woods.

Actions taken by governments and central banks have restored some order in international financial markets. The financial crisis had been triggered by an excess of incentives to take ill-considered risks, as well as by the inability of supervisory authorities to properly regulate the financial system domestically and internationally.

Efforts to remodel the international financial system have been set in motion. A massive process of financial de-leveraging is underway, which is putting pressure on banks’ balance sheets and is likely to discourage fresh lending for some time to come. However, progress has been made in dealing with systemic failures. The International Monetary Fund estimates of future write-downs have now been reduced to some USD 3 trillion, meaning that the clean-up process has reached the half-way mark. But this progress is still too slow. Balance sheets are being hit by “second-round” effects of the downturn -that is, the direct effects of poor economic activity on loan repayments.

Efforts to deal with the solvency crisis come at a high cost for the world economy. International and domestic banks have to be recapitalised in line with the losses on their balance sheets, meaning that hundreds of billions of dollars of public or private money will still be necessary to restore sound and safe conditions in the financial sector. All this points to a continuing contraction of bank balance sheets rather than an expansion in lending. The credit crunch in industrialised countries will remain a delaying factor in the global recovery.

The restoration of public confidence in banks and other financial intermediaries is contingent on macro-prudential reforms involving the regulation and supervision of the financial sector. A business-as-usual approach is not an option. One of the first steps has been to strengthen the governance structure under which new standards can be set for banking regulation and supervision globally. The Basel Committee on Banking Supervision has broadened its membership and been placed under the authority of a newly-established Financial Stability Board, which reports to G-20 Leaders.

It is important that re-regulation be applied in a non-discriminatory manner, avoiding any form of a “re-nationalisation” of lending. Countries that have provided support to banks should be able to exit support as the de-leveraging process takes place in a manner that ensures a level playing field between national and foreign-owned institutions.

Of course, all this has come at a cost for public finances and should not be implemented for longer than necessary or sustainable. In Asia, where the recovery has been faster, stimulus should not be allowed to overheat the economy. Governments will have to confront the challenge of managing a substantial increase in public indebtedness.

Stricter monitoring of trade and investment policies has also been engaged, with the aim of preventing protectionist tendencies from frustrating the overall recovery efforts.

The existence of a solid, rules-based world trading system has contributed to containing protectionism. While some trade-restrictive measures have been adopted, the volume of global trade affected has remained below 1 per cent. For the second time in a little more than a decade -the first being the1997 Asian financial crisis- the multilateral trading system has passed the “stress-test” of a significant downturn without major reversals in trade policy.

But we are not in the clear yet. Pressures for protectionist actions, as cleverly as they may be devised, with their illusory gains for the domestic economy, will not necessarily diminish any time soon. On the contrary, with persisting unemployment, still on the rise, these pressures may intensify.

Furthermore, if global imbalances expand again with increased economic activity, as well they might, this will add an additional layer of protectionist pressures, as was the case in the 1980s: rising unemployment and increasing trade imbalances proved a potent combination in increasing demands for protection.

There is, in my view, an unfortunate irony in this, since the imbalances are manifested in trade terms but are not caused by trade. Rather, they reflect macroeconomic and sometimes macro-prudential realities.

These realities leave us with no room for complacency as far as trade is concerned. And this is part of the much larger systemic context for why rising to the challenge of completing the Doha Round of world trade negotiations is so vital. It is not only about reaping the potential future economic gains. Success would also send a powerful signal in terms of business and consumer confidence and government resolve to match words with action. Just as important, a successful Round would strengthen the hand of governments as they confront protectionist pressures. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation.

Excerpt:

By Pascal Lamy and - -
GENEVA, Oct 6 2009 (IPS)

World economic growth, as measured by the world’s production of goods and services, has slowed abruptly in 2008 and the early part of this year. The contraction in demand led to a slowdown in production, and in international trade. World merchandise trade is projected to fall by a full 10 per cent this year, and foreign direct investment, which fell by 15 per cent in 2008, is projected to drop further.

The World Trade Organisation (WTO) has quickly responded to the crisis by cautioning governments against beggar-thy-neighbour policies, which have been tried in the past, in similar situations, and which have shown their gross inadequacy. It has cautioned against protectionism through a monitoring mechanism of trade restrictions that it enacted in the immediate wake of the financial crisis.

What the WTO radar shows so far is “low-intensity” protectionism, a large number of measures whose intensity has so far remained constrained. But there should be no complacency. Rising unemployment will continue to usher in the inevitable protectionist pressures.

The impulse to go “local” in answer to the financial crisis must be resisted. In fact, we should continue “going global,” for the simple reason that many consumers have seen their purchasing power decline, and are in need of cheaper, more competitive, goods and services, and not more expensive ones produced behind a national tariff wall.

International trade helps lower the cost of goods and services to the final consumer. And it is for this reason also that it is imperative that we conclude the Doha Development Round of world trade negotiations started in November 2001. In fact, if the entire WTO community of nations were to decide to raise its applied tariff levels all the way up to WTO legal ceilings, this would raise the world’s average tariff hurdle to about twice its current level. In other words, exporters would become 100 per cent worse-off than they are today if the full policy-space that the WTO provides were to be exploited.

The Doha Round would not only open new markets for exporters, but also curtail some of the existing margin of manoeuvre that could take the world backwards.

This explains why this issue has featured so highly on the G20’s agenda since last year, including in Pittsburgh last summit (September 24/25). I have used this opportunity to report to G20 leaders on the state-of-play of international trade. I said that political signals of commitment to resisting protectionism and to concluding the Doha Round in 2010 were needed. But that, as long as they do not translate into concrete engagement, declarations would not in-and-of themselves deliver an outcome. Leaders have agreed that their negotiators now embark on the work programmes that we have established for the next three months, and that they then assess our collective ability to achieve our 2010 target. It is now incumbent upon them to “walk the talk.”

Part of the contraction in world trade that we have seen in 2008 and 2009 occurred due to the drying-up of trade finance. Trade finance institutions rolled back their export credits in response to the financial crisis, having seen the number of defaults on trade contracts that had taken place. The WTO has not sat by in silence in response to the problem. It has mobilized the trade finance community and world leaders, alerting them to the downward spiral in world trade that this was leading to. Trade finance is now beginning to shore-up. It is my hope that we will soon see previous levels of trade finance restored, especially where it is most needed. In other words, for small businesses and least-developed countries.

While the financial crisis is a serious preoccupation, it is not the only global problem that awaits action on our part. It is critical as well that the international community “seal a climate deal” at the Copenhagen Summit at the end of this year. Only through an equitable “global” climate deal can we tackle the climate crisis effectively. We need a deal that clearly spells out the commitments of each and every player. Unilateral action of a few will not halt the climate crisis. WTO Members can help by accelerating market-opening for environmental and climate-related goods and services through the Doha Round. In this way, the trade community can chip into the construction of a global climate deal; one that we certainly hope to see emerge from the Copenhagen Summit at the end of this year.

All of us must act because what is at stake is our very ability to survive. (END/COPYRIGHT IPS)

(*) Pascal Lamy, Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Jul 20 2009 (IPS)

The world economy remains fragile and the economic outlook is still uncertain. There have been a few encouraging signs recently of better-than-expected performance here and there. Some are interpreting this as an indication that we may be turning the corner with regard to a possible return to previous patterns of economic growth, but excessive optimism is unwarranted.

Although financial markets are showing signs of stabilising, the crisis is far from over, particularly in the many developing countries that are only now starting to feel its full effect on their trade and economic growth. The collapse of aggregate demand is still working its way through the global economy while unemployment continues to increase. We should not forget that this crisis is unprecedented in its depth, breadth, and global impact.

The global economy continues to contract; the World Bank forecasts a 2.9 percent shrinkage for 2009. The latest World Trade Organisation (WTO) forecast for 2009 is a contraction of merchandise trade of 10 percent in volume (down from our previous estimate of 9 percent), with a 14 percent decline for developed economies, and a 7 percent decline for developing countries. Certain sectors of trade in services appear to be holding up better than others, and better than merchandise trade overall. This is of course welcome news, although not enough to alter the likelihood that the world economy will remain in a recessionary or low-growth mode for some time to come, and that the recovery, when it arrives, is likely to be much slower than we would like it to be.

The last monitoring report of the WTO, released July 13, presents a mixed picture of recent trade policy developments:

On the one hand, there have been some signs of improvement as more governments have introduced trade-opening and facilitating measures in the last three months. This is exactly what is needed from trade policy makers in current circumstances: to reaffirm their commitment to, and confidence in, open markets.

On the other hand, there has been further slippage towards increased restriction and distortion in certain tradable goods sectors of the world economy.

And there is no indication yet of governments more generally unwinding or removing the trade-restricting or distorting measures that they imposed early on in the crisis.

I am not suggesting, though, that this represents an outbreak of high-intensity protectionism and a widespread resort to trade restrictions and counter-retaliation. We can continue to take heart in the fact that the WTO’s multilateral trade rules continue to provide a valuable insurance policy against protectionism spiralling out of control. But the longer we delay the final settlement of the Doha Development Round of world trade negotiations, the less room we have for complacency about the future.

This crisis is one of the biggest challenges that the multilateral trading system has faced since its inception, and it has a human face. Poverty alleviation targets, whether as part of the Millennium Development Goals (MDGs) or otherwise, have become more challenging to achieve because of, among other things, the decline in export demand for goods.

This is a global crisis that requires global solutions. We have seen that no economy in the world is immune. The crisis is hitting hardest the majority of developing countries, which have no margin of comfort to buffer its impact. They lack the financial means to provide fiscal stimulus packages to help re-boot their economic growth, subsidies to help their farmers or businesses ride out the contraction of their markets, or social safety nets to help protect their populations from declining incomes and to prevent families from being pushed back under the poverty line.

One thing is clear: if Aid for Trade was urgent before the economic crisis, it is essential today. It is the investment that will allow many developing countries to prepare to exit the crisis by enhancing their trade capacity.

At a time when the global economy is still fragile worldwide and in face of the unprecedented decline in trade flows, we must send a clear and credible message that protectionism is not the answer. We have had that clarity from the G20 leaders in April as well as from G8+ leaders meeting in Italy on July 8-10. For credibility there is no better guarantee than to conclude the Doha Round, and I am pleased to say that we are witnessing the renewal of high-level engagement in the negotiations and a genuine desire to finally bring these talks, initiated in November 2001, to a successful conclusion. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, May 13 2009 (IPS)

While the world could probably agree on basic objectives for our agricultural systems -adequate, nutritious, and affordable food, decent pay for farmers, and culturally and environmentally-sensitive production – we still disagree on what global integration could bring to this process.

To my mind, global integration allows us to think of efficiency beyond national boundaries and to score efficiency gains on a global scale by shifting agricultural production to where it can work best. While some countries find themselves on fertile lands with sunshine and freshwater, others are condemned to arid and inhospitable terrains.

As I often say, if a country like Egypt were to aim for self-sufficiency in agriculture, it would soon need more than one River Nile. In other words, global integration must allow food, feed, and fibre to travel from countries where they are efficiently produced to countries where there is demand.

But there are other powerful reasons for trade too; such as differences in the relative efficiency of production (otherwise known as comparative advantage), and geographical proximity.

Despite this trade reality, countries continue to disagree on whether agriculture is like shirts, shoes, or tyres, and should fall under the same trade regime. Hence, the specificity of agriculture in the World Trade Organisation (WTO) rule-book. It made its entry into that rule-book about 50 years after industrial goods, and managed to come in on different footing. For example, export subsidies, which are completely prohibited for industrial goods, are yet to be phased-out through the Doha Round in the area of agriculture. Whereas the world’s trade-weighted average industrial goods tariffs is about 8 percent, in agriculture it is 25 percent. Not to mention tariff peaks, which in agriculture still reach as much as 1000 percent.

This fundamental divide took on a different dimension in last year’s food crisis. In response to the crisis, some countries turned further inward, introducing a host of export restrictions. Others started looking outwards more than they ever had before, seeing their food security endangered by their dependence on imports. Unique to this situation was the fact that countries on opposite sides of the export barriers all complained of the same thing: hunger. Hence the current phenomenon of the purchase of agricultural land abroad -dubbed “land grabs” by some.

International trade was not the source of last year’s food crisis. If anything, international trade has reduced the price of food over the years through greater competition and enhanced consumer purchasing power.

International trade in agriculture comprises less than 10 percent of world trade. Whereas 50 percent of the world’s production of industrial goods is traded internationally, only 25 percent of world food production does. In addition, of that 25 percent, the vast majority is processed food, and not rice, wheat, and soya, as some would like to claim. To suggest that less trade, and greater self-sufficiency, are the solutions to food security, is to argue that trade was itself to blame for the crisis – a proposition that would be difficult to sustain in light of those figures.

Despite the absence of a shared vision on agricultural trade policy, the world is moving in the right direction, though our job is by no means done. Between 2000 and 2007, agricultural exports by developing countries to the developed grew by 11 percent per year; faster than the 9 percent growth in trade flows in the opposite direction. This trend is a move towards redressing historical imbalances and levelling the international trade playing field.

The developing world’s international competitiveness in agriculture is becoming an undeniable reality. Today, the developing world tops the charts in kg/hectare of sugar cane, sugar beet, rice, wheat, maize, and other commodities too.

While we have yet to agree on a common vision for agricultural trade policy, the progress that the world has made is important. Global integration has fuelled economic growth and led to efficiency gains, and it must continue. But why then is there such widespread resistance to trade opening? To me the answer is clear: we have yet to build robust safety-nets for the world’s poor. Each and every government must turn its attention to this issue. In the absence of such safety nets, there will always be resentment at a time of crisis to a country’s food supply going abroad.

Trade policy cannot and does not, by itself, answer each and every challenge in agriculture, not least because, at the end of the day, trade is no more than a simple transmission belt between supply and demand. It has to work smoothly, but it is simply one element of a much more complex machinery. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Feb 26 2009 (IPS)

Today we are experiencing the worst economic recession since World War II. No country is immune. Trade is shrinking, growth is declining, and unemployment is on the rise.

The future is not clear. It is too early to judge whether we are at the bottom of the recession or whether this is just the beginning. But one thing is clear: the depth and scope of the crisis will be a function of the capacity of individual countries to act together at the global level and re-inject confidence in our economic and social systems.

But where will the confidence come from?

It should come from the belief that the financial system has been repaired and is back in operation. This requires focusing on cleaning banks’ balance sheets and is a matter of urgency even if resisted by bank shareholders. Unless this happens, there is no turning point in sight.

It should come from the belief that a serious attempt is being made to fill the hole in the international regulation of finance in order to avoid future accidents of this type.

It should come from the belief that individual stimulus packages are closely knitted together into a global joint effort.

It should come from the belief that the weakest and the poorest in our countries and continents are taken care of in policy responses.

It should come from the belief that leaders of major economies can work together in full co-ordination and trust to agree on common solutions.

And finally, the confidence should come from the belief that the world trade environment is not deteriorating and that isolationist pressures are contained.

Global leaders have a collective responsibility to provide confidence to the people, not only their own people but the people of the world.

It is encouraging that world leaders have seen the potential risks ahead. The G20 Leaders Summit in Washington last November underscored the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. Leaders of economies representing 90 percent of the world’s GDP agreed to refrain from raising new barriers to investment or trade and from imposing new export restrictions over the next 12 months. They also called for a rapid conclusion of the World Trade Organisation (WTO) Doha Round.

The next G20 Summit, in London, April 2, will be a test of the capacity of major economies to work together to find solutions to pull the world economy out of a deeper recession.

The first response to the crisis should be to complete the Doha Round of world trade negotiations as quickly as possible. The Doha Round is the best insurance policy against protectionist moves: the proposal currently under consideration would halve WTO tariff ceilings. Without Doha, tariffs applied on trade could double, rising to existing ceilings set previously by the WTO. The same is true for rich country agriculture subsidies, the ceilings of which would be reduced by 70-80 percent with the deal currently on the table.

Governments should resist the temptation to raise trade barriers, which today can take many forms: raising tariffs, applying non-tariff barriers, abusing trade remedies such as anti-dumping, doling out subsidy packages or imposing “buy local” conditions. Rejecting these moves is not a question of ideology but a matter of self-interest. Does anyone believe that they can protect themselves without the others doing the same? Beggar-thy-neighbour policies carry the risk of prompting retaliation by other countries and driving down the overall level of trade -thus destroying output and jobs around the world.

We must also ensure the availability and affordability of import and export finance. Trade has decreased as a result of a drop in demand, but it is also the result of lack of trade finance. At a meeting with providers of trade finance hosted by the WTO last November, the shortfall in credit for trade was estimated at USD 25 billion. The response initially focused on providing guarantees for trade credit. Thus, the World Bank’s International Finance Corporation (IFC) announced a tripling of the ceiling of its trade finance guarantees. Regional development banks, including the Asian Development Bank, also stepped in. However, three months later the problem persists and a lack of liquidity remains.

Finally, the international community should not forget their aid pledges in favour of the poorest countries, especially now that the crisis is also hitting them hard.

The world is changing. We live in an era of new technology and innovation, enjoying faster communications and lower costs of transportation. The methods of global production have also changed in that most goods are no longer manufactured solely in one country. We are also faced with more global issues, from global warming, energy shortages, and the world food supply, to nuclear proliferation and even outer space security. None of these can be resolved by one country or a small group of countries. We need collective efforts by all countries. (END/COPYRIGHT IPS)

(*) Pascal Lamy is Director-General of the World Trade Organisation (WTO).

Excerpt:

By Pascal Lamy and - -
GENEVA, Dec 1 2008 (IPS)

In every economic crisis, it is the poor and weak who suffer most. Individuals without savings or a reliable source of income face the most difficulty in surviving sharp economic downturns. It is the same for countries. As the world braces for the worst economic recession since the 1930s, anxiety is on the rise, particularly in the developing world where poverty alleviation programmes hinge on securing open markets and development aid, writes Pascal Lamy, Director-General of the World Trade Organization (WTO) The World Bank\’s latest projection is that global economic growth for 2009 will be a mere 1%. Rich countries will see economic contraction of 0.1% while developing countries will continue to grow next year, albeit at an estimated reduced rate of 4%. The developing world constitutes about one-third of the world economy and as the sole source of growth in 2009 these countries will represent important markets for developed and developing country exporters alike. But the growth levels forecast for next year will not be achieved if countries close their markets and turn off the flow of development funds.

It is the same for countries. As the world braces for the worst economic recession since the 1930s, anxiety is on the rise, particularly in the developing world where poverty alleviation programmes hinge on securing open markets and development aid. These countries have every reason to worry. Deteriorating economic conditions often lead governments to embrace inward looking policies that put domestic interests ahead of international cooperation. In tough times, it is too easy for politicians to blame the foreigner for the nation’s ills, shutting foreign products out of the market and slash foreign aid budgets. Such is the level of concern that leaders of 20 major economies felt compelled to publicly pledge a moratorium on the imposition of new barriers to trade in the coming 12 months. They said as well that they would make every effort to advance the Doha Development Round of global trade negotiations by reaching an understanding on two of its components, agriculture and industrial goods, before the end of the year. Leaders at the Asia Pacific Economic Cooperation forum in Peru and least developed country trade ministers meeting in Cambodia said precisely the same. As part of the Millenium Development Goals (MDGs), governments pledged that they would develop further an open, rule-based, predictable, non-discriminatory trading system. These provisions lie at the very heart of the Doha Round. Concluding these negotiations is therefore an integral part of the global effort to tackle poverty and foster development. Developed country governments pledged, moreover, to increase their developing assistance to 0.7% of Gross National Income. Last summer in Japan, G-8 leaders said they would increase overall development assistance to $130 billion by 2010. Part of these funds, governments have said, will be dedicated building ??? capacity to trade in the developing world through technical assistance, infrastructure development and enhanced production capacity, so that poor countries can more fully derive benefits from the trade. . Sticking to the MDGs pledges is about more than altruism. The World Bank’s latest projection is that global economic growth for 2009 will be a mere 1%. Rich countries will see economic contraction of 0.1% while developing countries will continue to grow next year, albeit at an estimated reduced rate of 4%. The Bank predicts that all developing regions of the world will continue to grow in 2009. The developing world constitutes about one-third of the world economy and as the sole source of growth in 2009 these countries will represent important markets for developed and developing country exporters alike. But the growth levels forecast for next year will not be achieved if countries close their markets and turn off the flow of development funds. Even without the imposition of protectionist measures, slackening consumer demand in the West is already hitting developing country exports. Moreover, the credit crunch has seriously undermined developing country exporters ­and some in the developed world as well. A shortage of liquidity and disproportionate aversion to risk have lead to a shortfall in available trade finance on the order of about $25 billion. Credit that is available is offered at rates three times more than in normal circumstances. Given that trade finance is one of the oldest, and safest, forms of bank lending, this risk aversion may be illogical but logic does not seem to hold at a time of such uncertainty and extreme market volatility. At a conference in Geneva last November, the World Trade Organization (WTO) assembled private banks, international financial institutions and regional development banks to assess the problem and look for solutions. One possible means of addressing the problem is for international and regional leaders to shoulder some of the risk through co-financing and thereby entice private lenders back to this market. The World Bank’s International Finance Corporation has already doubled its trade finance facility to $3 billion. The Organisation for Economic Cooperation and Development (OECD) and export credit agencies are also stepping in. These are uncertain times for the global economy. The recession we face, may well shake our collective faith in the kind of sound policies that have helped reduce poverty in many corners of the world. This is the time for leaders to show with deeds their commitment to trade and aid as two inseparable parts of a global development and growth agenda. (END/COPYRIGHT)

Excerpt:

By Pascal Lamy and - -
GENEVA, Nov 10 2008 (IPS)

History teaches that in a period of financial market upheaval and pending economic downturn like the one we\’re experiencing, the resort to protectionism advocated by some can only exacerbate the situation, as it did after the great Wall Street Crash of 1929, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, the author writes that US protectionist measures after the 1929 crash touched off a domino effect of retaliation and counter-retaliation among trading partners which provoked a severe contraction of international trade, depressed growth, and drove up unemployment around the industrial world. In the US the jobless rate soared to 25 percent. The expansion of trade is a powerful instrument in overcoming economic crises. While it is essential that governments resist the siren song of protectionism, it is even more urgent that they conclude the ongoing WTO trade negotiations under the Doha Development Round, initiated in 2001. The objective of the round, shared by the 153 WTO members, is the creation of a more equitable, ambitious, relevant, and development-oriented trading system.

Shortly after the 1929 crash, in June 1930, Senator Reed Smoot and Representative W. C. Hawley produced one of the most destructive pieces of legislation in US history. The goal of this ill-conceived tariff law was to protect US farmers and industries. Duties of more than 60 percent were slapped on 3,200 imported products, lifting overall average tariffs by about 20 percent. By 1933 imports had fallen from USD 4.4 billion to USD 1.3 billion while exports fell 69 percent over that same period to USD 1.6 billion.

But there was an unintended consequence: the tariff law touched off a domino effect of retaliation and counter-retaliation among trading partners which provoked a severe contraction of international trade, depressed growth, and drove up unemployment around the industrial world. In the US the jobless rate soared to 25 percent -it is currently 6.1 percent.

More recently, during the Asian crisis in the late 1990s, the developing countries of the Pacific Rim increased their exports to rich countries by tens of billions of dollars. Those increased exports helped the Asian countries stabilise their economies and regain prosperity. Trading their way out of the crisis was as vital to the countries of the Pacific Rim as the Marshall Plan was to Europe after World War II. But the export surge did not play well in all quarters of Europe and North America and governments faced intense pressure to erect tariff barriers.

North American and European governments resisted that pressure and the result was that Pacific Rim countries were quickly back on their feet.

An important reason why protectionist measures have not followed the harsh rhetoric of some politicians is that World Trade Organisation (WTO) commitments restrict, in a transparent way, the use of trade measures.

Over 60 years, and eight rounds of international trade negotiations, the General Agreement on Tariffs and Trade (GATT) and its successor, the WTO, have established a framework of regulations governing international trade interactions. Since the conclusion of the Uruguay Round in 1994, these rules have been extended to trade in services and have expanded into areas of interest to developing countries -particularly agriculture and textiles- that had previously been addressed only marginally.

Today, as the West weathers the looming economic downturn, it can draw comfort from the fact that governments elsewhere which may be tempted to curb European or American exports will face the same constraints. Overseas markets will be of particular interest because while the United States, Europe, and Japan constitute two-thirds of global economic output, domestic demand in all of these economies figures to be flat in the coming year. In the emerging markets by contrast, the forecast is for 6 percent growth next year.

As I see it, the current financial crisis raises two potential threats to global trade. The immediate problem we face is the credit crunch. Roughly 90 percent of international trade is financed with short-term credit. Trade finance is one of the oldest forms of credit, dating to the Middle Ages, and one of the safest since it provides creditors with obvious collateral -a boatload of cargo. Yet today, trade finance is being offered at 300 basis points above the London Interbank Offer Rate (LIBOR) and even at this high price has been difficult for developing countries to obtain.

The second -and less probable- threat we face is a panic-driven slide towards protectionism. In recent years, protectionist rhetoric has certainly increased. Politicians faced with deteriorating economic conditions are fond of blaming foreigners for their woes. But the anti-trade protestations have not yet translated into protectionist action.

While it is essential that governments resist the siren song of protectionism, it is even more urgent that they conclude the ongoing WTO trade negotiations under the Doha Development Round, initiated in 2001. The objective of the round, shared by the 153 WTO members, is the creation of a more equitable, ambitious, relevant and development-oriented trading system. This would be the best contribution that the WTO could make to counteract the current world crisis. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA, Oct 6 2008 (IPS)

Policy-makers in the United States and across the globe are desperately seeking to avoid the missteps that accentuated the financial crisis of the 1930s. One of the important lessons is that protectionism and economic isolationism do not work, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy writes at this time of economic distress with soaring world food prices, what impoverished consumers desperately need is to see their purchasing power enhanced and not reduced. Shutting borders does exactly the opposite. There is no doubt therefore that the current hurricane that has hit financial markets must not dissuade the international community from pursuing greater economic integration and openness. Despite the setback that the Doha Round of world trade negotiations suffered last July, talks have restarted with the aim of completing a deal on tariff and subsidy reduction by the end of this year. This would be the best contribution the WTO could make to counteract the current world crisis. A comprehensive WTO deal can help soften the impact of high food prices by tackling the current systemic distortions in international agricultural trade that have stifled food production and investment in agriculture for years in many developing countries.

They are all stressing that lessons from the Great Depression have been learned and that the many policy mistakes that were associated with it will be avoided. One of the important lessons is that protectionism and economic isolationism do not work. They are policies of the past, which should have no place in our future.

As tempting as it is in moments of crisis to give our producers comfort and shield them from competition by shutting our borders to imported goods or services, this course of action must not be pursued. In fact, the infamous Smoot-Hawley Tariff Act of the 1930s which raised US tariffs on over 20,000 imported goods to record levels led to nothing but a trade war between nations. In so doing, it ended up impoverishing us all, proving that protectionism, and beggar-thy-neighbour policies, are a dead-end.

In a financial crisis, and at this time of economic distress in particular with soaring world food prices, what impoverished consumers desperately need is to see their purchasing power enhanced and not reduced. What is needed is to enable consumers to purchase more for less. The temptation to shut our borders does exactly the opposite. There is no doubt therefore that the current hurricane that has hit financial markets must not dissuade the international community from pursuing greater economic integration and openness.

Despite the setback that the Doha Round of world trade negotiations suffered last July, talks have once again been restarted with the aim of completing a deal on the parameters for tariff and subsidy reduction by the end of this year. This would be the best contribution that the World Trade Organisation and its members could make to counteract the current world crisis.

What the world has before it today in the Doha Round negotiations is a package that includes: the reduction of unfair agricultural subsidies; the lowering of tariff walls on industrial and agricultural goods and of barriers to trade in critical services, such as banking, energy, and environmental services; and a myriad of new trade measures in areas like trade facilitation, anti-dumping, and fishery subsidies, to name but a few, all calculated to bring the trading system up to speed with new market realities.

One of the most pressing problems facing us today is the current food crisis, which is extremely relevant to growth and poverty reduction. A comprehensive WTO deal can help soften the impact of high food prices by tackling the current systemic distortions in international agricultural trade that have stifled food production and investment in agriculture for years in many developing countries.

If the Round is successfully concluded, the world would reduce by half the amount of imports tariffs paid today, about USD 150 billion in savings. Developing countries would contribute 1/3 of the savings and would benefit from 2/3. Developed countries would contribute with 2/3 of the savings. 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 from 1/3. This is truly a development Round.

There is another example related with the epicentre of the world financial crisis: if the Round is concluded with success, the US could see the amount of trade-distorting subsidies it is allowed reduced to USD 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 push its trade-distorting subsidies far higher as soon as food prices decline. In fact, it has done so in 8 of the last 10 years. It is true that this figure is still high and many would think that the amount should be zero, but without the Round it could reach USD 48 billion.

The reasons why we must conclude the Round are visible to all of us and are becoming more critical as the economic and financial outlook continues to deteriorate. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA, Feb 25 2008 (IPS)

With clouds darkening over the world economy, the Doha Round of the WTO is the one global initiative that may boost the confidence of world businesses, workers, and consumers and send a powerful signal that more than 150 countries have the confidence to resist protectionism, to create a more just and balanced trading system, and to lay sustainable foundations for growth and development in the 21st Century, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy acknowledges that the economic growth resulting from the expansion of world trade has not been equitably distributed within our societies, which have seen a rise in inequality and disruptions in their economic and social fabrics. If we are to succeed in building on the achievements of the global trading system through more trade opening, it is essential that countries adopt necessary domestic reforms and sequence them properly. This means adequate social safety nets and widespread availability of education and training

In the post-war era, trade expanded rapidly and living standards rose in many countries as a result. But in spite of its successes, the global trading system suffered from notable shortcomings. Important areas of commerce, including agriculture and services, lay outside the General Agreement on Tariffs and Trade (GATT) rules, rendering the trading system both less equitable and less relevant than it should have been: less equitable because agriculture is a sector in which many developing countries are highly competitive, and less relevant because services in those days accounted for about half of GATT members’ economic output.

These omissions, coupled with the rise in protectionism after the oil shocks of the 1970s and the de-industrialisation in developed countries in the 1980s, made it necessary for GATT to re-invent itself, and in 1986, member countries responded by launching the Uruguay Round.

Agreement on this Round in 1994 led to the creation of the World Trade Organisation the following year, a development which enabled governments and the multilateral trading system they created to better meet the challenges of the new millennium. Not only was the WTO given responsibility for new areas of trade like agriculture, services, textiles and trade-related intellectual property, but the creation of binding new dispute settlement system assured members that their rights would be better protected.

With the launch of the Doha Round in 2001, the trading system has again tried to adapt to new geopolitical realities. Striking an ambitious development-oriented agreement would further strengthen a system which has already done much to make the world a better place.

Since 1950 world trade has grown more than 20-fold and has expanded three times faster than world output growth. International trade has been a great stabiliser for many countries, contributing to economic expansion even at times of slackening domestic demand.

Typically, gains are spread across the vast majority of silent consumers and input users. But there is no denying that there are losers too, and often those who lose out are better-organised and more vocal about the costs of trade opening. In many of our societies trade is the scapegoat for job destruction and declining living standards. On this point there is general agreement among economists that it is not trade but productivity enhancements from technology improvements that is the primarily cause of losses of manufacturing jobs.

It is true that international trade speeds the transfer of technology. The opening of services markets to foreign providers has facilitated the movement of ideas and persons. For consumers this new range of options has been of tremendous benefit. The downside is that it has raised concerns among blue and white-collar workers in developed countries that technology has exposed entire new sectors of the economy to world competition.

It is also clear that the economic growth resulting from the expansion of world trade has not been equitably distributed within our societies, which have seen a rise in inequality and disruptions in their economic and social fabrics.

These issues, which are about fairness, draw our attention to what may be the most important lesson of these 60 years, which is that whether we speak of developed or developing countries, there must be a continuum in the articulation of trade and domestic policies. If we are to succeed in building on the achievements of the global trading system through more trade opening, it is essential that countries adopt necessary domestic reforms and sequence them properly. This means adequate social safety nets and widespread availability of education and training

If their growth and development programmes are to succeed, developing countries need capital. They can either attract it as foreign investment, borrow it, or import it through international trade. The safest, cheapest, and most sustainable way is to import it. Open policies have considerably changed the face of emerging economies. China, India, Mexico, Korea, Thailand, Indonesia, Argentina, South Africa and Chile, not to mention countries in Central and Eastern Europe, have done extremely well in a range of manufacturing sectors.

But to meet all the challenges, our ever-growing WTO membership needs to show leadership and cross the last mile to conclude the Doha Round in 2008. At a time when clouds are darkening over the world economy, the Round is the one global initiative that may boost the confidence of world businesses, workers, and consumers. Such an agreement would send a powerful signal that more than 150 countries have the confidence to resist protectionism, to create a more just and balanced trading system, and to lay sustainable foundations for growth and development in the 21st Century. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA , Dec 20 2007 (IPS)

The relationship between international trade -and indeed the WTO- and climate change would be best defined by a consensual international accord on climate change that successfully embraces all major polluters, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). In this article, Lamy writes that until a truly global consensus emerges on how best to tackle the issue of climate change, WTO members will continue to hold different views on what the multilateral trading system can do on this subject. The WTO tool-box of rules can certainly be leveraged in the fight against climate change, but they would need to be mobilised under clearer environmental parameters, which only the environmental community can set. In the absence of such parameters, the WTO will continue to be pulled from left to right by different players, with only a faint possibility of landing in the centre.

Many questions on the issue were raised during the recent United Nations Conference on Climate Change in Bali (3-15 December) but no practical answers were provided – at least none on which everyone could agree.

Some would like to see the trading system offset any competitive disadvantage suffered in the course of climate change mitigation. There are many different ideas circulating on what these ”offsetting” measures might be, with most of the discussion naturally focusing on countries’ most trade-exposed, energy-intensive economic sectors, like iron and steel and aluminium. Some are considering the imposition of domestic carbon taxes, with adjustment for those taxes at their border, others are contemplating emission cap-and-trade systems, with an obligation on importers to participate. Another group would prefer to focus on what is most immediately ”deliverable” by the trading system in the fight against climate change, meaning the opening of markets to environmental goods and services, especially those relevant to climate change, through the ongoing Doha Round of trade negotiations.

Another controversial issue is the international trading system’s carbon footprint. A new concept is that of ”food miles”, a calculation of the CO2 emitted during international transportation of food from the field to the table. Many conclude that it may be better to simply produce goods at home to minimise emissions, but this argument does not always stand up to empirical verification. In fact, 90 percent of internationally traded goods are carried by sea, which is by far the most carbon-efficient mode of transport, with only 14 grams of CO2 emissions per tonne kilometre. Next most carbon-efficient is train transport, then road transport. The least efficient is air transport, rated at a minimum of 600 grammes of CO2 per tonne kilometre.

In working towards an international accord on climate change, countries will certainly have to reflect on the role of international trade within such an accord. Trade leads to efficiency gains, allowing countries to specialise in what they are best at producing and to economic growth, offering countries the possibility of investing in pollution prevention and abatement if they take the political decision to do so.

The WTO tool-box of rules can certainly be leveraged in the fight against climate change. The WTO has rules on product standards for instance, that encourage its members to use the international norms set by more specialised international institutions, as well as rules on subsidies, taxes, intellectual property, and so on. All of these tools can prove valuable in the fight against climate change, but they would need to be mobilised under clearer environmental parameters, which only the environmental community can set. In the absence of such parameters, the WTO will continue to be pulled from left to right by different players, with only a faint possibility of landing in the centre.

A contribution the WTO can make right now is to truly open markets to clean technology and services. The Doha Round of trade negotiations offers an avenue for expanded access to products such as scrubbers, air filters, and energy management services. But, as can be expected, what is and is not an environmental good is a hotly debated matter.

For economists, things appear to be clearer. They tell us that, today, the global market for environmental goods and services is estimated to be worth more than 550 billion dollars per year. The OECD estimates that green services account for 65 percent of this market and green goods 35 percent. Climate change prevention and mitigation products and services represent an important proportion of these numbers.

Launched within a broader context of the Doha Round’s environmental chapter -which also includes issues such as the reduction of fishery subsidies and enhancing the mutual supportiveness between WTO rules and multilateral environmental agreements- the negotiations on environmental goods and services could deliver a win-win result for some our members, for both the environment and trade. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA, Sep 17 2007 (IPS)

Increasing trade restrictions is the wrong response to anxieties generated by the rapid pace of globalization and would cause unthinkable damage, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). In this analysis, Lamy writes that more often than not, the real cause of pain is not trade opening but the failure to accompany the efficiency gains it brings with economic policies that would amplify its benefits. Trade opening involves a built-in asymmetry: while the millions who experience gains in purchasing power from trade opening are usually unaware of the cause, the thousands whom it hurts can easily identify the source of their pain. For politicians, this asymmetry is difficult to cope with and too often the easy way out is to treat foreigners as scapegoats. The multilateral arena continues to be the most cost-effective way to negotiate trade matters. This is especially true for medium and small developing countries, who have much less negotiating power in bilateral negotiations with big partners than they do in a multilateral setting.

But globalisation has also contributed to an increasing number of worrisome phenomena — the scarcity of energy resources, the deterioration of the environment, the migratory movements provoked by insecurity, poverty, and political instability, and even the volatility of financial markets, as we have seen in recent weeks.

It can be argued that in some instances globalisation has reinforced the strong economies and weakened those that were already shaky. As public opinion has become considerably more anxious about the effects of globalization, there has been growing concern over the impact of increased competition on socioeconomic fabrics, the outsourcing labour-intensive services, and global trade imbalances.

However, increasing trade restrictions is certainly not the right response to anxieties generated by the rapid pace of globalization and would cause unthinkable damage. More often than not, the real cause of pain is not trade opening but the failure to accompany the efficiency gains it brings with economic policies that would amplify its benefits.

Memory of the great recession of the 1930s, which started with trade protectionism and finally led to WWII, now seems blurred in some people’s minds. The establishment of the Bretton Woods system, including the General Agreement on Tariffs and Trade (GATT, now The World Trade Organization-WTO) was an attempt to create an open and rules-based global economic system that would prevent the tragedy from happening again. To avoid repeating the mistakes of the past we should recognise that the politics of trade opening involve a built-in asymmetry: while the millions who experience gains in purchasing power from trade opening are usually unaware of the cause, the thousands whom it hurts can easily identify the source of their pain. For politicians, this asymmetry is difficult to cope with, and too often the easy way out is to treat foreigners as scapegoats.

The central issue is how to ensure that trade benefits all. This must occur at two levels: both within nations, and among them.

Regarding the latter level, two elements are fundamental: fairer multilateral trade rules, and the building of trade capacity in developing countries. A primary objective of the on-going WTO negotiations under the Doha Round is precisely to address the remaining imbalances in WTO rules that work against developing countries, whether in agriculture or in areas such as textiles or footwear. Over the coming months WTO members will have the opportunity to demonstrate that they want to fulfil the promises they made in Doha in 2001 to open their markets more and address the most egregious trade distortions.

At the intra-national level, trade opening can and does translate into greater growth and poverty alleviation, but this is neither automatic nor immediate. Rather it must be accompanied by a solid domestic agenda to spur on growth and cushion adjustment costs. Appropriate tax policies, competition policy, investment in quality education, social safety nets, and innovation to foster healthy environments must all be part of the mix needed for trade to translate into real benefits for the people.

At a time when free-trade agreements seem to be the fashion, the multilateral trading system deserves our full attention. Thanks to the commitment and vision of successive governments and groups of negotiators, the GATT/WTO has been one of the most successful examples ever of sustained international economic cooperation. Since 1950, world trade has grown 30-fold in volume terms. This expansion was more than 3 times faster than growth in world GDP, which expanded 8-fold during the same period..

The multilateral arena continues to be the most cost-effective way to negotiate trade matters. Market access resulting from WTO negotiations is global and cannot be matched by any bilateral trade agreements. This is especially true for medium and small developing countries, who have much less negotiating power in bilateral negotiations with big partners than they do in a multilateral setting. Key issues such as agricultural subsidies, anti-dumping, fishery subsidies discipline, or customs procedures cannot be addressed in bilateral agreements but only in the WTO.

Simply put, because of its inherent advantages, the multilateral trading system can be complemented but not replaced by free-trade agreements. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA, Jun 13 2007 (IPS)

Failure to successfully conclude the Doha development round would hurt the multilateral trading system but it would more devastating to developing countries, including those in Africa, writes Pascal Lamy, Director-General of the World Trade Organization (WTO). Though agriculture is an important part of the agenda, this Round covers other issues with significant potential gains for Africa. For instance, in industrial products, such as textiles and footwear, improved market access in developed countries would benefit African exports of manufactured goods. The same is true for services, the most dynamic sector in many African countries. Developing the necessary infrastructure and human skills are two of the most important challenges Africa faces in terms of modernising trade. Progress in these two areas is fundamental to building African countries\’ capacity to effectively participate in regional and global trade.

In seeking to narrow divergences, I have been actively consulting with all stakeholders, and the unanimous view is that a failure to successfully conclude the Round would not only be detrimental to the multilateral trading system; it would be more devastating to developing countries, including those in Africa.

Failure to reduce developed countries’ trade-distorting domestic subsidies would mean a missed opportunity to boost the expansion of agricultural production in Africa, particularly for cotton exporters, whose production has dropped significantly over the past years as a result of distortions in the cotton export market.

Lowering agricultural tariffs whether in developed countries or emerging countries will also benefit African exports, particularly in those sectors where they have comparative advantage, including cereals, vegetables, and horticulture. Negotiations will also address the important issue of tariff escalation, which affects African exports of processed agricultural products and undermines efforts to diversify agriculture exports. For example, African exports of cocoa to Japan enter duty free, but exports of cocoa paste face tariff rates of up to 25 percent.

It is important to note that although agriculture is an important part of the agenda, this Round covers other issues with significant potential gains for Africa.

For instance, in the area of industrial products, such as textiles and footwear, improved market access in developed countries would benefit African exports of manufactured goods.

The same is true for services, the most dynamic sector in many African countries. Developing countries have reserved the right to designate the service sectors that they wish to liberalise. In South Africa services now account for approximately 65 percent of GDP and around 70 percent of formal employment. Africa stands to gain further by maintaining an offensive position in this sector. This would not only send positive signals to investors but also provide the predictability and transparency that is required to facilitate investment decisions.

There cannot be a discussion on intra-African trade without addressing the services sector. Take the transport sector: according to UNCTAD, transport costs in Africa constitute over 15 percent of the total cost of any product, compared with 8 percent for other developing countries and 5 percent for developed countries. This high cost of transportation has a negative impact on trade volumes.

Another key area of the Round is trade facilitation, cutting red tape at the border. Trade facilitation is at the heart of efforts to increase intra-African trade and to integrate the continent into the global economy.

Effective participation in global trade requires that all actors, be they governments, corporations, or individual firms, operate at the cutting edge of technology not only in production processes but also in chain management. Globalisation and further trade opening will place demands on firms, small and large, to adjust to the new trading environment. Reducing transaction costs is one important step towards remaining competitive in international and regional markets.

Developing the necessary infrastructure and human skills are two of the most important challenges Africa faces in terms of modernising trade. Progress in these two areas is fundamental to building African countries’ capacity to effectively participate in regional and global trade.

In terms of overall density of infrastructure, Africa still lags significantly behind the rest of the world, but there are signs that this is improving. The quantity of surfaced roads in Africa grew by 128 percent between 1991 and 2000, reflecting increased investment in road networks, but more remains to be done.

The experience of many land-locked African countries shows that significant savings can be made by improving in transport networks. However, doing so involves more than the traditional notion of “trade facilitation”; in African countries it is a fundamental problem of “development”.

This is why parallel to the Round, we are putting together a comprehensive package of aid for trade to help developing countries, and African countries in particular, address some of their supply side constraints, including poor transport and general trade infrastructure networks. This will help enhance their ability to benefit from trade opening.

A successful conclusion of the Round will benefit developing countries and Africa in particular. (END/COPYRIGHT IPS)

Excerpt:

By Pascal Lamy and - -
GENEVA, Feb 2 2007 (IPS)

Sustainable development should be the cornerstone of our approach to globalisation and of the global governance architecture that we create, writes Pascal Lamy, Director-General of the World Trade Organisation (WTO). In this article, Lamy writes that the Doha Round of trade negotiations contains a promise to the environment to allow for a more efficient allocation of resources including natural ones on a global scale through a continued reduction of obstacles to trade (tariffs and subsidies). But it also includes a promise to ensure greater harmony between the WTO and Multilateral Environmental Agreements (MEAs): a promise to tear down the barriers to trade in clean technologies and services; as well as a promise to reduce the environmentally-harmful agricultural subsidies. The world must forge ahead with these negotiations as fast as it possibly can. Not because the negotiations are going to save the world\’s environment. But because they are the very modest start that the international community has agreed to make to address environmental challenges through the prism of trade. A failure of these negotiations would strengthen the hand of all those who argue that economic growth should proceed unchecked, that economic growth is supreme and need not take account of the environment. Trade, and indeed the WTO, must be made to deliver sustainable development. They are starting to.

Today, as we face environmental challenges of an unprecedented magnitude, like climate change, there is little doubt that Gaia will indeed react and that humankind may suffer the consequences.

In 1987, when the Brundtland Report coined the term “sustainable development”, many of us saw it as one option. The other option was business as usual. Twenty years later no one can argue that sustainable development is a choice anymore. It has become a must. Sustainable development should be the cornerstone of our approach to globalisation and of the global governance architecture that we create.

When the World Trade Organisation (WTO) was established back in 1995, sustainable development was placed at the heart of its founding charter. Governments vetoed the type of trade that is premised on the depletion of natural resources. Rather, they called for their sustainable use. They went further in their pledge to pursue a sustainable development path by launching environmental negotiations in the Doha Round. This is the first time in the history of multilateral trade talks that such negotiations have been started.

There are many different ways to look at globalisation. Some see it as an economic phenomenon, driven by a greater flow of goods, services, and capital between countries. In this definition, the WTO plays a central part. Others see it as a technological phenomenon, driven by the revolution that we have witnessed in information technology, and so on. The one certain element in all of this is that the world has become inter-connected to the point that today it is impossible for a country to live and prosper in isolation from the rest of the world.

Clearly, globalisation is a phenomenon that requires careful management. By connecting people from opposite ends of the planet, globalisation offers tremendous potential, but it also has drawbacks. As goods, services, and people cross borders, so does pollution, for example. The management of globalisation would allow us to capture its benefits, while avoiding its downside. There is no doubt that the world needs more effective “global governance” at a level that transcends national boundaries. Our institutions of global governance must therefore be strengthened. This applies to the WTO, and to all other international institutions, which should complement each other.

Trade, no doubt, leads to a more efficient allocation of resources on a global scale, and the Doha Round of trade negotiations contains a promise to the environment. A promise to allow for a more efficient allocation of resources including natural ones on a global scale through a continued reduction of obstacles to trade (tariffs and subsidies). But it also includes a promise to ensure greater harmony between the WTO and Multilateral Environmental Agreements (MEAs): a promise to tear down the barriers that stand in the way of trade in clean technologies and services; as well as a promise to reduce the environmentally-harmful agricultural subsidies that are leading to overproduction and harmful fisheries subsidies which are encouraging over-fishing and depleting the world’s fish stock.

The world must forge ahead with these negotiations as fast as it possibly can. Not because the negotiations are going to save the world’s environment. But because they are the very modest start that the international community has agreed to make to address environmental challenges through the prism of trade. A failure of these negotiations would strengthen the hand of all those who argue that economic growth should proceed unchecked, that economic growth is supreme and need not take account of the environment. Trade, and indeed the WTO, must be made to deliver sustainable development. They are starting to.

The contribution of the Doha Round to the environment is but a drop in the bucket in terms of the solutions required to address the world’s environmental problems. But it is a necessary drop, so that governments are encouraged to begin looking at the bucket as a whole. A sustainable development strategy, linking all international actors, must become our goal. We must not wait for Gaia to react!. (END/COPYRIGHT IPS)

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By Pascal Lamy and - -
GENEVA, Jan 1 2007 (IPS)

Many proposals have already been presented at the Doha Round Negotiations, but clearly what is on the table today is not enough to lead us to success. All parties need to make a greater contribution, starting with agriculture, writes Pascal Lamy, Director-General of the World Trade Organisation . In this article, the author writes that the US has to accept cuts in its subsidies beyond its current offer, as do the EU and the G-10. India and the G-33 countries also have to show flexibility. Indeed, if we are to reach a result, all Members have to show flexibility. No one is being asked to undertake disproportionate commitments, and certainly there is the flexibility to address for specific needs and concerns. With an additional effort we can unlock agriculture which in turn will open the last stage of talks on the other topics. This Round offers the largest cuts ever on tariffs on the industrial sector, which represents a large part of developed countries exports and holds the promise of reformed antidumping procedures to enhance transparency and predictability. For the first time ever it tackles fishery subsidies which increase capacities and contribute to the depletion of our oceans. It also goes deeper in opening telecommunications and financial, environmental, and a broad range of business services.

The basic premise underpinning the WTO is that market opening is good. The multilateral trading system helps to increase economic efficiency and can also help reduce corruption and bad government. Trade has played an increasing role in the world economy over past decades, as illustrated by the fact that the growth of real trade has exceeded that of world output. The ratio of world exports of goods and services to GDP rose from 13.5 percent in 1970 to 32 percent in 2005, and all major geographic regions recorded an excess of trade over output growth.

But the challenge of market opening and globalisation for developing countries calls for enhanced international action. A fundamental aspect of the current Doha Round is to correct some of the remaining imbalances in the current trade rules in favour of developing countries and to improve rules that will provide all Members and, in particular, developing country Members, with authentic market opportunities.

A number of the substantive rules of the WTO do perpetuate some bias against developing countries. This is the case in the agriculture sector, which today holds the key to unlocking the rest of the DDA. How can agriculture, which represents less than 8 percent of world trade, derail the entire Doha Round agenda? It is because food production remains a very sensitive sector for rich and poor countries alike.Given that the current Round is one of development and more than 70 percent of the world’s poor live in rural areas, there is no way the DDA can continue if the existing agriculture bias in favour of rich countries is not properly addressed. Reforming agriculture rules is necessary to ensure our sustainable development.

This is the reason why, in the Doha mandate, all WTO Members agreed in 2001 that the long-term objective is to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets.

Similar bias exists with regard to the remaining tariff peaks and high tariffs imposed by developed countries on sectors such as textiles and clothing, where a large number of developing countries have a comparative advantage. The new rules on market access for non-agricultural products (NAMA) would address these peaks to benefit exports from developing countries.

Completing the Doha Round is crucial for both developed and developing countries as a fundamental tool to control and harness globalisation and to ensure our sustainable development. Concluding it is understandably difficult. It is the most ambitious attempt by governments to open trade multilaterally both in the broadness of its scope, including on agriculture, and in the number of countries that are negotiating and that will share in the results. The previous Round, the Uruguay Round, wrote in 1994 the modern rule-book for the trading system, and the Doha Round is using it ten years later to open trade and lock-in reform on an unprecedented scale.

This Round offers the largest cuts ever on tariffs on the industrial sector, which represents a large part of developed countries exports, through a combination of a powerful reduction formula and deeper cuts on selected sectors. It holds the promise of reformed antidumping procedures to enhance transparency and predictability. For the first time ever it tackles fishery subsidies which increase capacities and contribute to the depletion of our oceans. It also goes deeper in opening telecommunications and financial, environmental, and a broad range of business services.

Many proposals have already been presented at the Doha Round Negotiations, but clearly what is on the table today is not enough to lead us to success. All parties need to make a greater contribution, starting with agriculture. The United States has to accept cuts in its subsidies beyond its current offer, as do the EU and the G-10. India and the G-33 countries also have to show flexibility. Indeed, if we are to reach a result, all Members have to show flexibility. No one is being asked to undertake disproportionate commitments, and certainly there is the flexibility to address for specific needs and concerns. With an additional effort we can unlock agriculture which in turn will open the last stage of talks on the other topics. (END/COPYRIGHT IPS)

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By Pascal Lamy and - -
GENEVA, Sep 1 2006 (IPS)

Since its accession to the WTO five years ago, China has been the fastest-growing trading nation in the world and now the third- largest trading economy, after the EU and US, writes Pascal Lamy, Director-General of the Word Trade Organization (WTO) In this article, Lamy writes that a successful Doha Round can provide China with a stable and predictable global trading environment and offer the prospects for another 10-15 years period of peaceful economic development. In the Doha Round, we are negotiating the trade regime which will apply to all its members for the next 10 years. A trading system based on strong multilateral rules is the least expensive insurance policy against the risks of protectionism available to China and to the world economy. There are some signals that trade protectionism whether in developed or in developing countries could be on the rise. Given China\’s insertion into the world economy, multilateral trade opening and strong multilateral discipline are the best means to safeguard China\’s trade interests whether home or abroad. Without the Doha Round and without a well-functioning WTO, China could well be one of the biggest victims.

Since its accession to the World Trade Organisation (WTO) five years ago, China has been the fastest- growing trading nation in the world. As a result today China is the world’s third-largest trading economy, after the European Union and the United States.

This is in keeping with China’s long tradition of trade. The famous Silk Road opened trade between China and the West. In the Tang dynasty, Chang An was the largest and most prosperous city in the world. When Zhen He sailed 600 years ago to Southeast Asia, to India, and to the east coast of Africa in the largest fleet in the world, the Ming Dynasty spread its civilisation and technology, together with silk and porcelain.

China was strong when it opened to the world, but when the Middle Kingdom closed its door, it fell behind.

China’s extraordinary expansion in exports is well-known throughout the world. Less well known is its opening to imports. In the last few years, the Chinese government has substantially reduced barriers to imports, which today are among the lowest in developing countries. The average applied import duty dropped to 9.7 percent in 2005, down from 15.6 percent in 2001. In the same year, average applied rates in India, Brazil, or Mexico were 20 percent, 11 percent, and 12 percent respectively.

Furthermore, China’s ratio of imports to GDP, which is a measure of an economy’s openness, is high: it has moved from 5 percent in 1978 to 30 percent in 2005, about twice that of the US and more than 3 times that of Japan.

Moreover, the number of imported products subject to import licenses or quantitative restrictions has dropped substantially. In the late 1980s, China imposed licensing requirements on almost 50 percent of all imports. By the time China joined the WTO in 2001, this figure had dropped to around 4 percent. In 2005, the government eliminated all licensing requirements.

From 2001 to 2005, China imported nearly USD 2.2 trillion worth of goods, with an annual growth rate of 28 percent. Throughout the 1990s China was the fastest-growing export market for US companies. This trend accelerated from 2000-2005, as US exports to China rose by 160 percent while US exports to the rest of the world rose only 10 percent. But China has also become a destination for other developing country exports: it is the world’s third largest importer from the world’s poorest countries after the EU and the US, absorbing nearly 40 percent of their exports.

For a country with such a large domestic market and where trade comprises over 60 percent of GDP, which ranks third in world trade and with the world fastest growth of exports, it is easy to understand why trade is so critical for China’s growth and development.

In June the WTO conducted the first review of China’s trade policy. The overall assessment is a positive one. Even if there are still areas that need some improvements, the political commitment showed by the Chinese government is serious and responsible, and all members have acknowledged it.

The Chinese implementation of WTO commitments in many areas has set a good example. China’s agricultural tariffs are today lower than in most developing countries; they are even lower than in some developed countries, such as the European Union or Japan. China also provides fewer trade-distorting subsidies than the US or the EU. And its industrial tariffs are today the lowest of all the developing countries.

There are, however, other areas where work needs to continue. For instance, in the area of Intellectual Property Rights (IPR) protection, we have seen important progress made by China this year. We know that it will take some time to solve and will require the collective efforts of all countries involved. The review has also identified new, creative non-trade barriers replacing some of the old tariffs; these will need to be addressed.

A successful Doha Round can provide China with a stable and predictable global trading environment and offer the prospects for another 10-15 years period of peaceful economic development. In the Doha Round, we are negotiating the trade regime which will apply to all its members for the next 10 years. A trading system based on strong multilateral rules is the least expensive insurance policy against the risks of protectionism available to China and to the world economy.

There are some signals that trade protectionism whether in developed or in developing countries could be on the rise. Given China’s insertion into the world economy, multilateral trade opening and strong multilateral discipline are the best means to safeguard China’s trade interests whether home or abroad. Without the Doha Round and without a well-functioning WTO, China could well be one of the biggest victims. (END/COPYRIGHT IPS)

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By Pascal Lamy and - -
GENEVA, Apr 1 2006 (IPS)

The end of this year marks the deadline for negotiations of the Doha Round of the World Trade Organisation (WTO), writes Pascal Lamy, WTO Director-General. The date was not picked out of the air: it is the day the US Trade Promotion Authority Act expires, the author writes in this analysis. The Act gives the US president \’\’fast-track\’\’ authority to enter into trade agreements which the US Congress must then submit to an up-or-down vote without amendment. If this deadline is missed, trade liberalisation on the scale envisaged by the Doha Round would become impossible to achieve in the near future. The main loser would be the developing world. The main aim of Doha is \”development\”, in other words, redressing the existing imbalances in multilateral trade relations. We are now faced with a difficult situation. The Hong Kong Ministerial Declaration called on countries to complete the \”modalities\” for the agricultural and industrial goods negotiations by 30 April. In the services areas, the Declaration called for revised offers to be submitted by 31 July. For these deadlines to be met, all actors will need to move.

The end of this year marks the deadline for negotiations of the Doha Round of the World Trade Organisation (WTO).

The date was not picked out of the air: it is the day the US Trade Promotion Authority Act expires. The Act gives the US president ”fast-track” authority to enter into trade agreements which the US Congress must then submit to an up-or-down vote without amendment. If this deadline is missed, trade liberalisation on the scale envisaged by the Doha Round would become impossible to achieve in the near future.

Were the Doha Round to fail, the main loser would be the developing world. The main aim of Doha is “development”, in other words, redressing the existing imbalances in multilateral trade relations.

The smallest and weakest economies would also be hard hit. For them, the multilateral process acts as an “insurance policy” against the pressures exerted by the strong in bilateral trade accords.

The other major loser, however, would undoubtedly be the WTO itself, the system that has served the collective interests of 150 different members and that has ensured trade opening that is adapted to changing realities and is based on a consensus between us all.

Last December, the WTO Hong Kong Ministerial Conference led to progress on some fronts. It also set a series of important deadlines to pave the way for our work this year. Hong Kong represented a modest success. Indeed, in Hong Kong only two outcomes were possible: modest success or serious failure.

The centre of the Doha Round is agriculture. This is logical given that the agricultural sector is several trade rounds behind industrial goods. The Agreement on Agriculture did not come into force until 1995. The agricultural sector has not benefited from the 50-year process of trade liberalisation that we witnessed in industrial goods.

In agriculture, Hong Kong secured a deal that involved all three pillars of the negotiations: export subsidies, domestic subsidies, and tariffs. Countries agreed to the elimination of export subsidies by 2013, with the removal of a substantial part by 2010. Europe lived up to the unanimous demand that had been made of it in this regard by the developing world. In Hong Kong, members also agreed to make “effective cuts” in trade-distorting domestic support.

It was also agreed that the biggest subsidisers would cut their subsidies the most, with the EU, the US, and Japan making the largest reductions.

With respect to tariffs, there was limited progress. The size of the tariff cuts to be made has yet to be resolved.

So what then are the outstanding remaining issues in agriculture?

The first is the magnitude of the reductions in agricultural subsidies in both Europe and the United States. (Needless to say, other members such as Japan will also need to make reductions.)

The second is the magnitude of the tariff reduction that will be required for agricultural products and the treatment of sensitive and special products for developing countries.

In industrial goods, which constitute 80 percent of world merchandise trade, there is an enormous potential for increased North-South and South-South trade. Members agreed to reduce tariffs using a formula that would reduce tariff peaks and the tariff escalation that remains in developed countries, but which would also reduce tariffs in developing countries in a manner suited to their needs and interests.

The Hong Kong Conference also succeeded in addressing a long-standing demand of 32 of our poorest members: rich countries agreed to provide duty-free and quota-free access to 97 percent of all Least Developed Countries (LDC) products on a lasting basis with a view to eventually extending this treatment to all of their products.

In services, Hong Kong opened the door to plurilateral negotiations, encouraging countries to submit collective requests in the services of sectors that are of particular interest to them.

Hong Kong, in my view, was able to strike a careful balance between opening trade in services and maintaining the right of countries to regulate this part of their economies.

We are now faced with a difficult situation. The Hong Kong Ministerial Declaration called on countries to complete the “modalities” for the agricultural and industrial goods negotiations by 30 April. In the services areas, the Declaration called for revised offers to be submitted by 31 July. For these deadlines to be met, all actors will need to move.

While agriculture has been placed at the forefront, the Doha Round is a “single undertaking”, and progress needs to be made on all fronts. To unblock agriculture, the US needs to move on domestic support, and the EU on market access. India, Brazil and other big developing countries need to show greater flexibility on industrial goods. The services negotiations must continue to progress.

This brief overview can be summed up in one sentence: we have no time to lose. The possibility of closing a deal — deciding on whether to succeed or to fail in the negotiations started over four years ago — will be decided in a few weeks. (END/COPYRIGHT IPS)

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By Pascal Lamy
Oct 5 2005 (IPS)

The Hong Kong Ministerial Meeting, set for three months from now, is the WTO’s last and best chance to successfully conclude the Doha Development Round, the deadline for completion of which is already long past, writes Pascal Lamy, the new director-general of the World Trade Organisation.

In this article, Lamy writes that it is difficult to exaggerate the huge potential of this Round for contributing to global growth, correcting imbalances, and promoting development. The challenge is less technical than political. It is about leadership, compromise, countries recognising their common interest in success, and the collective costs of failure.

An issue of particular importance for a number of developing countries is cotton. Part of the problem lies in the WTO and will be addressed in the ongoing negotiations to improve market access and cut subsidies for agricultural products. But the results of these changes will not affect cotton prices overnight. In the meantime these countries need bilateral and multilateral donors to urgently focus their assistance on this problem.

/NOT FOR PUBLICATION IN AUSTRALIA, BRAZIL, CANADA, NEW ZEALAND, CZECH REPUBLIC, IRELAND, POLAND, THE UNITED STATES, AND THE UNITED KINGDOM/

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