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Keynote
Address by H.E.Dr.Supachai Panitchpakdi |
Your Excellency Sheikh Hasina, Prime Minister of
Bangladesh, Excellencies, Distinguished Speakers and Scholars, Ladies and
Gentlemen
1. First of all, I would
like to express my thanks and appreciation to the International Chamber of
Commerce (ICC-Bangladesh) for inviting me to participate in this prestigious
event. It is indeed a great honor for me to be able to deliver a speech before
such a distinguished and diverse audience.
2. The topic which I have been entrusted with today is “WTO
: Trade Liberalisation and Concerns of the Developing Countries” and I
understand that I was invited here owing to my current position as Minister of
Commerce from a developing country as well as my future capacity as Director
General of the World Trade Organisation (WTO). However, in giving this speech I
consider my views to be coming wholly from a development and economic
perspective since I believe that it is a moral obligation for all of us to
address the concerns of developing countries, irrespective of our positions or
nationalities.
Ladies and Gentlemen,
3. There is no denying that the world in which we live in today is much more integrated and interdependent than the one that we lived in only a few decades ago. The advances in industrial, transportation and communications technologies as well as the successive rounds of trade negotiations under GATT/WTO have resulted in huge increases in the volume of world trade over the last fifty years.4. For its proponents, trade liberalisation promotes efficiency in the allocation of resources bringing about economic growth and rising living standards. However for some of us there are no words in the dictionary which are more threatening than the words “trade liberalisation” and “globalisation” since they denote the loss of culture, tradition, jobs as well as the widening gap between the rich and the poor.
5. I think both sides are correct in their outlooks because free trade brings with it not only the opportunities but also the challenges and the threats. As for Thailand we have relied on exports as the engine of economic growth for the past two decades and two-way international trade accounts for approximately two-thirds of our Gross Domestic Product (GDP). But in 1997, after successive years of double digit growths, Thailand suffered a setback which led to the Asian financial crisis. This, coupled with the events in Seattle last year, seem to favor the proponents of protectionism and these days “free trade bashing” is quite an effective strategy for politicians who want to be perceived by the public as being nationalistic. Although in the short run this may be politically popular, I think that we must be careful and not lose sight of the long term economic gains from trade liberalisation since we can no longer live in isolation.
Ladies and Gentlemen,
6. Under GATT/WTO we have seen the level of tariffs for manufactured products in developed countries come down from an average of 40 percent in 1948 to current level of about 4 percent. The current multilateral trading system has evolved into one which is based on strict rules and disciplines ensuring greater predictability and transparency. However the rule based system of the WTO is not without its flaws. As you all know, developing countries and LDCs, who now comprise four-fifths of the WTO’s membership have been calling for greater equitability in terms of benefits derived from trade liberalisation.
7.
From past experience it is clear that we need to do a lot more than practice
free trade. It must be recognised that free trade is a necessary condition but
not a sufficient condition for economic development. In order to be beneficial
free trade has to go hand in hand with fair trade and sound economic policies,
among other things. And while there is no denying that the multilateral trading
system has contributed considerably to world economic growth, there is also a
need to address the structural flaws in order to make the system more equitable
for all its Members.
Ladies and Gentlemen,
8. It has been six years since the conclusion of the Uruguay Round and many developing countries are reluctant to support the launch of a new round of trade negotiations due to the lack of benefits, and problems arising from the implementation of the UR agreements, especially those concerning TRIPS, Sanitary and Phytosanitary measures (SPS), Technical Barriers to Trade (TBT) agriculture and textiles agreements.
9. In intellectual property rights, while companies have been able to protect their investments and innovations, serious considerations have to be given to ensure that the world population are not deprived of basic humanitarian needs such as cheap medicines and that their traditional knowledge and bio-diversity are not exploited. In the area of textiles and clothing the liberalisation commitments have only been implemented half-heartedly due to the practice of backloading by the developed countries, while world trade in agricultural goods continue to be distorted by tariff peaks, tariff escalations, export subsidies and domestic support schemes which prevent developing economies to realise their comparative advantage in areas which are so vital to their interests. And while the eight rounds of negotiations under GATT/WTO have been successful in reducing the level of industrial tariffs, new disguised barriers in the form of SPS and TBT measures have surfaced. These measures have hindered market access for exports from developing countries who simply do not have the expertise to match the excessive technical requirements. Hence it is vital that developed countries give more technical and financial assistance to developing countries in this area while at the same time ensuring that their standards and regulations are not higher or more stringent than is necessary to achieve legitimate policy goals and that they reflect the real needs of the consumers.10. These problems that I have just mentioned have also been further compounded by the economic slump which has led to political backlashes in many developing countries and LDCs. The lack of benefits from Post-UR liberalisation has made it difficult to solicit public support for the passing of certain laws in order to comply with UR implementation commitments. Furthermore, the uncertainties associated with greater market openings have supported claims that the benefits from a new round and further trade liberalisation do not justify the economic and social costs arising from it.
11. From the Uruguay Round experience it is also apparent that most developing countries lack the necessary financial and human resources to reap the benefits from the trade liberalisation process. To address this problem the intensification of efforts would need to be stepped up under the WTO itself, and that between the WTO and other organisations, such as UNCTAD, the IMF, and the World Bank on the issue of capacity building and technical assistance to help less advanced members integrate fully into the multilateral trading system. As you may be aware, I also happen to be the President of the UNCTAD X and I think the less advanced countries can certainly use UNCTAD’s expertise to analyse trade, investment and development issues. This will help create more coherent policies and create a positive agenda that can assist developing countries to reap greater benefits from the multilateral trading system.
12. It must be recognised that developing countries are a long way behind developed countries in terms of economic development and hence Special and Differential treatment (S&D) is needed to level the playing field and help them integrate smoothly into the multilateral trading system. The S&D provisions that were part of the Uruguay Round, and regarded as concessions by developed countries to bring LDCs on board, have not really been implemented and thus the promised benefits from the UR have yet to be realised. The current works in the WTO to boost confidence such as the QUAD proposal to grant least developed countries tariff-free and quota-free treatment is praiseworthy. However for there to be significant benefits the same condition needs to be applied to more products which are relevant to less developed economies, such as agriculture and textiles, as well as extended to developing country members. Indeed, as developing countries constitute the largest group of countries in the WTO, such provision would greatly heighten the trust in the WTO’s system to create a more open and fairer world trading system.
13. With the new round of WTO possibly being called a “Development Round” we also need to give serious thoughts to the negotiations process within the WTO. With the membership now reaching 139 countries, of which four-fifths are developing countries, LDCs and economies in transition, the developed countries can no longer hold exclusive meetings, draw up their agenda and force the rest of the Members to accept it afterwards. The Green Room process, whereby only twenty-five or thirty Members were invited had proved to be a major problem at the Seattle Ministerial Conference. Many developing countries were upset because they had no part in the decision making process and efforts to relaunch a new round of trade negotiations will likely face the same difficulties until the decision-making process is rectified. Indeed there are ways to improve the process. For instance, the Green Room meetings could be broadcast to the General Council through closed-circuit television. In this manner, all Members will be aware of the discussions without decreasing the effectiveness of the process by opening it up to too large a group.
Ladies and Gentlemen,
14. In conclusion, it must be emphasized that the collapse of the Seattle Conference was a wake up call for all WTO Members that they need to give greater consideration to the needs an interests of developing and least developed country Members. At Seattle it was clear that developing countries were better prepared than in the previous rounds of trade negotiations. In effect this means that future trade negotiations can come about only if they are beneficial to all. As such, while it may seem an uphill battle in our efforts to establish a more equitable multilateral trading system, once the battle is won and necessary reforms are made, I hope to see an emergence of a new and more effective World Trade Organistion (WTO) which serves the interests of all its Members. I think that we all stand to gain a great deal from the multilateral trading system of the WTO, since it would not only offer predictability, transparency, and certainty in trading pursuits but also access to markets and resources required for growth and development. The increase in the number of active participants can greatly enhance the substance of global liberalisation, and thus strengthen the multilateral trading system.
Thank you for your kind attention.
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