High
stakes for ministers in Doha
By Mike Moore, Director-General,
WTO
Doha, 7 November 2001
- Tomorrow the World Trade Organization will stage its fourth and most important
Ministerial Conference.
Much is riding on the outcome of this conference: our ability to address an
economic downturn by taking decisive action to further open markets, the development
prospects of three-quarters of the world's population and even people's confidence
that international organizations can function at a time when international co-operation
is absolutely vital.
The situation confronting ministers today is markedly different to that of two
years ago in Seattle. Then, economic prospects in the industrial world were
at their brightest in more than a quarter of a century. In 1999, strong growth
in the industrial world meant lucrative export markets for developing countries.
While access to those markets was not everything developing country governments
would have liked, strong demand from the West meant booming exports figures,
strong growth and improved development prospects.
The other significant difference, of course, is that all of our lives have changed
fundamentally since the dreadful attacks in New York and Washington on 11 September.
Today, for the first time in nearly 30 years, we face the prospect of the major
economic powers going into recession simultaneously. Even if the United States,
Europe and Japan are not all in recession, there can be no doubt that they have
been hit by a major economic slowdown which has adverse consequences for the
entire world. The World Bank now predicts global economic growth will be more
than halved from 3.8% last year to 1.3% in 2001.
Last year, global trade grew by 12% in volume terms, but trade growth this year
will fall to 2% at the most. During the second quarter of 2001, global trade
actually contracted.
It's fashionable to say in some quarters that the rich countries do nothing
for the poor, but the facts tell another story. The Asian crisis of 1997-98
could have been far more lethal had U.S. and EU markets not stayed open to exports
from that region. The U.S. current account deteriorated by over $100 billion
as a result but the economies of the Pacific Rim rebounded.
The slowdown in the US and other big economies means a loss of exports, a loss
of jobs and a decli
ne in growth in many developing countries that depend on
rich country markets. None of this is good for development prospects.
According to the University of Michigan, removing all barriers to trade would
add $1.9 trillion to the global economy. Realistically, negotiators will never
succeed in paring away all such barriers, but the study says reducing barriers
by only a third, would result in an additional contribution to output of some
$613 billion - roughly the size of the Canadian economy. Does anyone seriously
believe that such a contribution would be unwelcome today?
Contraction in trade and output affects the poor countries most seriously. As
levels of official development assistance have declined and with private sector
investors reluctant to invest in many poor countries, governments in the developing
world have sought to raise growth and incomes through trade. Last year, developing
country exports rose by 15%, the best performance in 50 years. Exports from
developing countries comprised 27% of total exported manufactures, up from 17%
in 1990. For the 49 Least Developed Countries, exports jumped 5% to a record
$34 billion.
More than half of Japan's imports of manufactured goods come from developing
countries, while the share in the United States is 45% and rising. But if growth
is contracting in those markets, the developing countries - especially those
dependant on exports -- will suffer disproportionately.
Yet if the economic benefits of launching a broad work programme of WTO negotiations
are clear, so too are the political difficulties. The European Union and Japan
would like to see a broad series of negotiations, including investment and competition
rules and a clarification of environmental rules. The United States would like
rules on trade facilitation and transparency in government procurement. But
for some developing countries these issues represent political problems stemming
from domestic opposition and a lack of capacity to take on new obligations.
For developing countries the issues of agriculture and adjustments in the implementation
of existing WTO agreements are paramount. Brazil and India would also like to
see clarifications on how the WTO's intellectual property agreement affects
public health.
But there is resistance to negotiations on these issues in some industrial countries.
Compromise is required from all sides, because frankly the price of failure
is too high for everyone. Developing countries run the risk of losing those
implementation-related gains on which we hope to reach agreement in Doha. Moreover,
the promise to negotiate a solution for remaining implementation items would
evaporate.
For the United States, the majority of developing countries and the Cairns Group
of agricultural exporters (a group largely comprised of developing countries)
failure to agree on a work programme in Doha may well consign agricultural negotiations,
underway since 2000, to the slow track. The services negotiations, which cover
over 70% of economic activity in the industrial world, may meet the same fate.
For the EU, there would be little hope of resurrecting the issues of investment,
competition and environment in the near term.
Failure to agree in Doha would also represent a setback in the field of international
co-operation and may further undermine public confidence in the ability of international
organizations to serve their owners - the member governments and their citizens.
Last, but certainly not least a failure in Doha would be a major blow to the
multilateral trading system, particularly as it would occur during a weakening
global economy when protectionist pressures are on the rise.
There is something on the table now for everyone. It's time to strike the deal
that can provide buoyancy to a sinking world economy and extend hope and opportunity
to those developing countries that so desperately need it.
-- Mike Moore is Director-General
of the World Trade Organization.