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DG Azevêdo In India: Flexibility Is The Essential Ingredient For The Global Trading System

Director General of the CII, Mr Chandrajit Banerjee, President Shobana Kamineni, Special Secretary Anup Wadhawan, Ambassador Deepak, Leaders of Indian industry, Distinguished guests, Ladies and gentlemen,

Good afternoon.

I am pleased to be here again at the Confederation of Indian Industry. Thank you for your kind invitation.

Each time I come to India, it is great to have the opportunity to interact with the leaders of Indian industry.  

I would also like to thank the Indian government, and Minister Prabhu in particular, for convening the Informal Ministerial meeting which brings me to New Delhi today. 

I am very pleased that India has taken this step, which comes at a key moment in global trade. I applaud the initiative. It shows India’s engagement with and commitment to the multilateral trading system – and real leadership as well. Whatever issues the global economy is facing today, all can be better managed through coming together in a spirit of cooperation, dialogue and discussion.

So, once again, I would like to thank the government and Minister Prabhu for this important initiative.

And in having these ministerial discussions on trade issues, it is vital that we listen to the users of the trading system. That means talking with a range of stakeholders, including the private sector.

It is through business that many of the positive effects of trade are transmitted to our economies and communities. You are the job creators.

And of course the Confederation of Indian Industry plays a very important role, supporting trade and investment in the country, and helping to inform the government’s positions on trade issues.

As WTO Director-General I certainly value our ongoing dialogue.

After years of sluggish growth, trade expansion has been picking up around the world. It is growing at a sustained pace that we have not seen since the global financial crisis.

Global trade growth last year was around 3.5% and early indications for 2018 are positive. Our latest World Trade Outlook Indicator shows that merchandise trade volumes, export orders and air and sea freight traffic are all above trend, suggesting that first-quarter trade growth is continuing apace.

However, we have been warning for some time that there are many risks to this more positive outlook. And these risks are continuing to grow. In recent weeks, we have seen the spectre of protectionism rising again.

There was the announcement by the US of new tariffs on steel and aluminum. In response, we also heard announcements of other potential trade restrictive actions by numerous other economies.

This is of real concern. The risk of escalation is clear.

I am talking to all sides to try to resolve this situation. We all need to work together to step back from the brink. Instead of escalating tensions, we need to find ways to resolve them constructively. 

And, more than ever, we need to keep strengthening the multilateral trading system. We must ensure that the system is robust, and that it is responsive to its members’ needs and priorities.

It is worrying therefore that the WTO’s Dispute Settlement System is facing a big challenge with the impasse in the nominations for the Appellate Body. This is a serious concern for us all – as the disputes function underpins the whole trading system. I am working with members here, and urging them to actively engage towards finding potential solutions.

We will continue these efforts.

An important part of strengthening the trading system is delivering new reforms – and we have shown that the WTO can produce meaningful results.

At our Ministerial Conferences in Bali in 2013 and Nairobi in 2015, WTO members delivered very important outcomes, including for example:

  • the Trade Facilitation Agreement,
  • the Bali Decision on Public Stockholding for Food Security Purposes, and
  • the decision to abolish agricultural export subsidies.

Members also agreed on a number of steps on cotton, and measures to help the poorest countries to boost their trading potential.

These measures represent some of the biggest trade reforms in a generation – and they will have a major economic impact. For example, implementation of the Trade Facilitation Agreement alone could cut trade costs in India by between 12.2 and 13.9 per cent.

This Agreement entered into force last year, after the Agreement was ratified by two-thirds of the WTO membership – including India.

Last year we also saw the entry into force of the amendment to the TRIPS Agreement, which helps developing countries access generic medicines at more affordable prices.

This shows members’ commitment to the multilateral trading system – to agreeing reforms and seeing them through to implementation.

The latest step on this journey was our ministerial conference in Buenos Aires in December last year. We didn’t manage to deliver final, substantive agreements this time, and this was particularly disappointing on public stockholding. But there were some positives on which we need to build.

The meeting was conducted in a very constructive and well-organized manner. Moreover, it was completely open and transparent. We also saw very high levels of political support for our work, with the tone set on day one by the Declaration from four Latin American heads of state and five Presidential envoys.

And we saw strong engagement from other stakeholders. The Business Forum convened by Argentina was a notable success. Indeed, it was great to see senior representatives from Indian industry attending.

Ministers adopted a number of measures in Buenos Aires including:

  • the decision on the e-commerce work programme and to extend the moratorium on customs duties for electronic transmissions;
  • the decision on TRIPS non-violation and situation complaints;
  • the decision on the work programme on small economies; and, significantly,
  • the decision on fisheries subsidies.  

While the fisheries subsidies decision was not the ambitious outcome that many were hoping for, including myself, it was a step forward – and it includes a commitment to deliver on a key target of Sustainable Development Goal 14 by 2019.

On public stockholding work will need to continue. As I have said before, this is of paramount importance to a large number of members. However – as in several other areas – not enough progress has been made and I would urge India and all the other proponents to look for ways to take this issue forward. 

Members also committed to continuing negotiations on all issues, including on those areas where progress has eluded us since the launch of the Doha Round. This is very important. 

We have to continue pushing forward on all remaining issues, including:

  • the three pillars of agriculture, namely domestic support, market access and export competition, as well as
  • non-agricultural market access, services, development, TRIPS, rules, and trade and environment.

If we want to make progress on these vital issues, we need to face up to the problems before us. The pledges of support for the system that we often hear need to be matched by deeds.

A frank and meaningful dialogue on how we can move forward is essential here, and the meeting convened by the Indian Government and Minister Prabhu provides a timely and valuable opportunity to do so.

It was also notable in Buenos Aires that there was an outbreak of dynamism. Many members launched a number of open-ended initiatives in some other areas of work:

  • A group of 71 WTO members launched a more intensive discussion on e-commerce. That’s almost half of the membership and accounting for around 77% of global trade. That group and 13 other delegations – totaling 84 countries – met for the first time last week in Geneva and I understand there was considerable enthusiasm to move this initiative forward.
  • Similarly, a group of 70 members launched work on investment facilitation. Those members, accounting for around 66% of global inward FDI, met for the first time last week, along with 27 others who have not signed the initial declaration but who want to follow these discussions. 
  • In addition, a group of 88 members launched work on reducing obstacles which prevent micro, small and medium enterprises from trading.
  • And 118 WTO members and observers agreed to take action on trade and women’s economic empowerment.

There have been meetings under each of these initiatives in recent weeks. In each case there seems to be real momentum. And it is very interesting to look at the make-up of these new groups. They do not represent a north-south divide. Instead, they encompass developed, developing and least-developed countries, big and small.

Of course each member needs to determine for themselves whether and how best to engage in these areas.

It is very encouraging, in my view, that each of these initiatives is being conducted in an open, transparent and inclusive manner, with even non-signatories of the original declaration being invited to participate in the meetings if they so wish. 

So that’s where we stand after MC11. Our task now is to find viable ways forward.

When I look at how we might move ahead it always comes back to one point: flexibility.

If members are not prepared to put themselves in others’ shoes and seek compromises, then we have little hope to move forward. The approach that we have often seen of ‘I get what I want or no one gets anything’ is very destructive. It does not encourage flexibility or efforts to find common ground.

Therefore, we need to find ways of increasing the levels of flexibility that we show to each other. And the system allows for different and very flexible approaches. 

In terms of how we build up momentum in this post Buenos Aires period, we need to pursue work across a number of different fronts. 

Clearly this needs to include those issues that we have been working on for a long time, and which are of central interest to so many members. This includes, for instance, domestic support in agriculture, food security, services and development, among others.

There is also scope for work in other areas that have been put forward for discussion. 

India herself has put forward ideas on trade facilitation in services. I would encourage members to keep building on this work. 

In every instance, including the open-ended initiatives launched in Buenos Aires, it is the proponents who are driving forward the discussions on the issues they want to advance.

It’s true that the desire to talk about different issues has not been welcomed by all. But we should keep conversations in the WTO. Otherwise, they will not be open to all. And they most likely will come back to the WTO later on. So everyone should have the opportunity to shape these conversations early on.

But of course it is up to each member to decide whether they want to be a part of these conversations or not.

And let me be clear about two points:

  • First, at this point members are only discussing these issues – not negotiating. If you sit down to simply discuss and better understand an issue, you are not making a commitment to anything more than that. There is no commitment to start negotiations.
  • Second, simply because these discussions are under way it does not mean abandoning issues that are already on the table and that need to see progress. In fact, one may even argue that by adding other elements into the mix, that might in fact help with progress in other areas where progress has eluded us for so long.

I would conclude by reiterating that in a system with 164 members of different sizes, different priorities and different stages of development, the only way to advance is by being flexible. This is the essential ingredient.

And again this will be a focus of our discussions at the informal ministerial meeting here in New Delhi.

We need the system to work.

We need it to promote stability, growth, job creation and development.

And most importantly we need it to promote global economic cooperation, especially in testing times.

India has always played an important role in the WTO. We need a constructive approach from all key members in order to protect and strengthen the multilateral trading system. 

The Confederation of Indian Industry can also play an important role here. We need you to continue working with the Government, informing our discussions and bringing forward the issues that matter most to you.

So stay engaged in the debate. Come to Geneva. Join our WTO ‘Trade Dialogues’ business summit later this year.

Thank you.

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Publication  World Trade Organization [5F]
Core Series Globelex ,GPETR
Topic codes

98IGO , 151WTO

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