Forgive this brief intrusion into your busy days, but I thought it prudent to update you on our Doha Round negotiations in advance of your meeting later this month in Geneva.
Each of you has informed me that your objective for these talks is to conclude by the end of the year. You have all said current trade rules, agreed in 1994, are not equitable enough for developing countries and do not sufficiently cover important elements of trade in the 21st century. You have expressed concerns about the signals a collapse of the talks might send to a global community reeling from financial disruptions, food shortages, soaring energy prices and the deteriorating health of this planet we all must share.
Lastly, every one of you worries about protectionism surging ever more menacingly into the political debate.
I share your sentiments, so I must confront you with an uncomfortable truth: The coming weeks represent the moment of truth for the Doha Round. If we are to conclude the Doha Round, we must strike a deal this month on trade in agriculture and industrial goods, provide clear signals on opening services markets and clear the decks on the remaining issues.
A deal in agriculture and industrial goods would generate an unstoppable momentum and bring quick resolution to the Round. It’s not easy, I know. You are being asked to fundamentally change a system of farm and manufactured trade.
Rich country ministers, you have accepted cuts in trade-distorting farm subsidies of around 70 percent, and farm-tariff cuts of about 50 percent. You have agreed to sharply reduce your few remaining high industrial tariffs, which very largely apply to goods exported by developing countries.
Emerging country ministers, in exchange for these greater market opportunities, you too have agreed to make a contribution to open trade, including among yourselves. This contribution will be smaller than for advanced countries, but it will be a contribution nonetheless. Ministers from our poorest and weakest members, you have participated in these negotiations with far greater commitment than ever before. You know this agreement will create new opportunities in the global marketplace and, coupled with an effective Aid for Trade package, could transform entire sections of your economy.
To conclude a deal will require courage and some of you may be wavering. So, let’s assess collectively what we stand to gain from a deal and what we would lose without one.
First, more open trade would generate wealth. When the cost of nearly everything has become more expensive, greater economic growth is essential.
Second, this Doha Round would be a powerful insurance policy against protectionist surges. At a time when financial markets are unsteady and unemployment is rising, many politicians find it easy to blame foreigners and suggest protectionism may be the cure for a nation’s ills.
Third, if we want to promote greater growth and development in Africa, Asia and Latin America, we need to change our rules.
Fourth, the food crisis has illustrated clearly how injurious trade-distorting subsidies and peak tariffs are to developing country farmers.
Bad trade policy is but part of the problem and trade offers only part of the solution. To address the supply-demand imbalance we face today we must invest more in agriculture production in the developing world. Boosting supply, though, does not mean import dependent countries would have enough food. This demand can only be met through more trade.
Lastly, an inability to strike a deal would not bode well in geopolitical terms. Many countries have invested a great deal in these negotiations and are likely to be highly frustrated by a failure. Do any of you seriously believe that an agreement on climate change, immigration or reform of international institutions would be likely in the aftermath of a Doha collapse?
Last week, I proposed to members of the World Trade Organization that you come to Geneva for the week of July 21 to bridge gaps in your positions. They agreed because they know final decisions on the most sensitive matters can only be made by you. At the moment, there remains much work to do to prepare for your arrival. This is why many of you have sent senior officials to Geneva to resolve as many of these differences as possible ahead of your visit. I’m very glad these officials are here, but I need to tell you we need more progress – soon. These officials operate on instructions from you. A word in their ears now to show more flexibility at the negotiating table would save you all a lot of headaches when you get to Geneva.
I believe the chances of reaching agreement this month are better than 50 percent. If I did not believe this, I would not have asked you to come. But success is not guaranteed and I must tell you that an inability to reach accord by the end of the month means our chances for success in the Doha Round would be much less than 50 percent. Agreement is within our reach, but all of us will have a stretch a bit to get there.
I look forward to seeing you in Geneva.
Pascal Lamy is director general of the World Trade Organization