Remarks by DG Azevêdo
Présidente de Sarnez,
Mesdames et messieurs,
Bonjour. C’est un grand plaisir de vous rejoindre aujourd’hui, et de discuter de l’avenir du commerce mondial et de l’Organisation mondiale du commerce.
Je remercie la Commission des Affaires Étrangères pour son aimable invitation. Et, si vous me le permettez, je vais maintenant passer à l’anglais.
France is a hugely important member of the multilateral trading system. President Macron, and previous French leaders, have been very vocal in support of multilateralism in general, and the multilateral trading system in particular.
So I am pleased to have the opportunity to strengthen that partnership today at the Assemblée Nationale.
Parliamentarians play a particularly important role in our work. You support us through your advocacy on trade issues, through debating and ratifying WTO agreements, and through the pressure that you apply to your governments to engage on the key issues.
And of course, you help connect the WTO as an organization to your constituents – to the people you represent. This is a very important link. It helps to ensure inclusivity in the global trading system, so that we can ensure that the benefits of trade reach everyone.
In my view, a rules-based framework for global trade is essential to that end.
I will address some of the current challenges in global trade in a moment, but first I want to say a few words about the trading system itself, and why it is so important.
The multilateral trading system, rooted in mutually-agreed rules and practices, provides stability and predictability in trading relations.
This helps to ensure that trade can flow as freely and openly as possible. It also ensures that this happens in a way that fully respects the space needed for the implementation of legitimate public policies.
At its root, today’s system was a response to the economic chaos of the 1930s.
Escalating protectionism, rival trade blocs and competitive currency devaluations fueled huge economic insecurity.
After the war a concerted effort was made to avoid making the same mistakes again. Governments pursued greater international cooperation to fuel economic recovery and ensure political stability.
The initial plan was to create an International Trade Organization – alongside the International Monetary Fund and World Bank.
However, the creation of an ‘International Trade Organization’ proved too ambitious and the more limited General Agreement on Tariffs and Trade was established.
It was only much later that this original vision was realized. It was in 1995, when the World Trade Organization was created to replace the GATT.
France was actively involved in all this. The country was a founding member of the GATT, and also of the WTO.
Today, the WTO is the only organization dealing with trade rules at the global level. It now has 164 members, accounting for around 98% of global trade.
In a nutshell, the WTO provides the constitution for global trade, establishing shared principles which underpin trading practices around the world.
It is a platform for discussion and debate on wider trade issues. Members have access to information, not just about national trade policies, but about international trade relations as well, through the WTO’s transparency and surveillance mechanisms.
Members also use WTO councils, committees and working groups to coordinate and debate policies and head-off conflicts. And when solutions cannot be found, members can call on the WTO’s Dispute Settlement System to help ensure that trade disputes do not spiral into larger conflicts.
This system ensures that trade disputes are solved according to an objective and well established set of procedures that are equally applied to everybody. In this way, the system provides an essential mechanism to avoid unilateral actions and to depoliticise trade differences.
Through all of this work, the system has proven to be essential for growth and development globally, helping to lift one billion people from extreme poverty since 1990.
This system has also provided stability and predictability in global trade – holding firm even during the financial crisis.
When the crisis hit in 2008, we did not see a repeat of the 1930s. Protectionism was largely contained, limiting the economic harm. Members knew their commitments, and where the red lines were, thanks in part to this shared system of rules. This is why people say: if the WTO did not exist, you would have to invent it.
I am clear that trade and the trading system deliver tremendous economic gains – for developed and developing countries alike.
But when I say that “trade” brings these benefits, I am not talking about untrammelled free trade. Free trade is not a magic potion that, by itself, cures all economic afflictions.
What is essential is that we maintain a system of rules-based trade.
If the WTO was a free trade agreement it would have been written on a single piece of paper instead of the thousands of pages that make up our rules and commitments.
And these are not rules given from on high. These are agreements and commitments that governments negotiate with each other and enter into freely, on the basis of shared interest.
And they help to ensure that other important governance principles can work hand-in-hand with trade policies.
For example, sustainability is key to the WTO’s mission.
The principle of sustainable development is enshrined in the founding agreement of the WTO – page one, paragraph one.
For example, this is reflected in the flexibilities and special provisions in WTO agreements and decisions, as well as in our capacity building initiatives for developing countries.
The WTO runs a range of training programmes, tailored to the needs of developing country officials.
These partnerships provide vital help to developing countries, especially the poorest, enabling them to better take advantage of trade opportunities.
The principle of sustainability is also reflected in how WTO members deal with environmental matters.
The WTO Committee on Trade and Environment offers a specific forum where members discuss the role of trade to further environmental sustainability.
The data shows that environmental issues are a big part of WTO work. And its importance is increasing. Every year, over 1,000 new environmental measures are notified to the WTO. One in six notifications to the WTO are related to the environment. Twenty years ago, it was one in ten.
It is also important to note that WTO members are free to adopt measures to tackle climate change and other environmental challenges, even trade-restrictive ones, as long as it is not a veiled attempt at protectionism.
Case law has confirmed that WTO members have a large measure of autonomy to determine their own policies on the environment, their environmental objectives and the environment legislation they enact and implement.
We work in close cooperation with other organizations on this front – and many others – to discuss the evolving links between trade and global sustainable development.
It is argued that trade was a crucial factor in the early achievement of Millennium Development Goal 1, which was to cut extreme poverty by half.
Now we want to keep contributing in the achievement of the Sustainable Development Goals.
Just two weeks ago I welcomed United Nations Secretary-General António Guterres to the WTO. He gave a powerful address to the membership, stressing the vital role that trade has played – and must continue to play – in these efforts.
Like the Secretary-General, I am a strong believer in multilateralism as an essential force for good, supporting economic growth, development, stability and peace.
Of course, multilateralism is not easy. It requires continued commitment. It requires ongoing diplomacy, negotiation and dialogue. This was a key theme of the Paris Peace Forum last year.
In challenging times, governments will often be tempted to take the reins and try to solve things by themselves. This seems easier than having to go through the sometimes difficult processes of multilateralism. But in the end, it just doesn’t work. In a non-cooperative approach, everybody loses.
This applies to the trading system as well.
We must continue working to strengthen the trading system, and ensure it is able to respond effectively to the challenges of today’s world.
There are a number of very lively trade issues and challenges before us today.
Clearly tensions remain high. A recent WTO report shows that last year new restrictive measures were imposed on around 580 billion dollars of trade. That is over seven times the level of the year before. New measures have been introduced since that report was issued.
And this is affecting trade growth.
Trade growth stood at 4.6% in 2017. There was hope that trade was regaining the momentum it lost after the financial crisis. But this did not materialise.
In 2018 trade growth was 3%, dropping dramatically in the fourth quarter.
And in 2019 we are forecasting growth of 2.6%. With tensions running high, this should surprise no one.
Yesterday we published our quarterly World Trade Outlook Indicator which gives an early guide to the trajectory of trade growth.
It reported that key trade measures on export orders, international air freight, agricultural raw materials, electronic components, and automobile production and sales are all firmly below-trend.
The overall indicator reading is unchanged from last quarter. It continues to show the weakest reading for ten years.
And this does not capture some of the more notable trade measures that have been announced in recent days.
To put it simply, we are in a situation of huge uncertainty.
This lowers investment and consumption, hitting trade hard. And potentially hitting economic growth everywhere.
We can’t let this situation escalate further.
But it is important to acknowledge that these tensions have not materialised out of thin air. They are fuelled by the genuine cares and concerns of citizens around the world.
Workers are being squeezed by the lingering after-effects of the 2008 crisis and the 4th industrial revolution which is transforming the labour market.
Innovation and productivity are displacing workers in more traditional sectors like manufacturing. In some economies, out of ten jobs that disappear, eight are lost to automation and new technologies.
Of course, new jobs are also created by this technological wave. However, people still need new skills to fill these new positions. The worker that loses his or her job in manufacturing is not likely to be equipped and ready to fill the openings that are showing up in the more dynamic sectors of the economy.
This situation is fostering a heightened sense of fear and uncertainty about the future.
This requires real action in domestic policy to help workers adapt. Governments are seeking to respond to this in their own way.
Globally, we must also respond to this situation. This means working to reduce tensions and ensuring that the system remains responsive.
All of this is reflected in Geneva.
Members are bringing these issues to the WTO. We are dealing with a record number of disputes. And we are doing all we can to help deal with members’ concerns and urgently reduce tensions.
In fact, some see reforming the WTO itself as a step towards resolving some of these issues. The G20 leaders issued a strong statement on this at their summit in December – calling for “necessary reforms”.
While I think there is significant momentum behind the idea of reform, there remains no single answer to the more difficult question of precisely what any such reform should entail.
From my conversations with members, it is clear that the WTO has to be better, work faster and be more responsive.
But no one is talking about tearing apart what we have. Rather, the focus is on taking necessary, practical, concrete steps that can have a rapid impact in driving our work forward.
In terms of the substance, I think the conversations are falling into three broad areas.
The first is how to strengthen the work of the WTO’s regular bodies and committees. One key focus here is an improvement in areas such as notifications and transparency.
The second area is how to improve the Dispute Settlement System, where we currently have an impasse in the appointments to the Appellate Body. This work constitutes a fundamental pillar of the organization and of the global economy. Therefore, finding an urgent resolution here is absolutely critical for the system.
The third area is looking at how to improve our negotiating work so that we can keep delivering new agreements with real economic impact.
There is currently a lot in the pipeline.
Members are continuing to work on longstanding issues where progress has proved more difficult – including agriculture and food security.
Importantly, members are also working hard to meet the 2019 deadline for an agreement to limit harmful fisheries subsidies. This is a hugely important piece of work that would deliver on a key element of Sustainable Development Goal 14.
We have to find ways to reinvigorate our negotiating and deliberative work to deliver on issues of importance for members. We can’t allow multilateralism to become synonymous with paralysis.
I think that our experience over recent years has been instructive. After a long period without progress, we have struck a series of major deals.
In 2013, at our Ministerial Conference in Bali, WTO members delivered the Trade Facilitation Agreement. This was the first major global trade deal in 20 years.
By ensuring that goods can move across borders more quickly, more cheaply and with less red tape, this deal has the potential to increase global merchandise exports by up to 1 trillion dollars per annum.
Then in 2015, at our Ministerial Conference in Nairobi, a group of WTO members struck a deal to eliminate tariffs on a range of new generation information technology products. Trade in these products is worth around 1.3 trillion dollars each year. That’s bigger than global automotive trade.
And, at the same meeting in Nairobi, members also agreed to abolish export subsidies in agriculture. This was the biggest reform in global agriculture trade for 20 years. And it delivered on a key target of SDG 2 on Zero Hunger.
Together, these deals are the most significant reforms to the trading system in a generation. Full implementation will bring major economic benefits.
France, as part of the EU, has played a very important role in driving these deals forward.
These deals also provided some valuable lessons about how to make progress. So what did we do that suddenly made it possible? Ultimately it is all about flexibility.
In a system with 164 members of different sizes, priorities and stages of development, we have found that the only way to advance is by being flexible. A one-size-fits-all approach will not work. We have shown how this can be applied in a number of different ways.
- For example, we can have flexibility in substance. We saw this with the multilateral Trade Facilitation Agreement, where each developing country may ask for technical assistance and may itself decide how fast it can implement each specific commitment.
- And we can have flexibility in geometry. This is the case of the Information Technology Agreement, where only a group of members participate. In this case the zero tariffs of the participants apply for all members.
Besides these formats, we are also seeing members testing new forms of flexibilities.
At our Ministerial Conference in Buenos Aires in 2017, groups of members have launched so called “joint initiatives” to work on some key issues. They include: electronic commerce, MSMEs, facilitation of investments, and the economic empowerment of women.
Another group is also discussing how to make progress in domestic regulation in services.
Not all members participate but these initiatives have significant support. They are open to anyone who wants to join – and they are building momentum.
In January, 76 WTO members announced their intention to launch negotiations on e-commerce. This includes the EU, the US, Canada and China as well as other small and large members. Both developed and developing countries are on board. Together, the participants account for 90% of global trade.
All this activity is very noteworthy. It shows that members are willing to engage in more creative, flexible formats to make progress at the WTO.
It is important to keep momentum. We have some key milestones on the horizon.
We will have our 12th Ministerial Conference in Kazakhstan next year, and members are already looking to define potential deliverables for that meeting.
In terms of the reform debate, the G20 Summit in Osaka in June will also be an important political moment.
Of course, any reform will be very difficult. But it is possible with political will. And reform will be a positive factor helping to reduce the current trade tensions.
We need to keep working hard on all of these fronts if we want to see progress – and we need to use all of the different options and avenues that are available to us.
We have an opportunity to make some essential changes to the trading system so that it can better serve the people of France – and every other WTO member.
The current crisis in global trade has sparked renewed interest in the WTO. People are waking up to how important it is.
The organisation represents the best efforts of governments around the world, working together for 70 years, to find ways to cooperate on trade issues.
So it is in the interests of everybody that we preserve and strengthen this essential public good.
We count on France’s support in that effort.