The World Trade Organisation (WTO) head, Roberto Azevêdo , has said no member country has sought long-standing issues, including food security-related, to be taken off the negotiating table of the Doha Round talks — aimed at further liberalising global trade. In an exclusive e-mail interview to The Hindu ahead of a key WTO ‘mini-ministerial’ meeting at Oslo, Norway, on October 21-22, Mr. Azevêdo said “I talk to WTO members all the time… and their commitment to development is unchanged.”
Referring to the projected world trade growth of just 1.7 per cent for 2016, the lowest rate of expansion since the financial crisis, the WTO Director General said, “We should be looking for policies that will boost trade growth while also promoting a more inclusive trading system…” Pointing out that the major cause of job losses is not trade, but new technologies and innovation, Azevêdo said the real challenge is to bring out policy responses at domestic and global level to adapt to technology and innovation.
Edited excerpts
You had recently said “the dramatic slowing of world trade growth is serious and should serve as a wake-up call.” How should the Oslo meet look into this situation especially in the backdrop of rising protectionism?
The forecast trade growth of 1.7 per cent for 2016 would be the lowest rate of expansion since the financial crisis. The primary cause for this poor trade performance is sluggish economic growth and weak investment activity. While protectionism is a relatively minor factor here, it does pose big downside risks. So we need policies that are designed to respond to these challenges.
For example, I think we should be looking for policies that will boost trade growth while also promoting a more inclusive trading system, to ensure that the benefits of trade reach wider and deeper. We have agreements that help us in this sense. The WTO's Trade Facilitation Agreement (or TFA, aimed to expedite flow of goods across borders) is a good example here as it delivers major gains for developing countries, and facilitates the participation of smaller enterprises in trade. High trade costs affect micro, small and medium enterprises the most.
The TFA helps to reduce trading costs significantly, thereby making it easier for smaller companies to start exporting. We are working to bring the Agreement into force in the near future. India ratified the Agreement earlier this year. To boost trade growth while making the system more inclusive and development oriented is a priority for WTO Members. The meeting convened by the Norwegian government in Oslo can be an important step towards this goal.
What are the ‘new’ challenges for the global trading system? How should WTO and its member countries address them, especially at the Ministerial Conference next year?
The WTO is a member-driven organisation, so it is up to our 164 members to determine the issues they feel should be addressed as we move towards the Ministerial Conference next year – and members are currently having a very lively discussion on this point. After the successes of the last two WTO Ministerial Conferences, members are energised and keen to keep delivering.
In addition to the long-standing Doha issues, a wide range of ideas are being put forward by Members for discussion at the moment – including measures to support SMEs to trade, steps to facilitate trade in services, electronic commerce, disciplines on subsidies that lead to overfishing, and other ideas. Members will decide which of those discussions should progress and how.
Do you think there are any takers now for the 'development agenda' of the WTO's Doha Round negotiations? Is it true that the divorce from the Doha dynamics is almost complete?
I talk to WTO members all the time – in capitals around the world, and at the WTO headquarters in Geneva – and their commitment to development is unchanged. The Declaration agreed by Ministers at the Nairobi Ministerial Conference last year says that all WTO members have a 'strong commitment' to advancing negotiations on the remaining Doha issues.
However, the Nairobi Declaration also made it clear that there are differences of opinion between members on precisely how these issues should be advanced. This is part of the discussion that is happening now in Geneva – but I have heard no member argue that any of the longstanding issues should be taken off the table. They are all too important to be cast aside. Agriculture, for example, is a key priority for developing countries in general. Progress on these issues will of course be difficult, but I think that with fresh thinking, open-mindedness, and a renewed spirit of flexibility, anything is possible.
What are your views on proposals for separate WTO Trade Facilitation Agreements on ‘Services’ (championed by India) and ‘Investments’ (being pushed by China)? Which one is gaining more traction?
I absolutely welcome these kinds of positive moves. Services, in particular, constitute a key pillar in most economies and will grow in importance even more. By coming forward with ideas and proposals on a wide range of issues I think that members can create a more dynamic atmosphere where real progress can be made – and that could include progress on areas which have long been stalled.
I do hope that all Members will keep an open mind when considering such initiatives. They all deserve to be fully evaluated. All Members should have an opportunity to have their ideas heard and should also be ready to hear the ideas put forth by others. We are not in a zero sum situation. We can find benefits and desirable outcomes for all Members if we have a constructive and creative dialogue. As to which ideas are gaining or will gain more traction, I think it's probably too soon to say – but I welcome the increased levels of engagement and positivity that we are seeing, and which these proposals illustrate.
The proposed mega-regional trade pacts such as Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership and Regional Comprehensive Economic Partnership aimed at opening up markets seem to have lost momentum. What does this mean for global trade?
People often assume that negotiating bilateral or regional deals would be easier than negotiating deals in the WTO because our membership is so much larger. That may well be true in some areas, like tariff-cutting, but trade deals are always very difficult. The reason trade negotiations are difficult usually has nothing to do with the number of players around the table and everything to do with their complexity and the political sensitivity of the issues under discussion.
It is also often assumed that regional trade initiatives are a threat to the WTO but again, I would argue that this is not the case. These agreements existed before the WTO, and even before its predecessor, the General Agreement on Tariffs and Trade. So rather than undermining the WTO, these initiatives complement it. The WTO rules still apply to the participants of any bilateral or regional trade agreement. What we do need is a continuous updating of the WTO rule-book. We have been doing this more recently – with the Bali and Nairobi decisions – and we should keep doing it.
Do you think some recent global political developments such as 'Brexit' and support for the proposals of Donald Trump (Republican nominee for US Presidential election) including to pull the US out of the WTO, will affect global trade and WTO? How can WTO address this situation of a globalisation backlash?
First, I think there are important distinctions to be made between anti-globalisation and anti-trade sentiments. However, both strands are deeply rooted on feelings of uncertainty and insecurity about what the constantly changing modern world means to people’s lives. New technologies, innovative management, higher productivity, displacements in the labour market, increased migration; these are all provoking major economic, social and political shifts. These shifts need to be better understood if we are to address them in a positive and effective manner.
As far as trade is concerned, my concern is not that anti-trade arguments are being made in public discourse in advanced countries. My concern is the echo that they attract from the people. That echo reflects real concerns and I think that we all have a duty to reflect on it and to respond. I believe that trade is essential for economic growth and development around the world, but I also believe that trade is imperfect. Despite the overall gains it delivers, it can have negative effects in some parts of the economy. It's important that we recognise that those effects can have a big impact on some people's lives. We have to work harder to ensure that the benefits of trade are more widely shared, and we also have to work harder to make a credible, balanced, powerful argument for trade.
We need to put some rationality back into the discussion. We need a clearer analysis of the challenges before us so that we can tailor our response. The charge often levelled against trade, particularly in advanced economies, is that it sends jobs overseas, largely in manufacturing. Trade can indeed cause this kind of displacement, and we need to respond to it. But actually trade is a relatively minor cause of job losses. In the vast majority of cases – upwards of 80 per cent in advanced economies – the cause of job losses is new technologies and innovation.
So we need to be clear-eyed about the problems in the job market. No-one wants to attack technology – trade is a much easier scapegoat. But the wrong diagnosis leads to the wrong medicine. And, when trade is considered the main issue, all too often the suggested prescription is protectionism. This medicine would harm the patient, rather than help him.
The real challenge is to adapt to technology and innovation. This will require a range of policy responses at the domestic level and at the global level. At the domestic level, any effective response will have to be horizontal and involve much more than a mere re-calibration in trade policies. Such response will need to include actions in education, labour training and re-skilling, investment financing, support for the SMEs and the unemployed, etc. Actions at the global level could include reforms to ensure that trade is more inclusive and works for everyone, and that SMEs are helped to trade and compete. Many WTO members – developed and developing – are keen to discuss these issues. Time will tell whether progress can be made.
