The Role of WTO in the Current Crisis

1. The Role of WTO in the Current Crisis Harsha V. Singh Deputy Director General, WTO 30 April 2010

2. OUTLINE • Present situation • Importance of the present WTO regime • Recent steps taken by WTO • Way Ahead for the Recovery

3. Present situation

4. World economy - severe battering, worst in last 70 years. • In 2009, Volume of Output: • Global Output fell -2.3 % • Developed Countries output fell – 3.3 % • Developing Countries output was + 1.2 % • Colombia’s output increased by + 0.4 %

5. In 2009: • Global Trade volume declined -12 % • Developed Countries trade volume declined by – 15.3% • Developing Countries trade volume declined by – 8% • Colombia’s volume of exports of goods and services decreased by about – 8.2 %

6. Forecast for 2010: • World output volume rise +2.7 % • World trade volume growth nearly +10 % • Exports (developed countries) +7 % • Exports (developing countries) +11 % • Colombia’s Output volume to rise +2.5% • Colombia’s volume of exports of goods and services to increase +6.1 %

7. Fast speed of the turnaround compared to historical experience • In 1930s, protectionism prolonged and deepened the recession • Did not happen this time

8. Some instances of protectionism • These affected below 1 % of world trade • A vital factor was existence of international trade rules (WTO). • But risks remain as long as unemployment remains high

9. We can not go back to business as usual • We need to be vigilant about the risk of back-tracking

10. Importance of the present WTO regime

11. Presence of WTO disciplines meant that: • Countries are aware of actions that would be questioned • WTO disciplines provide reference or a standard for reasonable behaviour

12. WTO Disciplines help countries to monitor and assess actions based on them • WTO gives a platform for interaction, sharing common concerns and taking common initiatives

13. If trade restrictive measure is adopted then: • WTO provides processes and mechanisms for dealing with them • WTO system has been tested • Credible dispute settlement mechanism. Allows to settle disputes peacefully.

14. Reduces tensions and pressures from disputes and disagreements • Promotes orderly and non-disruptive behaviour • Columbia has been: • Complainant in 5 cases • Respondent in 3 cases • Third Party in 17 cases

15. WTO’s Technical Assistance Programme helps improve use of the system: • Since 2008, Columbia has had: • 3 National activities (services, agriculture, trade and environment) • Seminar on trade facilitation • Several training activities covering academics and officials

16. Recent steps taken by WTO

17. During the crisis, WTO also has taken pro-active steps • Several initiatives of the WTO Director General to: • Stem protectionism, keep markets open • Focus on key trade policy initiatives • Reduce tensions and disputes • Contribute to exit from the crisis • Important role of monitoring and transparency for these objectives

18. WTO DG prepared detailed monitoring reports with information : • on policy measures by individual Members during the crisis • in consultation with and using data inputs from WTO Members, as well as information from other sources • discussed by the whole Membership at special meetings

19. Monitoring reportdiscussion: • provides peer review • opportunity to raise and clarify concerns, including specific policies • Gives voice to large number of smaller countries

20. Monitoring Reports showed that countries also adopted: • trade opening or trade facilitating measures • Terminated previously adopted trade restrictive measures

21. Discussion gave basis to WTO DG to carry the voice and concerns of all the Membership (153 WTO Members) to world fora • Such reports give stronger voice to developing countries: • These nations have more difficulty to obtain comprehensive information

22. Monitoring reports provide basis to better deal with political protectionist pressures

23. Another initiative of WTO DG was to emphasise importance of trade finance in facilitating trade: • particularly for smaller businesses and poorer economies • especially if countries not able to raise such finance

24. WTO DG highlighted: • need for treating trade finance different from other types of finance • Trade finance repayment period shorter and repayment more certain • need for international support to assist with trade finance and thus facilitate trade • He worked with other major international institutions on the issue of trade finance • G20 has put aside $250 billion trade finance support to help poorer countries.

25. Evidence was highlighted to show that countries better withstand adverse effects if they have: • adequate safety nets • adequate regulatory frameworks • open trade policy complemented with appropriate domestic policies

26. Emphasised the need for meeting aid commitments for developing countries • Aid for Trade is important part of stimulus in less developed countries • Inter-connected world and common interests • Crucial to keep in mind both present situation and medium term effects of actions

27. Evidence to show that while: • trade decline can cause economic effects • trade links help more rapid recovery • Evidence shows that countries with more open markets and trade links generally able to respond quicker

28. Way Ahead In Recovery

29. We need to: • ensure that stability due to multilateral rules is maintained, i.e. keep markets open • work co-operatively, emphasising interests of all countries, small, medium and large • improve the system to increase opportunities, reduce distortions, and address any unfairness in the system: • keep opening markets and opportunities

30. DDA negotiations

31. Several areas covered, offering many positive opportunities and more level playing field • E.g., agriculture, industry, services, Anti-dumping, Fisheries subsidies, environmental goods and services, certain TRIPS related issues, development concerns, trade facilitation • Columbia is a very active participant

32. AGRICULTURE • More level playing field by reducing trade-distorting subsidies: • major reductions in domestic subsidies in developed countries • elimination of export subsidies • These are important objectives of Columbia

33. Enhanced market access opportunities for primary and processed products: • reduction of tariffs, tariff peaks and tariff escalation • Will encourage processing activities under Columbia’s Productive Transformation Programme • Liberalisation of Tropical Products markets • Tariff-quotas providing market access for sensitive products

34. NAMA • Improved access to markets for industrial products through reduction of: • tariff peaks ; tariff escalation; non-tariff barriers • Strong tariff peak reduction in all developed country markets • Greater market access and greater certainty in major developing country markets • Concerns on Non Tariff Barriers addressed (Colombia should be active in these negotiations)

35. Services • Improved access for services trade • More market opening for most services emphasised by Colombia • (signalling conference and plurilateral negotiations) • Greater transparency and certainty with regulatory regime • More growth and development opportunities: • Services are large part of economy • Services trade is more dynamic and resilient • Service growth has widespread positive effects for economic and social achievements

36. Examples from Other Areas • Improved disciplines on trade-remedies (e.g., anti-dumping) • Greater disciplines for fisheries subsidies • Increased markets for environmental goods and services

37. Increase in markets and decrease in costs due to better trade facilitation • World Bank Report “Doing Business” shows Colombia one of top ten reformers in 2008/2009 • Colombia improved to 37th rank in 2010 from 49th rank in 2009 for ease of doing business • Columbia’s improved custom administration reduced time to prepare documentation by: • 60% for exports • 40% for imports

38. Fairer trading system, and greater participation of small and medium sized developing countries in the international system • These are all important objectives of Colombia, which is both: • A friend of the existing system • Significant contributor to improving the system further through negotiations

39. Thank You