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Commissioner Lamy’s speech on “The Doha Round: Assessment and Prospects in the European Perspective”

Sommaire: January 30, 2003: Speech by Pascal Lamy, EU Commissioner for Trade, on "The Doha Round: Assessment and Prospects in the European Perspective" at the Getulio Vargas Foundation, Center for Studies on International Economy (Rio, Brazil)

Mr. Langoni, ladies and gentlemen,

for those of you who know Brussels in January, you will understand I am operating at a level beyond the usual diplomatic politesse when I say how nice it is to be here in Rio. I am often asked about the reasons for my visit to a particular country, who I will be seeing and so on. Funnily enough, no-one asks me when I go to Brazil, because the answer is just so...obvious ! Nonetheless, I had also some serious business in Sao Paulo and today in Rio, meeting with business and civil society representatives before meeting members of the new Brazilian government tomorrow in Brasilia.

I am here, in fact, with multi-purposes in mind. Please note: I did not say "multi-functional". I am here not just to meet the new government, including President Lula himself, though of course that is a great honour, and I look forward to my discussions with him in particular. I am here not just to try to help push the EU-Mercosur negotiations forward, and to stress the importance of the adhering to the work programme that we agreed here in Rio last July. I am here not just to tackle the range of bilateral concerns and sometimes disputes, which inevitably arise in a trading relationship now worth over 35 billion euros.

In fact, perhaps most importantly of all, I am here to hold detailed discussions on the progress of the Doha Development Agenda. For those of us in the trade world, with all apologies to the EU-Mercosur process, to the negotiations on the Free Trade Area of the Americas, to the detailed discussions we ourselves have with other parts of the world, the DDA is priority number one. It is Europe's trade priority. So it is very appropriate to ask me to make this topic the principal focus of my remarks this morning.

To begin with, given that the conclusion of the Doha Round is so important both to the EU and (I believe) for Brazil and other members of Mercosur, it is worth remembering why we have embarked upon it. Some of the reasons are rather basic. For instance, in the continuing bumpy outlook for the international economy, we owe it to the rest of the world to try to pilot our way rapidly through to a deal, not least because the DDA will boost global economic growth by further liberalising trade and investment, and by virtue of the stability and predictability that strengthened WTO rules will bring.

Separately, of course, the DDA has a strong political content: it is a key element of our efforts in support of sustainable development, and of coherence between international trade, development and aid policies. That is why we have all spoken for the last year or so of a continuum between Doha, Monterrey (where they held the Financing for Development conference) and Johannesburg where of course the World Summit for Sustainable Development took place only last summer. And we are also looking for much better coherence between the work of the WTO and other international institutions, such as the World Bank, the IMF and other UN bodies, in the context of globalisation and improving global governance. That is extremely important to us.

We have only one or two islands of global governance in a sea of globalisation: the WTO is one, but it is a rather small island, and we need to join it up with the other institutions, as far as we can, to enhance its effectiveness.

But if I may, the most important theme of all remains development. The Doha Development Agenda will only succeed if it makes a real contribution to development, and precisely how we hope to achieve that will be the main focus of my short speech this morning.

Progress of the Doha Development Agenda

How far have we got in the Doha Round ? Well, it is true that it is difficult at this stage to point to concrete achievements, and we are now fourteen months into the Round, and rapidly approaching the mid-point. But the hardened professionals in the trade business, whether they are in Brussels, Brasilia or Geneva, will always tell you that we are roughly at par for the course thus far. Indeed, any Round will always take some time to set up just to establish the structure of the negotiations for instance. WTO Members are generally rather well engaged in this process, putting forward positions, making their priorities clear, laying the foundations for the negotiations themselves. Of course the enthusiasm and energy levels differ, but no one country is identified as the demandeur for the Round, and no one country is trying to block the process.

The EU has been amongst the more active group of participants, as of course we hope Brazil will become now that you have a settled government in office, with a fresh mandate.

Perhaps I should take a moment to explain our strategy to you.

First, we are determined to move forward on the development volet. The Doha Agenda has to be about development.

So we need rapid progress on issues such as the outstanding negotiations on TRIPS and health, where we are trying to fulfil the Doha mandate to find the right mechanism by which developing countries with no pharmaceutical manufacturing capacity themselves can use the TRIPS provisions on compulsory licensing of necessary drugs, whilst safeguarding the importance of the research and development base of the international pharmaceutical industry. And unfortunately, we are blocked at the moment - every country except the US was ready to accept a compromise at the end of last year on the list of medicines which would be covered, and more importantly, the mechanism for considering which new diseases would be covered.

The EU, for its part, is absolutely determined to find a multilateral solution which is workable, sustainable, and legally secure. We cannot rely for very long on individual unilateral waivers or on private donations. Recent announcements are of course welcome, but we need absolute clarity that the deal covers the widest possible list of major infectious diseases and is not a restrictive list. Hence our own proposal which we floated three weeks ago to give the World Health Organisation a role in assessing additional coverage. I will continue to push forward this idea. And to address a Brazilian concern, which we share in Europe, let me say that in case of doubt asking for WHO advice is not in our view a breach of national sovereignty. So, I look forward to hearing the views of the Brazilian government on this vital issue, as much as visiting the Osvaldo Cruz Foundation this afternoon. Brazilian experience in fighting against communicable diseases is extremely valuable to the rest of the world.

We need progress in one or two other areas, such as the question of the implementation of commitments from prior trade agreements. We have successfully solved some of these issues, and the way forward now is to fold the remaining issues into the DDA negotiations. The same idea applies to the specific requests which a number of countries have raised with the aim of ensuring that developing countries have the right kind of special and differential treatment in the WTO.

Here, again, we are sympathetic to the aims, but we are determined to conclude agreements which are trade-creating, and most importantly, work towards the inclusion of the WTO and the global economy. Gone must be the days when we try to argue that special and differential treatment can be applied equally to all developing countries for all time. Much better to look for differentiation within individual agreements, in terms of implementation periods, for example. And gone must also be the days when we try to help developing countries by taking them outside the mainstream system, outside the world economy, creating second-class WTO citizens with diminished WTO obligations, but also diminished WTO rights.

Indeed, it is with that very issue in mind that we have pursued development in the other, more traditional areas of the negotiation. For the negotiations on industrial market access, for instance, we have put forward an ambitious proposal, which would result in reduced tariffs across the board. We address in a very tough way the question of tariff peaks and tariff escalation, which would increase opportunities, not just for north-south, but also for south-south trade. But we are not proposing, like other some WTO members, that all countries go to zero tariffs, even within a certain delay. We know that this would be very detrimental to long-term sustainable development of developing countries.

And on agriculture, where everyone in the press here in Rio will tell you that the European Union is unable to move forward, we now, indeed this week, put forward a proposal which would not only slash our import tariffs by more than a third, our export subsidies by nearly half, and reduce trade distorting farm support by more than half, but which also contains specific actions to give developing countries a better deal. Such as the idea that the rich countries should ensure that access at zero duty should be applied to at least 50% of their imports from developing countries, and a special proposal which would allow crops which are key to a developing country's food security to be protected through a special safeguard. And all this when Europe is already exceptionally open to agricultural imports. Don't take my word on this - ask your own exporters! For we already absorb 45% of Latin America's agricultural exports and four times more from Brazil than the US do.

Of course I accept that the EU has a relatively defensive position on agriculture. We are not going to agree to dismantle the CAP. We do believe agriculture is different - intimately tied up with how we run our rural economy, our rural society, indeed the whole rural landscape. But we accept that if we support agriculture, we have to do it in ways which do not distort the world trade system. And that is what the whole process of CAP reform is about, and that is how we are now in a position where we can put a real agricultural offer on the table.

And finally, we can and should ensure that developing country concerns are fully taken into account in the rule-making issues. We are ready to do so on topics of concern to developing countries, such as anti-dumping. Developing countries have understandably pushed very hard in Doha to have this on the table, and they have the right to expect the topic to be treated properly.

In other words, we have to get our thinking out of boxes. In particular, we should absolutely avoid, at all costs, the idea that developing countries should focus on "development issues" to the exclusion of their involvement in market access and rules issues. What developing countries need is better market access. And I am used to hearing Brazilian negotiators say this, loudly, particularly on agriculture! But not only that. Brazil, and other developing countries, also need better rules to turn this market access into a reality. I hear much about non-tariff barriers here in Brazil. That is what we are talking about. Which is why it is a mistake to see rules in this negotiation as a developed country, or more particularly, as an EU obsession. New and better rules governing world trade concern us all.

The next step: the Cancun Ministerial in September

I am often asked if it is possible to conclude the Doha Round within the agreed deadline, that is to say by the end of 2004. After all, people say, the Uruguay Round took seven years, and it took another seven years to launch the Doha Round. Implicitly, the trade world doesn't move that fast. Well, I don't accept these calculations. Conventional wisdom is a terrific excuse for doing nothing. Where I do agree with commentators is that we absolutely have to have a good result in Cancun, in September this year, if we are to conclude by the end of 2004. Cancun is a key staging post to the Round. And when I come to assess the bilan for 2003, it will be positive or negative largely depending on how the Ministerial meeting in Cancun went.

Most importantly, Cancun has to gather together the loose horses within the concept and spirit of the Single Undertaking. That is to say, the Doha Development Agenda is one single building, and each of its components is an integral part. If Cancun does not succeed in setting out a satisfactory basis for the conclusion of all parts of the negotiation, there is a risk that the building will fall.

In particular, Cancun needs to take the necessary decisions on the Singapore issues - competition, investment, procurement, trade facilitation – where although WTO members are talking rather productively about the content of the future agreements, we need a collective decision on the modalities of the negotiations in these four areas. And we should not consider that these issues are only of interest to developed countries. Take trade facilitation. Brazilian business and exporters tell me, as they do to my friend Luis Fernando Furlan, that what they need is cutting red tape in customs and administrative procedures in order to foster trade. Take investment. Sustainable investments depend largely on stability and predictability of the regulatory environment. We are proposing to establish common minimum standards that will support the development of such an environment in particular in developing countries. As you see, such improvements should, in our view, respond to the needs of all WTO members.

We also need to see more progress on trade and environment, where we have thus far been rather disappointed by the lack of progress. We ought to be able to get to agreement on one part of the trade and environment agenda by Cancun, namely to ensure that the on-going negotiations are open to observation by the UN Environment Programme (UNEP) and by representatives from the Multilateral Environment Agreements (MEAs). This would only serve to build confidence in the rest of environment-related negotiations, but without prejudicing agreement on that.

The outcome on these issues will largely depend upon countries like Brazil to engage constructively and proactively. I will devote much of my contacts with the Brazilian authorities to discuss this.

And it follows that in the run-up to Cancun, we must build confidence by meeting each of the various interim deadlines as they come up during the course of this year. It is already - and regrettably - the case that we have missed one or two thus far, notably the deadline for the solution on access to medicines, which was supposed to be agreed by the end of last year. Here, I have to say once again how much I regret the decision the US took last year, given that we otherwise had a consensus to put this sensitive and important issue to bed.

And to return to agriculture for a moment, one of the most important deadlines we face is to find an agreement on agriculture modalities by end March. The EU has no problem with this deadline - indeed we have already launched a fairly solid, rather ambitious proposal on modalities, and one which is development oriented with a view to building bridges between north and south. But to argue that modalities is the be-all and end-all of the Doha process would be a great mistake. They are a necessary step in order for negotiations to start on more precise numbers.

And so, I hear you say, what is the link between modalities and other reforms, such as with Franz Fischler's cleverly worked package for further agricultural reforms? Answer: it may impact positively on the EU's margin of negotiations on the numbers or precise wording, and this can be important at the end of the day. But we can, and intend to, negotiate in a rather substantial way on modalities, by the end of March, within our existing system. I hope this becomes rather more widely recognised in Brazil because it is an important point.

Before I come to a halt, two more important components for a successful Ministerial meeting in Cancun. First, all WTO members have to keep to the pledges that they made on trade related assistance. For its part, the EU is fully prepared to play its part, and as the record shows, we have provided targeted and extensive assistance to developing countries for their participation in WTO negotiations.

And secondly, if rather prosaically, the members of the WTO, and particularly the Ministers who will carry the can in Cancun, have to stay in very close touch with each other. We continue to support very actively the process of "mini-Ministerials" whereby a group of both developed and developing country Ministers gets together every three months or so to try to develop political momentum and to break the key deadlocks in the negotiations along the way. But outside these meetings, there is also a non-stop programme of formal and informal contacts between different groups of Ministers. So not only am I looking forward to taking up my existing friendships with Celso Amorim and with Luiz Fernando Furlan, but I look forward to seeing them on the road to Cancun, starting in Tokyo for the next Mini-Ministerial meeting in mid February.

If I may conclude, therefore, 2003 will be a crunch year for the Doha Development Agenda. The year ahead will not be an easy one, and we will only succeed in Cancun - and of course in the Doha Round as a whole – if there are efforts from all, including both the EU and Brazil. But even though we have it all to do this year, the process is still broadly on track.

  • Ref: SP03-209EN
  • Source UE: Commission Européenne
  • UN forum: Autres
  • Date: 30/1/2003

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