Statement by Richard Wyatt on trade and development

Sommaire: October 26, 2000: Statement by Mr. Richard Wyatt, Representative of the European Community, on behalf of the European Union. Trade and Development.

Mr. Chairman,

I have the honor to speak on behalf of the European Union.

The EU is fully committed to the values, principles and objectives enunciated in the United Nations Millennium Declaration. In order to put them into practice, we consider that trade and the trading system, both at the multilateral and regional level, must provide a significant contribution the realization of the wider sustainable development objectives which are key to realizing a more peaceful, prosperous and just world.

Our action is guided by the conviction, confirmed by real world experience, that trade and foreign direct investment confer large efficiency benefits by fostering the international division of labor and by disseminating the gains from technological progress. This produces economic growth. Hence, by means of their contribution to growth, international trade and investment, both at the regional and multilateral level, are important, albeit by no means sufficient, contributing factors and policies to the goal of sustainable development and the reduction of poverty.

However, while globalization and a full integration in the world economy through trade and investment is bringing, on balance, many benefits to emerging economies, it has not done so thus far for the Least Developed Countries, in particular. This situation is chiefly the result of structural weaknesses of least developed and other low-income economies which need to be addressed through sound domestic economic policies, supported by a collective effort of the international community .In this regard the trading system must also be made much more responsive to the needs of developing countries. In order to so we cannot have a moratorium on trade negotiations. On the contrary, we have to forge ahead with an ambitious and pro-development agenda. Issues relating to the trade and development of the Least Developed Countries will be considered in more detail at the third UN Conference on the LDCs in Brussels in May 2001.

A number of immediate actions are also needed. The EU has spearheaded an initiative in the WTO to grant duty and quota-free market access to cover essentially all LDCs' exports. As far as the Community is concerned, we are ready to work towards full elimination of duties and quotas. This will be an important effort, which - we hope - will be followed by other countries. However, enhanced market access opportunities for LDCs now and for other developing countries in the context of the new round of multilateral trade negotiations, as well as through GSP reform and free trade area negotiations, will easily be missed if their business sectors are not able to seize them. This is why we consider human and institutional capacity building a fundamental priority both in terms of facilitating the implementation of existing commitments and with respect to future negotiations. Pro-poor growth through trade is one of the priorities of EU Development policy and we are working to improve the provision of our trade-related technical assistance to developing countries. We also fully support the efforts, spearheaded by the Director General of the WTO, Mr. Mike Moore, the Administrator of the UNDP, Mr. Mark Malloch-Brown and the Secretary General of UNCTAD, Mr. Rubens Ricupero to revamp the Integrated Framework for Least Developed Countries.

An important overall objective of the WTO is to contribute to sustainable development. However, it is important to bear in mind that the WTO is and will remain a trade institution. Many of the concrete policy measures that are required to help developing countries benefit from increased trading opportunities fall within the primary responsibility of national governments or within the fields of activity of other international organizations. UNCTAD has an important role to play in this respect. A coherent approach to global governance and development should therefore imply parallel efforts to develop the role of international organizations responsible for development co-operation, for environment and social development, and reinforced co-operation between the WTO, the Bretton-Woods institutions and these other international organizations. Next year's High Level Intergovernmental Event on Financing for Development and its preparatory process provides an opportunity for the WTO together with the UN, the World Bank, the IMF and other relevant development actors to jointly address these issues in a coherent way.

A good example is provided by the EU on the issue of trade and labor. A sanctions- based approach is doomed to fail, as Seattle has demonstrated. At the same time, it is clear that the WTO must be involved in a broader dialogue to promote a better understanding of the relationships between trade and social development. Such a dialogue should not be limited to the promotion of core labor standards, but should also include a number of social development issues of broad concern. There is, for instance, a need to understand better the relationship between trade liberalization, job creation and the fight against poverty. Institutions such as ILO, WTO, UNCTAD and the World Bank should participate in such a dialogue. An important objective would be to help national governments to better take into account the social impact of trade liberalization so as to develop policies to maximize positive impacts and limit negative effects.

With regard to future trade negotiations, we are fully aware that, while trade liberalization is everybody's business, industrialized countries bear a major responsibility .in making the trading system more responsive to the needs of developing countries. We will do our part by reducing and in some cases eliminating those distortions that impair access and competitiveness of developing countries in our market, especially in labor-intensive and resource-intensive sectors in which developing countries enjoy comparative advantages. On the other hand, we also expect developing countries to continue on a judicious and country-specific path of liberalization, so that for instance high tariffs, which distort the local economy, create rents and penalize local producers as well as consumers, may be gradually phased-out.

More generally, we must ensure in the new round that the opportunities provided by the multilateral trading system are available to all WTO Members. What can our response be to this challenge? First and foremost it means that a new negotiating round must be balanced -and perceived to be balanced -in that all participants can gain. It means that all members must contribute to setting the agenda, and not just the major players. To allow the necessary trade-offs the round needs to be inclusive of all WTO Members' interests.

In particular, enhancing the contribution of the WTO to the promotion of sustainable development should be considered as a crucial objective for future trade negotiations.

This means that we will have to consider the following actions, inter alia, as part of a new round:

Substantial improvements in market access across the board, including on products of export interest for developing countries. This would imply a willingness by all trading partners to envisage substantial liberalization of sensitive sectors.
New WTO rules on investment, competition and trade facilitation to improve the governance of the world economy. The contribution of such rules to development should be an important objective of the negotiating process. In the case of investment, this implies a gradual bottom up approach to market opening and fully respecting the right of governments to regulate. As regards competition, the central objective should be to strengthen international cooperation; against anticompetitive practices of an international dimension, such as international cartels or transnational abuses of a dominant position. New rule making in these areas should contribute to enhancing the regulatory capacity of developing countries and help all countries to address new challenges raised by globalization.
Clarifying and - if necessary - improving existing WTO rules from a sustainable development perspective. A key issue will be clarifying the relationship between WTO rules and a number of actions taken for the protection of the environment.

The continuum trade-development-environment needs to be effectively addressed at all levels in the 'trade and development' debate. Trade, development and environment can be mutually reinforcing. Trade liberalization can favor environmental efficiency and promote the integration of developing countries into the world's economic system. No doubt, sustainable development cannot be achieved - in particular, in developing countries - without stable economic growth and investment promotion, especially foreign direct investment. At the same time, without environmental protection there cannot be sustainable growth. Pollution and environmental degradation have very detrimental social and economic effects. They also combine as negative incentives for growth and investment.

At the same time there is a need to address developing countries' concerns over eco- protectionism and their perception that there is a conflict between environmental and developmental objectives. This includes avoidance of the use of trade measures for protectionist purposes and avoidance of unilateralism. As the recent example of the Bio-safety protocol shows, the existence of Multilateral Environment Agreements (MEAs) proves that international or transboundary environmental issues can best be tackled in an internationally negotiated context. In this way, we accord high priority to the establishment of a constructive dialogue and co-operation with developing countries. Confidence and bridge building in this regard leads both to better co- operation in environmental matters and also to the identification and promotion of positive synergies between trade liberalization, economic development and the protection of the environment.

These efforts help at the same time to ensure comprehensiveness and policy coherence as requested by CSD8 in April 2000 and the Millennium Assembly in September 2000.

Turning now briefly to the legitimacy issue that is also important from a development perspective, we all agree on the need to foster both WTO transparency and dialogue with civil society. We are fully aware of the problems that a good number of our developing partners encounter in the day-to-day operation of the WTO, as well as in negotiating situations. While there are probably no magic solutions, for LDCs in particular, specific efforts have to be made to strengthen their negotiating capacities.

Finally, it is important to stress that our efforts in the area of regional integration are fully consistent and supportive of our general approach to the trade and development issue, which is mainly directed to pursue the fuller integration of developing countries in the world economy thus benefiting from growth and development opportunities that the trading system offers.

Regional integration can be an important stepping-stone in preparing for their full integration into the world economy. The EU supports regional economic integration initiatives in Africa that are coherent with national economic reform programmes and open towards world markets. In this context, the EU and its ACP partners have recently concluded the Cotonou Agreement, which will serve as a framework for their future economic and trade relations, building, where appropriate, on regional integration initiatives among ACP countries themselves.

It is important to underline that liberalization will be pursued according to the ACP countries' own economic-and social constraints. These trade agreements, it is our belief and hope, will represent an important contribution to the consolidation of the regional integration processes thus preparing the ACP for their full participation in a liberalized world economy. However, in this instance as well as more generally, both developed and developing countries will have to work together, each doing its part in pursuing good governance and liberalization reforms, which are fundamental elements of a true sustainable development policy. .

We welcome the successful outcome of UNCTAD X in Bangkok earlier this year as well as the work being done to reform the institution on the basis agreed at the conference. The European Union would like to encourage UNCTAD to pursue its efforts aimed at ending the marginalization of the Least Developed Countries and facilitating the integration of African countries into the world economy. We also welcome UNCTAD's efforts in providing developing countries with analytical support and technical assistance on trade matters to help them to integrate more fully into world trade. Finally we encourage UNCTAD to continue building consensus on trade issues by helping developing countries and particularly the Least Developed Countries to define their negotiating approaches and initiatives for the next round of multilateral trade negotiations and, where appropriate, in their efforts to join the WTO.

Thank you Mr. Chairman.

Ref: SP00-101EN
Source UE: Commission Européenne
UN forum: Deuxième Commission (Affaires économiques et financières, environnement)
Date: 26/10/2000

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