WTO chief: 2011 will be remembered for its turbulence

The year 2011 will be remembered for its turbulence and instability, said the director General of the WTO, Pascal Lamy. "When WTO member states thought we had turned the corner from the 2009 economic crisis, the outlook for the world economy seriously worsened," he said. In his speech opening the 8th ministerial conference of the WTO, late on Thursday, he said, "high volatility in financial markets and sovereign debt concerns have damaged business and consumer confidence. Global growth is stuttering across nations and, as a result, trade is slowing down. Unemployment remains at unacceptably high levels. The development gains made in recent years are disappearing. In the midst of this tempest citizens from across the globe have taken to the streets to demand stability, fairness, accountability. They are demanding solutions to address the challenges of our interconnected world. As trade has contracted, the multilateral trading system has provided an anchor for national trade policies. It has helped moor them to "our values" of openness, non-discrimination, transparency and rule of law. But the strong storm waves are loosening the anchor and now risk dislodging it. This would be very bad news. The cost to the world economy of high intensity protectionism would be in the order of USD 800 billion, the estimated value of space or "water" in WTO commitments today. By improving the credibility of the WTO, by ensuring it keeps moving forward, "you have a contribution to make towards restoring global stability and predictability." A freer, fairer and more development friendly trading system is part of the solution. Exiting the crisis will be easier if it is done in the spirit of global co-operation. Going-it-alone will make it more painful and longer. "As I outlined in my recent letter to you, your work and achievements in the last two years has advanced the WTO agenda." The WTO member states have failed in your endeavours to amend the WTO rule-book to make global trade fairer and more open. The Doha Development Round is at an impasse. At the same time the number of bilateral and plurilateral trade agreements keeps rising, demonstrating that the benefits of trade opening are not in question. How do we explain this paradox? According to Lamy, some say that bilateral deals provide a faster route to trade opening as they allow participants to omit the most politically difficult issues such as agriculture and fisheries subsidies, anti-dumping rules or tariff peaks. Some argue it is easier to conclude deals when you can pick and choose your partners. For others, this proliferation is more driven by geopolitics than by economics. Be that as it may, it is time Members of the WTO face up to the reality of this growing contradiction. We can no longer bury our head in the sand. We need to understand the root causes of our inability to advance multilateral trade opening and a regulatory agenda, and to build a collective response. Blaming others will not help. The WTO member states will need to address the essential question behind the current impasse: different views as to what constitutes a fair balance of rights and obligations within the trading system, among Members with different levels of development. What is the right share in the contributions and aspirations of advanced economies and emerging markets. What is the right combination of reciprocity among trade partners with similar levels of development and flexibility, which would provide weaker Members with space to adjust to greater competition. It is clear that progress in multilateral trade negotiations, as in climate change negotiations, will require a political response to this political question. All of WTO members believe that this should be done step-by-step, gradually moving forward the parts of the Doha Round which are mature, and re-thinking those where greater differences remain. But to be credible, this needs to be translated, sooner rather than later, into an operational work plan. But in the view of Pascal Lamy this is not enough. The WTO members also need to look at the real drivers of today's and tomorrow's world trade, at today's and tomorrow's obstacles to trade, at today's and tomorrow's trade patterns, at how to keep transforming trade into development, growth, jobs and poverty alleviation. In sum, all member must equip the WTO with XXI century software. In order to facilitate this discussion, in 2012 Pascal Lamy will be convening a "panel of multi-stakeholders of the WTO "to analyse all these elements and report to the entire Membership by the end of next year. He believes this can provide a useful contribution to your own reflections in what is, and should remain, a Member-driven Organization. "The multilateral trading system is at a crossroads. In an interlinked world economy in constant transformation, it cannot stay put. Either it advances in the spirit of shared values and enhanced co-operation, or we will face a retreat from multilateralism, at our own peril. Waiting for better times will simply not suffice. A consensus for inaction would simply mean a consensus for more pain for all". The WTO Director-General explained His call is "for all of us to stand up for the values of multilateralism. For major players to exercise leadership and to muster political courage to act together for greater trade opening and reform". To place the interests and needs of developing countries and, in particular, those of the poorest, at its heart. And to start thinking seriously about the dire consequences of not doing so in the midst of a worsening crisis. To act now in favour of a stronger multilateral trading system tomorrow, said Lamy.