Speech by SCIT at NGO Roundtable Forum (with photos)
**************************************************** Following is the speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the NGO Roundtable Forum this (October 16) afternoon:
Pascal, Distinguished Guests, Ladies and Gentlemen,
Good afternoon. First of all, I would like to welcome all of you to the Roundtable discussion today. We are here today to exchange views on a subject that carries dramatic implications on the world's economic well being, particularly that relating to the developing world. We have a good cross section of the civil society here, and I look forward to a candid exchange of views later on.
Today's gathering is very much part of the constructive dialogue that we intend to have with the civil society which has become an integral part of the WTO fabric. It is also very much part of the Hong Kong way of life where the institutions of civil society, including religious bodies, labour unions, charities, professional associations, community groups and other NGOs, form an important part of our free and open society.
WTO Members over the last decade have increasingly recognised the role that NGOs play in raising public awareness on WTO-related issues, as well as increasing transparency and communication with the public. There are more than 1,000 NGOs accredited at the Hong Kong Ministerial. That is a record number. In fact, that is more than 10 times the number of NGOs that attended the inaugural WTO Ministerial in Singapore in 1996.
The Hong Kong Ministerial will claim another first: it will be the first time that accredited NGO representatives and delegates will be housed under the same roof, albeit a really large one.
But constructive engagement is about much more than numbers and location. As host, we are committed to doing all we can to enable everyone, including those with dissenting voices, to be heard. The agreement we have just reached with the Hong Kong People's Alliance on WTO to designate a protest zone nearer the meeting venue, I believe, demonstrates our wish for constructive engagement. The dialogue will continue, and as I have said earlier, the Roundtable discussion today provides us with a further opportunity to exchange views on a host of issues that are relevant to progress in the Doha Development Agenda. Our special guest today will tell us more about this later on.
The DDA Plane
I thought I should start with a few words about the vital role which he, as Director-General of the World Trade Organisation, plays in the run-up to the Hong Kong Ministerial in December. My analogy goes like this : Pascal is the pilot of the DDA plane. We in Hong Kong have offered to provide an intermediate landing place along the way to its final destination. The runway is ready; the landing lights are on; the radar is working; the air-traffic control is standing by. And the pilot needs to bring the plane in to land. In the meantime, the 148 families on board continue to discuss exactly what they want to do when they land here as well as the programme for the final leg of their long, extended journey.
Historical Perspective
The Doha Round is the ninth round of multilateral negotiations since the General Agreement on Tariffs and Trade, or GATT, came into being in 1948. As you all know, the agenda for this round, the Doha Development Agenda, is hugely ambitious. Obviously, that makes it quite a challenge for all concerned. What may not be quite so obvious, but what must be said, is that a ninth round is difficult by definition. It is difficult because it has to deal with all the hard residual issues that were not possible to resolve in the previous eight rounds. In particular, the current Round has to deal with Agriculture.
The earlier Rounds - like Dillon, Kennedy, Tokyo etc - devoted much effort to bringing down the towering tariff walls for industrial goods. These artificial barriers have been built to "protect" trade in many economies before the Second World War, but had ended up with the adverse effect of totally stifling international trade. Hong Kong, a practitioner of free trade, benefited directly from this, and it is one of the reasons why we are so committed to the multilateral system. Unfortunately, as these tariff walls for industrial goods started tumbling down, all sorts of new means for supporting, subsidising and protecting trade in agricultural goods were introduced around the world.
Numerous studies, notably those undertaken by Peter Timmer of the Harvard Business School in the early 80s, began to set out the empirical evidence of the serious damage that these measures were inflicting on Developing Country markets. That evidence was totally compelling, and it is incredible that it has taken so long for governments to agree that what was right for industrial goods is also right for agriculture. Those towering walls for agriculture must come down as well.
In the meantime, interests have become more entrenched and the problems have become more complex. To take a simple example, at one end of the spectrum, the existence of various preference schemes means that bringing tariffs down for all will reduce the value of those preferences, undermining as a result the competitiveness of some less developed producers. Where such countries have only a limited range of exports, this phenomenon represents a significant challenge. At the other end of the spectrum, the largest players have concluded that their support for farmers is unsustainable, but they are wary of the political impact of too rapid a liberalisation. The dilemma remains.
Agriculture is the Key
To give you some sense of scale, the United States is spending some US$20 billion each year on trade-distorting support. The European Union's entitlement is approximately Euro$70 billion per annum. Obviously, for the developing world, just reducing this imbalance would be a major achievement. However, simply leveling the playing field between these two major economies would not necessarily benefit others. For other major agricultural producers, elimination of subsidies by the US and the EU is a necessary first step in redressing international market distortion, but by itself it is not sufficient to generate new trade. For that, there must also be genuine new market opening.
Similarly, for developing and least developed economies, for those whose domestic markets have been all but destroyed by the distortions in world markets created by developed country subsidies, barriers and dumping of surplus production, some even in the guise of "food aid", almost everything else on the agenda pales into insignificance, when compared with the potential gains from the liberalisation of trade in Agricultural products. To be convinced, however, they need to see agreement on a realistic end-date for the elimination of export subsidies, they need to see a commitment to substantially reduce domestic support, and, particularly important for their own development, they need to see a genuine willingness to open up markets to crops that they produce. Some of the latter can and should come from market opening by other developing economies as well, particularly the more successful industrialising economies, but the key in terms of convincing them that the big exporters are serious about liberalisation will be significant new market access in the developed world.
Trade in agricultural products accounts only for a relatively small proportion of world trade at about 8%. But that does not tell the whole story. For some of the smaller economies, their meagre export is all they have got. For some of these economies, they have a single product and they have no other source of income, other than that single agricultural product that they produce. We need to safeguard the interests of these vulnerable economies.
And because of the scale of the distortion, because of its importance to developed and developing countries alike, Agriculture cuts across the traditional patterns of divisions and alliances within the WTO. As a result, while the Doha Development Agenda has the broadest agenda yet devised for a multilateral negotiation, progress in all other areas depends to an unprecedented degree on progress in this single area. More than this, it depends, first and foremost, on the behaviour of the two largest players, the US and the EU. So for much of the last twelve months, all eyes have been on the US and the EU. And until they come to a clear mutual understanding of what needs to be done, until they take the first courageous and, I know, very difficult steps, others will not move.
The US has just taken such a step in Zurich on Monday, in a meeting of Ministers which I attended. It has had a positive impact. Mixing my metaphors, it has given a very slow moving train a good shunt along the tracks. Whether or not the train gathers real momentum, however, will depend on corresponding contributions. Before Zurich we had clear sight of only one of the three pillars of the agricultural negotiation, Export Subsidies. The US has given us a much clearer view of a second pillar, Domestic Support. We hope that the EU's response will show us the third, Market Access.
Once they have a clear view of all three, others will need to negotiate their own contributions, working outwards through all the various groups of interested parties until the wider membership is comfortable with what is proposed. The same process must also follow for each of the other market access negotiations, such as non-agricultural goods and services, and of course, rules and other development related issues. And it would be foolish to assume that, just because negotiations on these are waiting on results in Agriculture, everything will suddenly fall into place once Agriculture is resolved. There are hard issues to tackle in all these areas.
I am, of course, simplifying the equation, but the lack of progress to date, the lack of agreement in other key areas reflects the failure so far to strike a deal on Agriculture. The days are long gone when the US and the EU could simply agree to fix an agreement and impose it on others. Nevertheless, the message for the two majors must be blindingly clear: time is running out. And like it or not, the rest of the world, and the rest of the agenda, are currently being held hostage, waiting for the two majors to resolve their differences in Agriculture. If they do not, it is not just a question of how much, or how little momentum the Hong Kong Ministerial would contribute to the process. Rather it is a question of the whole world losing out. If we fail collectively to resolve Agriculture during this Round, we will lose a once-in-a-generation opportunity to do some serious good for the developing world.
Conclusion
Ladies and Gentlemen, the "development dimension" of the Doha Development Agenda embraces more than just agriculture. I have focused only on Agriculture today, because firstly, it is of such fundamental importance to poverty reduction and economic development for so many of the less developed members of the global community and, secondly, it has become the choke point in the negotiations.
This is why the Hong Kong Ministerial offers such a challenge - and such an opportunity. In two months' time, the whole WTO membership needs to flesh out the framework agreed in July 2004 on agriculture and non-agricultural market access, define the level of ambition for the services negotiations, agree on the next concrete steps for the rules negotiations, and properly reflect the development perspective in the outcome to all these negotiations. This is no easy task, but all WTO Members will have to ensure that it is accomplished. The stakes are high. The cost of failure is not a price any Member can afford to pay.
With these thoughts, I shall hand the floor to our special guest speaker from Geneva, Pascal Lamy. Thank you.
**************************************************** Following is the speech by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the NGO Roundtable Forum this (October 16) afternoon:
Pascal, Distinguished Guests, Ladies and Gentlemen,
Good afternoon. First of all, I would like to welcome all of you to the Roundtable discussion today. We are here today to exchange views on a subject that carries dramatic implications on the world's economic well being, particularly that relating to the developing world. We have a good cross section of the civil society here, and I look forward to a candid exchange of views later on.
Today's gathering is very much part of the constructive dialogue that we intend to have with the civil society which has become an integral part of the WTO fabric. It is also very much part of the Hong Kong way of life where the institutions of civil society, including religious bodies, labour unions, charities, professional associations, community groups and other NGOs, form an important part of our free and open society.
WTO Members over the last decade have increasingly recognised the role that NGOs play in raising public awareness on WTO-related issues, as well as increasing transparency and communication with the public. There are more than 1,000 NGOs accredited at the Hong Kong Ministerial. That is a record number. In fact, that is more than 10 times the number of NGOs that attended the inaugural WTO Ministerial in Singapore in 1996.
The Hong Kong Ministerial will claim another first: it will be the first time that accredited NGO representatives and delegates will be housed under the same roof, albeit a really large one.
But constructive engagement is about much more than numbers and location. As host, we are committed to doing all we can to enable everyone, including those with dissenting voices, to be heard. The agreement we have just reached with the Hong Kong People's Alliance on WTO to designate a protest zone nearer the meeting venue, I believe, demonstrates our wish for constructive engagement. The dialogue will continue, and as I have said earlier, the Roundtable discussion today provides us with a further opportunity to exchange views on a host of issues that are relevant to progress in the Doha Development Agenda. Our special guest today will tell us more about this later on.
The DDA Plane
I thought I should start with a few words about the vital role which he, as Director-General of the World Trade Organisation, plays in the run-up to the Hong Kong Ministerial in December. My analogy goes like this : Pascal is the pilot of the DDA plane. We in Hong Kong have offered to provide an intermediate landing place along the way to its final destination. The runway is ready; the landing lights are on; the radar is working; the air-traffic control is standing by. And the pilot needs to bring the plane in to land. In the meantime, the 148 families on board continue to discuss exactly what they want to do when they land here as well as the programme for the final leg of their long, extended journey.
Historical Perspective
The Doha Round is the ninth round of multilateral negotiations since the General Agreement on Tariffs and Trade, or GATT, came into being in 1948. As you all know, the agenda for this round, the Doha Development Agenda, is hugely ambitious. Obviously, that makes it quite a challenge for all concerned. What may not be quite so obvious, but what must be said, is that a ninth round is difficult by definition. It is difficult because it has to deal with all the hard residual issues that were not possible to resolve in the previous eight rounds. In particular, the current Round has to deal with Agriculture.
The earlier Rounds - like Dillon, Kennedy, Tokyo etc - devoted much effort to bringing down the towering tariff walls for industrial goods. These artificial barriers have been built to "protect" trade in many economies before the Second World War, but had ended up with the adverse effect of totally stifling international trade. Hong Kong, a practitioner of free trade, benefited directly from this, and it is one of the reasons why we are so committed to the multilateral system. Unfortunately, as these tariff walls for industrial goods started tumbling down, all sorts of new means for supporting, subsidising and protecting trade in agricultural goods were introduced around the world.
Numerous studies, notably those undertaken by Peter Timmer of the Harvard Business School in the early 80s, began to set out the empirical evidence of the serious damage that these measures were inflicting on Developing Country markets. That evidence was totally compelling, and it is incredible that it has taken so long for governments to agree that what was right for industrial goods is also right for agriculture. Those towering walls for agriculture must come down as well.
In the meantime, interests have become more entrenched and the problems have become more complex. To take a simple example, at one end of the spectrum, the existence of various preference schemes means that bringing tariffs down for all will reduce the value of those preferences, undermining as a result the competitiveness of some less developed producers. Where such countries have only a limited range of exports, this phenomenon represents a significant challenge. At the other end of the spectrum, the largest players have concluded that their support for farmers is unsustainable, but they are wary of the political impact of too rapid a liberalisation. The dilemma remains.
Agriculture is the Key
To give you some sense of scale, the United States is spending some US$20 billion each year on trade-distorting support. The European Union's entitlement is approximately Euro$70 billion per annum. Obviously, for the developing world, just reducing this imbalance would be a major achievement. However, simply leveling the playing field between these two major economies would not necessarily benefit others. For other major agricultural producers, elimination of subsidies by the US and the EU is a necessary first step in redressing international market distortion, but by itself it is not sufficient to generate new trade. For that, there must also be genuine new market opening.
Similarly, for developing and least developed economies, for those whose domestic markets have been all but destroyed by the distortions in world markets created by developed country subsidies, barriers and dumping of surplus production, some even in the guise of "food aid", almost everything else on the agenda pales into insignificance, when compared with the potential gains from the liberalisation of trade in Agricultural products. To be convinced, however, they need to see agreement on a realistic end-date for the elimination of export subsidies, they need to see a commitment to substantially reduce domestic support, and, particularly important for their own development, they need to see a genuine willingness to open up markets to crops that they produce. Some of the latter can and should come from market opening by other developing economies as well, particularly the more successful industrialising economies, but the key in terms of convincing them that the big exporters are serious about liberalisation will be significant new market access in the developed world.
Trade in agricultural products accounts only for a relatively small proportion of world trade at about 8%. But that does not tell the whole story. For some of the smaller economies, their meagre export is all they have got. For some of these economies, they have a single product and they have no other source of income, other than that single agricultural product that they produce. We need to safeguard the interests of these vulnerable economies.
And because of the scale of the distortion, because of its importance to developed and developing countries alike, Agriculture cuts across the traditional patterns of divisions and alliances within the WTO. As a result, while the Doha Development Agenda has the broadest agenda yet devised for a multilateral negotiation, progress in all other areas depends to an unprecedented degree on progress in this single area. More than this, it depends, first and foremost, on the behaviour of the two largest players, the US and the EU. So for much of the last twelve months, all eyes have been on the US and the EU. And until they come to a clear mutual understanding of what needs to be done, until they take the first courageous and, I know, very difficult steps, others will not move.
The US has just taken such a step in Zurich on Monday, in a meeting of Ministers which I attended. It has had a positive impact. Mixing my metaphors, it has given a very slow moving train a good shunt along the tracks. Whether or not the train gathers real momentum, however, will depend on corresponding contributions. Before Zurich we had clear sight of only one of the three pillars of the agricultural negotiation, Export Subsidies. The US has given us a much clearer view of a second pillar, Domestic Support. We hope that the EU's response will show us the third, Market Access.
Once they have a clear view of all three, others will need to negotiate their own contributions, working outwards through all the various groups of interested parties until the wider membership is comfortable with what is proposed. The same process must also follow for each of the other market access negotiations, such as non-agricultural goods and services, and of course, rules and other development related issues. And it would be foolish to assume that, just because negotiations on these are waiting on results in Agriculture, everything will suddenly fall into place once Agriculture is resolved. There are hard issues to tackle in all these areas.
I am, of course, simplifying the equation, but the lack of progress to date, the lack of agreement in other key areas reflects the failure so far to strike a deal on Agriculture. The days are long gone when the US and the EU could simply agree to fix an agreement and impose it on others. Nevertheless, the message for the two majors must be blindingly clear: time is running out. And like it or not, the rest of the world, and the rest of the agenda, are currently being held hostage, waiting for the two majors to resolve their differences in Agriculture. If they do not, it is not just a question of how much, or how little momentum the Hong Kong Ministerial would contribute to the process. Rather it is a question of the whole world losing out. If we fail collectively to resolve Agriculture during this Round, we will lose a once-in-a-generation opportunity to do some serious good for the developing world.
Conclusion
Ladies and Gentlemen, the "development dimension" of the Doha Development Agenda embraces more than just agriculture. I have focused only on Agriculture today, because firstly, it is of such fundamental importance to poverty reduction and economic development for so many of the less developed members of the global community and, secondly, it has become the choke point in the negotiations.
This is why the Hong Kong Ministerial offers such a challenge - and such an opportunity. In two months' time, the whole WTO membership needs to flesh out the framework agreed in July 2004 on agriculture and non-agricultural market access, define the level of ambition for the services negotiations, agree on the next concrete steps for the rules negotiations, and properly reflect the development perspective in the outcome to all these negotiations. This is no easy task, but all WTO Members will have to ensure that it is accomplished. The stakes are high. The cost of failure is not a price any Member can afford to pay.
With these thoughts, I shall hand the floor to our special guest speaker from Geneva, Pascal Lamy. Thank you.
Ends/Sunday, October 16, 2005
Issued at HKT 16:10
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