unctad.org | Seventh session of the Commission on Trade in Goods and Services, and Commodities
Statement by Mr. Rubens Ricupero, Secretary-General of UNCTAD
Seventh session of the Commission on Trade in Goods and Services, and Commodities
Geneva
02 Feb 2003

Mr. Chairman,
Ambassadors, distinguished delegates,
Ladies and gentlemen,

Allow me to make a few comments on current developments in the trade arena which I believe can provide a useful background to your discussions. A more detailed written statement covering the main items before the Commission is also available.

My first point concerns the negative trend in the growth of world trade over the past two years. This faltering growth runs counter to the historic trend of the past 35 or 40 years, when for the most part international trade grew at twice or more the rate of world output, and of course we still do not know how much it will recover this year or next. If you take as your starting point the year 2000, which was the last year of significant expansion in world trade, there was an extraordinary growth rate of around 12 per cent in volume - quite considerable a figure, even in terms of the performance of the last 35 years. But in 2001, volume contracted by 1 per cent, and value, by 3 to 4 per cent.

Last year did see a recovery in terms of volume, but it was not very significant - somewhere between 1 and 2 per cent, which is less than the growth in world output, and thus unusual for the post-war period. There are several projections for this year, one of the most optimistic of which comes from the World Bank. The Bank is predicting a 6 or 6.5 per cent increase in the volume of international trade, provided of course that the recovery of the US economy is confirmed. And this is precisely where the crux of the matter lies, because, particularly since the Asian crisis of 1997, the US has been the sole significant source of import demand growth. Hypothetically, of course, other leading economies may take over as the locomotive of world demand growth. But this appears to be unlikely: the other two major industrial economies, Japan and Europe, put in a somewhat mediocre economic performance and have increasingly relied on export-driven recovery. Rather than contributing to the recovery of international imports, they are on the contrary detracting from that prospect.

Much will depend thus on the strength and the stability of US economic recovery, and on how this recovery enhances world trade growth. We should not forget in this context that the US current account deficit has reached a very high proportion of GDP - nearly 5 per cent - and sooner or later an adjustment will be necessary. This has already affected the strength of the dollar in relation to some other major currencies, particularly the euro. The uncertainty of the current international political situation also has an impact on the world economy. I will not attempt to draw any conclusions from these factors, and I certainly do not pretend to be exhaustive, but simply to flag a few points that in my opinion are the most important to consider when we reflect on the outlook for world trade. And as you discuss world trade, I think it would also be useful for you to keep in mind my second point - which is that we are in the midst of a major initiative in terms of trade negotiations. I refer, of course, to the multilateral round now under way at the WTO, in addition to other negotiations of a bilateral or regional nature which are being pursued practically everywhere in the world.

I would like now to make a connection between my first and second points. One of the reasons why I think we so badly need success in international trade negotiations - not just at the multilateral level, but at other levels as well - is precisely because of the less than encouraging panorama I presented at the outset. Precisely because we need a boost to international trade, it is imperative for the trade negotiations to be pursued and completed according to the timeframe adopted in Doha, and for them to end successfully, meeting the expectations created for those negotiations in Doha. Among those goals I of course include all those related to the development perspective. As I have often emphasized, I have always been very reluctant to call this round a development round, and to be frank I still refuse to do so. I prefer to wait until the negotiations have concluded before passing judgement on whether they really contributed to the advancement of development, and I say this because I have been a trade negotiator myself. I know there are many goals pursued by trade negotiations which do not have a direct link to development. Those goals are also legitimate, and necessary, even if they are more relevant to industrial countries, because of the interdependence between the success of those advanced countries in international trade, and the expectations of developing countries in terms of new opportunities. I believe that we must pursue those negotiations very positively as a set of objectives, and it is more necessary than ever for us to have a constructive engagement. To this end I will ensure that the UNCTAD secretariat contributes useful suggestions on how to reach this goal.

But the successful and timely conclusion of the round is imperative for another reason, and this is the real danger to the credibility of the multilateral trading system if, at the same time that this system proves unable to advance, other bilateral or regional initiatives are crowned with success. I am increasingly worried by this trend and have several times discussed this perception with Dr. Supachai. I am worried because I do not believe in the argument that those initiatives are always building blocks to a more liberal trading system. I do not believe it for the simple reason that many if not most of those initiatives are not advancing solely in areas where the multilateral negotiations have failed. They are instead adding new discriminatory rules - rules which did not previously exist - to the array of very complex rules that tend to discriminate among nations. We should never forget that the heart and soul of the world trading system is non-discrimination; it is not, as people sometimes think, to reach zero tariffs or zero barriers as soon as possible. The real heart and soul of the international trading system - and this was the principle that has guided its evolution since the 19th century, and particularly after 1934 - was the most-favoured-nation clause, the idea that countries should be treated equally. It is not by coincidence that articles 1 and 2 of the General Agreement on Tariffs and Trade have to do with non-discrimination. Lately we have seen a proliferation of discriminatory treatment under the guise of preferential arrangements. And as I said, this is not, as some people argue, to advance only in areas where other countries are not ready to advance; I could give you a long list of provisions in regional and bilateral trade agreements where new and complex discriminatory rules were introduced, particularly in rules of origin but in many other areas as well. I do not see how those agreements could possibly be seen as building blocks, since they are just adding difficulties and complexities, they are adding preferential and discriminatory treatment to the existing rules. This is why I believe it is so important to reach a successful conclusion to the WTO negotiations: it would be the best possible proof that the multilateral trading system is capable of moving in a fair and non-discriminatory way towards the goal of a liberal trading system.



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