U.S. STATEMENT AT UNCTAD’S 54TH TRADE AND DEVELOPMENT BOARD

Delivered by William Craft, Director of Multilateral Trade Affairs Office
Bureau of Economic, Energy, and Business Affairs
U.S. Department of State
October 3, 2007

Trade and Development Report 2007

The United States welcomes UNCTAD’s work on the Trade and Development Report to better our collective understanding of the factors that shape trade policy and its role in promoting economic growth and reduction of poverty.

The Trade and Development Report is an ambitious undertaking and we encourage UNCTAD to seize the opportunity of the report to incite meaningful and results-driven dialogue on the best ways forward.

We appreciate the report’s emphasis on promoting regional cooperation among developing countries as a useful venture and its positive approach to trade as a vehicle for development.

However, we are disappointed by several recommendations in the Trade and Development Report that run counter to the foundations of sound economic and trade policy, as well as the research of other international organizations dedicated to promoting growth.

We find the view put forward in the report discouraging developing countries from pursuing bilateral and regional preferential trade agreements with developed countries to be misguided and inconsistent with the preponderance of economic evidence. We believe the message runs counter to the mandate of UNCTAD to promote economic growth through trade.

I would like to join my EU colleague and express my appreciation to the Mexican delegation for their detailed analysis demonstrating the concrete benefits Mexico has reaped from NAFTA, and my agreement with their conclusion that trade agreements such as NAFTA are powerful tools for development when accompanied by solid economic reform and fiscal reform that provides the state with necessary resources to combat poverty.

The U.S. is a strong supporter of the multilateral trade system and the Doha process. While the complex WTO negotiations are vital to global economic growth, pursuing bilateral trade is also important. Both can be mutually supportive.

There are important gains to be made through bilateral trade, including by promoting economic development through increasing technical skill and technological improvements. Trade fosters economic growth but it also links countries together -- opening doors of communication, travel, and understanding.

Participating in bilateral trade negotiations provides countries with the opportunity to develop expertise and increased understanding of the process, thereby improving their own negotiating posture.

The skills and knowledge gained through the bilateral trade negotiating process are invaluable to a nation’s development. Limiting the scope of free trade solely to regional partners at a similar level of development and not reaching out to larger potential markets is a fundamentally flawed policy recommendation, which inhibits countries from reaching their trade and development potential.

The report is critical of environmental restrictions within trade negotiations. The U.S. experience indicates that adherence to higher environmental, investment, and procurement rules as part of trade agreements with developed countries benefits all parties to the agreement and is not a detriment to development.

We note that the TDR also advocates greater international cooperation on monetary and fiscal policies, specifically "rules of conduct," but that these rules are not defined. These types of proposals are outside of the scope of the Trade and Development mandate.

Currently there is extensive cooperation on monetary policies through the G-8 and growing consensus on what constitutes prudent monetary and fiscal policies among the members of the World Bank and IMF. The TDR is not the appropriate vehicle for discussion of international financial matters.

Regarding the proposal for multilateral governance on the financial side to address global current account imbalances, we would suggest instead looking at the flip side of the equation. The US is running a large capital account surplus reflecting a favorable business environment with high output and productivity growth. We believe in private sector led growth and strongly encourage efforts to improve investment environments worldwide, which will help address global imbalances.

The report attempts to conceptualize policy space for developing countries as an aggregate and tries to operationalize the concept. We question the usefulness of this exercise given vast differences in developing economies and the wide variety of international agreements. We also question the wisdom of this approach since it implies that all developing countries want to opt out of their international commitments. We know this is simply not the case, as policy makers in all countries, developed and developing, understand the value of those commitments.

Regarding intellectual property protections, we are concerned that this report appears to advocate contrary positions that are not realistic. The report also mischaracterizes the Intellectual Property Rights provisions of US bilateral and multilateral trade agreements as being harmful for development. These negotiated agreements provide broad flexibility for our Free Trade Agreement partners to develop strong IP systems while taking into account their varied national interests.

We thoroughly encourage UNCTAD to develop a better system of vetting and peer review of this major UNCTAD report to ensure that it is consistent with the organization’s broader message and goals to foster sustainable economic growth through trade.

The Trade and Development Report has been successful in prompting discussion of important policy issues and can serve an important role in highlighting the perspectives of developing countries. It can also help to build policy consensus around important economic and development issues; but to do so the report’s policy recommendations must be objective, clear, coherent, and complete. When the report’s authors are expressing a specific and unproven ideological position, this should be clearly stated so that the reader is not confused or led to believe that the recommendation reflects fact or broad consensus. We hope that UNCTAD will use the report in a responsible manner to focus on positive and effective ways forward. In that light, we thank the Secretariat for its work.