Remarks by U.S. Trade Representative Michael Froman at the WTO Public Forum
Innovation and the Global Trading System Keynote Remarks by U.S. Trade Representative Michael Froman at the World Trade Organization Public Forum
Office of the United States Trade Representative
October 1, 2013,
Washington, DC 20510
“Thank you very much. It’s good to be back. Thank you [WTO Director General Roberto Azevedo] for those comments and for injecting new life and energy into the conversation here at the World Trade Organization. The United States looks forward to working with you and your new team. Thanks also to Anoush der Boghossian and the Secretariat team for working so hard to make the WTO more open for those we all serve.
“I am very pleased to be here at the WTO Public Forum. This event has long been an opportunity to throw open the doors of the WTO for broader discussion. And it reflects how far the multilateral system has come since the creation of the GATT. Then, this was a relatively small club with a few nations who spoke for the many. Today we live in a world in which new players are at the table and where new voices are given an ear.
“During this period, the global marketplace has experienced a sea change as well. Combining globalization with new technology and with new business models has dramatically accelerated the pace of change and innovation. The flow of data is as important as the movement of goods. Services are an increasing share of value-added manufacturing. And the market is determining standards at an increasingly rapid pace.
“The question posed by the Public Forum’s theme is, with innovation in technology and even the concept of international trade changing so quickly, can our trade negotiations evolve quickly enough to facilitate or even drive it?
“And this same question faces WTO Members on a more fundamental level today. Can we be nimble enough, can we be creative enough to innovate when it comes to the global trading system?
“The United States of America believes in the World Trade Organization. For seven decades, we have taken seriously our role in the global economy and in the multilateral trading system, and our responsibility to lead along with partners willing and able.
“And in many ways, the WTO has fulfilled its initial promise.
“The Uruguay Round disciplines generally work. And in fact, the rules and principles negotiated back in 1947 with the establishment of the GATT are enduring and essential.
“In recent years, these principles gave countries a plumb line to follow when the foundations of the global economy shook – and we held true. This was the worst economic crisis since the 1930’s, but unlike that crisis, this time – while no country has been perfect – we avoided a descent into spirals of protectionism.
“The day-to-day work of the committees at the WTO spots and solves problems so well, seizes so many opportunities for cooperation as a matter of course, that their work – humming away like an engine under the hood – goes largely unnoticed.
“The dispute settlement body of the WTO is second to none as a respected forum for the resolution of international frictions. The DSB has helped to quell protectionism through its accessibility to all WTO Members, by its very existence and by its excellence.
“These are the successes of the WTO system: Global tariffs have been reduced significantly. There has been increasing attention paid to non-tariff barriers, including the promotion of good regulatory practices. We’ve seen new Members, through accession agreements, lock in more open trade policies and economic reforms. And through aid-for-trade and other mechanisms, we’ve seen trade and investment emerge as a powerful tool for development, including for the poorest countries of the world. In these ways, the WTO has been a model for global integration and cooperation.
“In its early years, the WTO was extremely productive, with new plurilateral, trade-liberalizing agreements on information technology, telecommunications and financial services. But there is one, yawning gap in the WTO’s record: in its nearly twenty-year history, the WTO has never once produced a new, fully multilateral trade agreement. Think about that. The WTO is now at a crossroads, and the challenges that remain are the hardest.
“The Doha Round was launched back in 2001 with the promise of building on past successes. And there was hope that pre-existing negotiating mandates in agriculture and services could be rolled quickly into one bigger, single undertaking. But for more than a decade, we’ve been unable to reach that goal. For 12 years, we have too often had to say: it’s stuck.
“When President Obama came into office in January 2009, the fact that Doha was deadlocked was well-established. It’s just that no one wanted to way it. At summit after summit, Leaders got together and declared that this, finally, was the year to get it done. And with each passing year, the credibility of those assertions declined and the cynicism of he international community’s about Doha – and the WTO – grew.
“So, after reviewing the state of the negotiations, the President made clear, and we made clear here in Geneva, that we saw no possibility of concluding the agreement by just pursuing the same approach as we had been for the last decade. Rather, we needed fresh, credible approaches to trade liberalization that held the prospect of achieving pragmatic results and creating momentum for further progress. And that is exactly what we’ve seen with the negotiations towards a multilateral Trade Facilitation agreement, a plurilateral Trade in Services Agreement (TISA) and an expansion of the Information Technology Agreement (ITA).
“But I want to go back and underscore what we did and why.
“The United States refused to accept the status quo of the Doha talks not because we were ready to quit – but because we were determined to advance. We all know that multilateral trade liberalization is in theory the highest and best form of trade liberalization, and while we always viewed the WTO as bigger than Doha, we didn’t want to give up on the WTO being able to make a meaningful contribution not just to dispute settlement, but to trade liberalization as well. It is precisely because we believe in the WTO that the United States has been unwilling during this Administration to let it continue down a path toward certain failure.
“We tried, and many partners joined us, in trying to infuse a new spirit of innovation into the WTO. In Silicon Valley, incubator to of some of the most innovative companies in the world, there is an important concept: ‘fail fast.’ The idea is to be ambitious and bold, dive in and experiment, try things. But also learn quickly from one’s mistakes, adapt and move on.
“The seeds of change began to sprout two years ago, at the WTO’s 8th Ministerial Conference. There, trade ministers spoke frankly, acknowledged that Doha was at impasse, and encouraged – and here I’m paraphrasing – an innovative approach to further progress.
“And the result of that guidance is our work today – an effort to set aside, for the time being, the most seriously deadlocked portions of the Doha agenda, and focus instead on a package of deliverables where we have the best chance of producing results.
“There is a degree to which this approach makes everyone unhappy. Certainly the United States is not happy that core issues like industrial tariffs, multilateral services liberalization and new market access for agriculture have been set aside for the time being. And I know that every WTO Member has its own list of disappointments.
“But this is no time to focus on what we can’t do. We should focus instead on what we can do. A concrete result at Bali is still possible. And that means it’s time to work.
“And in that regard, let me say how strongly the United States supports the new intensification of work under our new Director General. In a few short weeks, he and his team have created and managed a process that has given this Membership a chance to succeed.
“Bali has the potential to be a vital step towards the WTO creating something new, something that can lead to other new opportunities – to innovation in our approach to multilateral negotiations.
“A strong, binding trade facilitation agreement clearly is doable. It could be the first multilateral trade agreement the WTO produces. And the truth is, a trade facilitation deal could represent the most significant development deliverable in the history of the WTO.
“Let me stress how important this link is between trade and development to the United States and to the President personally.
“Development is in the bloodstream of U.S. trade policy today. Let me focus particularly on Africa, where we find the preponderance of WTO [Least-Developed Country] members. According to out most recent analysis, Between our various preference programs, 97.5 percent of all exports from least-developed countries in Sub-Saharan African enter the U.S. duty free, quota free. Through AGOA, we have provided one-way access to the U.S. market for the last 13 years and as we prepare for AGOA’s seamless renewal, we are engaging in a top-to-bottom review of the program to determine how to ensure that it best meets its objectives.
“When President Obama was in Africa earlier this year, he launched Trade Africa, an initiative focused on deepening regional integration and facilitating trade and investment, both within Africa and between Africa and the rest of the world. The President also launched Power Africa to double access to electricity, one of the gating issues in the ability of Africa to increase it’s productivity and compete effectively in the global trading system.
“Of course, this is on top of the historic work the U.S. has supported as the world’s largest contributor to global health and as the driver of recent efforts – from the L’Aquila initiative to the New Alliance on Food Security and Nutrition – to put food security – including increasing the productivity and trade of agricultural products — front and center on the global development agenda. The U.S. remains an active supporter of the WTO Aid for Trade Initiative and has taken innovative steps to propose an unprecedented development chapter in the Trans-Pacific Partnership negotiations. I say this just to make clear that the U.S. is firmly committed to the trade and development agenda, not just in words but in deeds.
“And in that regard, I am sometimes struck by the dichotomy I sense between capitals and Geneva when it comes to trade facilitation. Every time I go to Africa, most recently for the AGOA Forum in Addis Ababa in August, it is clear that trade facilitation is a central goal of every government with which I have met, the focal point of domestic, bilateral and regional work. In Geneva, trade facilitation is too often a bargaining chip in the great game of multilateral trade negotiations, a pivot point for tactical maneuvering.
“To succeed by Bali – and frankly, to retain the credibility of the WTO as a forum for global trade liberalization – we must close this gap.
“A trade facilitation agreement is as close to a ‘win-win’ as exists in the real world. Both developed and developing countries would benefit – but after years of efforts to deliver on Doha’s development mandate, we can reduce costs of trade for developing countries most of all. By some estimates, a trade facilitation agreement is estimated to reduce costs for developed countries by 10 percent, but for developing countries by 14 percent.
“Trade facilitation, at its core, is about connecting countries – their farmers and businesses – to the global economy. This is most important for small and medium-sized businesses that have the drive to succeed but lack the resources to maneuver through red tape.
“That’s why an action like making trade documents available on the internet is such a vital step – such a vital innovation. Just two weeks ago, across the street in the blandly named ‘Room D,’ our negotiators incorporated this idea into the potential package for Bali. If we deliver on a Bali package, a small company in Africa or Southeast Asia, seeking information about customs procedures or tariff schedules in any WTO member market, will be able to pull it up on the internet. That is, if we get an agreement.
“The ‘special and differential’ provisions currently in the trade facilitation agreement are unique. Under a proposal first put forward by the United States four years ago and later taken up by many others, developing countries would be allowed to create their own individual implementation schedules. This is unprecedented. It is innovative trade policy.
“While the United States believes that trade facilitation must be at the core of a Bali package, the Bali package can be more.
“As Roberto said, agreement is also reachable on additional development issues such as a monitoring mechanism for implementation of special and [differential] provisions, and new guidelines on rules of origin.
“And, we are starting to see possible outcomes in agriculture. Delegations here are working hard to deal with the concerns of certain developing countries about food security.
“As I said earlier, we support food security; indeed, we have been one of the global leaders to promote food security around the world by mobilizing tens of billions of dollars of investment in agricultural productivity and nutrition. But if countries are going to take new steps in this area, we call on them to do so in a transparent manner and without distorting the global market in a way that could create food insecurity for farmers and consumers in other countries. So we are actively working toward a solution — a restraint mechanism that responds to the needs of a few, in a package that serves the entire membership.
“It’s clear we can succeed if we want to. The only question is – what future do we choose for the WTO? The competing scenarios are stark but clear.
“In one, we fail to deliver a meaningful Bali package. December comes with almost nothing to show – across two decades – that the WTO is a meaningful forum for negotiations. In such a scenario, we will have to come to terms with what failure means.
“First, if we fail in Bali, we will lose the opportunities currently on the table. If we fail in Bali, many offers of flexibility for this package will disappear, for an indeterminate period of time. No nation will leave its hand open once these offers are finally slapped away.
“Second, the worst fears of many about the role of agreements outside the WTO could come to pass. The United States believes that plurilaterals and bilaterals don’t compete with the multilateral system – they are meant to complement, and ultimately to strengthen the multilateral system. But if Bali shows that the WTO is not a viable forum for negotiations, bilaterals and plurilaterals will likely be the only avenue for trade negotiations.
“And this speaks, again, to the development goals. The loss of the WTO as a negotiating forum of course, would have the greatest impact on the smallest countries and the poorest economies. Big countries will always have options. Fair or unfair, that’s a reality. We all want the WTO to be a vibrant negotiating forum – but small countries and poor countries would feel the loss the most.
“By the way, let me be clear that no one should blame the proliferation of bilateral and plurilateral trade negotiations for the state of the WTO today. Bilateral and plurilateral negotiations in or out of the WTO are not the context of our negotiating failure here – if anything, they are a consequence instead.
“The main attraction of plurilateral agreements, for many, is that they offer a way forward. Like-minded countries – the coalition of the working — can come together to open markets, set high standards and introduce new disciplines for global trade.
“There is, of course, a more hopeful scenario. WTO Members could come together to craft a meaningful Bali package – a package whose contours are already apparent. In this scenario, we beat market expectations. We surprise a skeptical global audience. We demonstrate through actions that the WTO can solve practical problems facing our workers, farmers and ranchers; of manufacturers and service providers; of investors, entrepreneurs and consumers.
“In this scenario, it’s possible to image a credible agenda for broader WTO negotiations, for continuing to make progress on the unfinished business of the Doha Round, for exploring ways in which the WTO can be a forum for solving new problems, tackling new opportunities as innovation continues and global trade evolves.
“Once upon a time, the World Trade Organization stood at the leading of edge of innovation. In 1995, 128 nations stepped boldly forward to the next phase of the global experiment, shifting from the GATT to the WTO.
“If we do no more, this experiment will have been a success. All the good and important things I mentioned above, from the benefits of the Uruguay Round disciplines to state of the art dispute settlement system, will remain standing and go on.
“But the U.S. believes that the WTO can do more and can be more. This body can still be proof of the potential of a truly global trading system. And the moment to show that is now.
“Make no mistake: The choice of scenario lies with those of you in this room. The success or failures of negotiations in this room over the next four weeks will write the future of this institution. Every Member of this institution has its hand on the pen. It is within our reach to open a new and dynamic chapter, together, in the work of the WTO.