The Role of WTO in the Current Crisis
Harsha V. Singh
Deputy Director General, WTO
30 April 2010
OUTLINE
• Present situation
• Importance of the present WTO regime
• Recent steps taken by WTO
• Way Ahead for the Recovery
Present situation
• World economy - severe battering,
worst in last 70 years.
• In 2009, Volume of Output:
– Global Output fell -2.3 %
– Developed Countries output fell – 3.3 %
– Developing Countries output was + 1.2 %
– Colombia’s output increased by + 0.4 %
• In 2009:
• Global Trade volume declined -12 %
• Developed Countries trade volume
declined by – 15.3%
• Developing Countries trade volume
declined by – 8%
• Colombia’s volume of exports of
goods and services decreased by
about – 8.2 %
• Forecast for 2010:
– World output volume rise +2.7 %
– World trade volume growth nearly +10 %
• Exports (developed countries) +7 %
• Exports (developing countries) +11 %
– Colombia’s Output volume to rise +2.5%
– Colombia’s volume of exports of goods and
services to increase +6.1 %
• Fast speed of the turnaround
compared
to
historical
experience
• In
1930s,
prolonged and
recession
protectionism
deepened the
• Did not happen this time
• Some instances of protectionism
– These affected below 1 % of world
trade
• A vital factor was existence of
international trade rules (WTO).
• But risks remain as long
unemployment remains high
as
• We can not go back to business as
usual
• We need to be vigilant
risk of back-tracking
about the
Importance of the present
WTO regime
Presence of WTO disciplines meant
that:
• Countries are aware of actions that
would be questioned
• WTO disciplines provide reference
or a standard for reasonable
behaviour
• WTO Disciplines help countries to
monitor and assess actions based
on them
• WTO gives a platform for interaction,
sharing common concerns and
taking common initiatives
• If trade restrictive measure is adopted
then:
– WTO provides processes and mechanisms
for dealing with them
• WTO system has been tested
• Credible dispute settlement mechanism.
Allows to settle disputes peacefully.
• Reduces tensions and pressures
from disputes and disagreements
• Promotes
orderly
disruptive behaviour
– Columbia has been:
• Complainant in 5 cases
• Respondent in 3 cases
• Third Party in 17 cases
and
non-
• WTO’s Technical Assistance
Programme helps improve use of
the system:
– Since 2008, Columbia has had:
• 3 National activities (services,
agriculture, trade and environment)
• Seminar on trade facilitation
• Several training activities covering
academics and officials
Recent steps taken by
WTO
• During the crisis, WTO also has taken
pro-active steps
• Several initiatives of the WTO Director
General to:
• Stem protectionism, keep markets open
• Focus on key trade policy initiatives
• Reduce tensions and disputes
• Contribute to exit from the crisis
• Important role of monitoring
transparency for these objectives
and
WTO DG prepared detailed monitoring
reports with information :
– on policy measures by individual Members
during the crisis
– in consultation with and using data inputs
from WTO Members, as well as information
from other sources
– discussed by the whole Membership at
special meetings
• Monitoring report discussion:
– provides peer review
– opportunity to raise and clarify
concerns, including specific policies
– Gives voice to large number of smaller
countries
• Monitoring Reports showed
that countries also adopted:
• trade opening or trade facilitating
measures
• Terminated previously adopted
trade restrictive measures
• Discussion gave basis to WTO DG
to carry the voice and concerns of
all the Membership (153 WTO
Members) to world fora
• Such reports give stronger voice to
developing countries:
– These nations have more difficulty to obtain
comprehensive information
• Monitoring reports provide
basis to better deal with
political
protectionist
pressures
• Another initiative of WTO DG was to
emphasise importance of trade finance
in facilitating trade:
– particularly for smaller businesses and
poorer economies
– especially if countries not able to raise such
finance
• WTO DG highlighted:
– need for treating trade finance different from
other types of finance
• Trade finance repayment period shorter and
repayment more certain
– need for international support to assist with
trade finance and thus facilitate trade
• He worked with other major international
institutions on the issue of trade finance
• G20 has put aside $250 billion trade
finance support to help poorer countries.
• Evidence was highlighted to show
that countries better withstand
adverse effects if they have:
• adequate safety nets
• adequate regulatory frameworks
• open trade policy complemented
with appropriate domestic policies
• Emphasised the need for meeting aid
commitments for developing countries
• Aid for Trade is important part of stimulus
in less developed countries
• Inter-connected
interests
world
and
common
• Crucial to keep in mind both present
situation and medium term effects of
actions
• Evidence to show that while:
– trade decline can cause economic
effects
– trade links help more rapid recovery
• Evidence shows that countries
with more open markets and trade
links generally able to respond
quicker
Way Ahead In Recovery
• We need to:
– ensure that stability due to
multilateral rules is maintained, i.e.
keep markets open
– work co-operatively, emphasising
interests of all countries, small,
medium and large
– improve the system to increase
opportunities, reduce distortions, and
address any unfairness in the system:
• keep opening markets and opportunities
DDA negotiations
• Several areas covered, offering many
positive opportunities and more level
playing field
• E.g., agriculture, industry, services, Antidumping, Fisheries subsidies,
environmental goods and services, certain
TRIPS related issues, development
concerns, trade facilitation
• Columbia is a very active participant
AGRICULTURE
• More level playing field by reducing
trade-distorting subsidies:
– major reductions in domestic subsidies
in developed countries
– elimination of export subsidies
• These are
Columbia
important
objectives
of
• Enhanced market access opportunities
for primary and processed products:
– reduction of tariffs, tariff peaks and tariff
escalation
• Will encourage processing
Columbia’s
Productive
Programme
activities under
Transformation
– Liberalisation of Tropical Products markets
– Tariff-quotas providing market access for
sensitive products
NAMA
• Improved access to markets for industrial
products through reduction of:
– tariff peaks ; tariff escalation; non-tariff barriers
• Strong tariff peak reduction in all developed
country markets
• Greater market access and greater certainty in
major developing country markets
• Concerns on Non Tariff Barriers addressed
(Colombia should be active in these
negotiations)
Services
• Improved access for services trade
– More market opening for most services emphasised by
Colombia
– (signalling conference and plurilateral negotiations)
• Greater transparency and certainty with
regulatory regime
• More growth and development opportunities:
– Services are large part of economy
– Services trade is more dynamic and resilient
– Service growth has widespread positive effects for
economic and social achievements
Examples from Other Areas
• Improved disciplines on traderemedies (e.g., anti-dumping)
• Greater disciplines for fisheries
subsidies
• Increased markets for environmental
goods and services
• Increase in markets and decrease in
costs due to better trade facilitation
– World Bank Report “Doing Business”
shows Colombia one of top ten reformers
in 2008/2009
– Colombia improved to 37th rank in 2010
from 49th rank in 2009 for ease of doing
business
– Columbia’s
improved
custom
administration reduced time to prepare
documentation by:
• 60% for exports
• 40% for imports
• Fairer trading system, and greater
participation of small and medium
sized developing countries in the
international system
• These are all important objectives of
Colombia, which is both:
– A friend of the existing system
– Significant contributor to improving the
system further through negotiations
Thank You