TWN Info Service on WTO and Trade Issues (Nov16/18)
30 November 2016
Third World Network

WTO can continue to be an important partner of the US, says D-G
Published in SUNS #8364 dated 28 November 2016

Geneva, 25 Nov (Kanaga Raja) -- The Director-General (D-G) of the World Trade Organisation (WTO) said on Thursday (24 November) that he has had no indication that US President-elect Donald Trump would move to pull the United States out of the organisation, adding that the WTO can continue to be a very important partner of the United States.

Speaking at an event hosted by the Association of Correspondents Accredited to the United Nations (ACANU) here, Director-General Roberto Azevedo said that he is ready to talk to Mr Trump just like he is ready to talk to any leader of any other WTO member whenever they are ready to do so.

Asked whether US President-elect Trump was serious in his suggestion during his election campaign that the US could leave the WTO, Azevedo said, "I haven't had any indication from anybody that that would be the case."

"But I think at this point in time, what we have to do is to be ready for a conversation. I myself as the Director-General am convinced that the WTO can continue to be a very important partner of the United States and of the other major trading partners in this task of seeking a more dynamic growth environment globally," he said, adding that trade is a very important component of that.

"So I think at this point in time," said the DG, "what we can do is be ready for a conversation and be ready to engage in deepening the partnership that we have with the United States and all other WTO members".

Asked if he had talked to Trump since the election, Azevedo said that he has not talked to him, "and I am ready to talk to him like I am ready to talk to any leader of any other WTO member whenever they are ready to do that."

"I told them that I am available whenever they are ready to have a conversation and I do that to pretty much every leader when they take office. The first thing I do is I write a letter to all of them (to) tell that the WTO is ready to continue to work with them, to deepen the partnership, that we think that the WTO can be a part of their strategies and that I am ready to meet and talk to them whenever they are ready."

Asked about Trump statement that he will withdraw the US from the Trans-Pacific Partnership (TPP) agreement on the day he takes office, Azevedo said that as a trade negotiator and subsequently as Director-General of the WTO, "I am always very cautious in analysing situations from the basis of (news) headlines."

"I think we have to look at the details, we have to look at what is actually done in that context. Would there be re-negotiations? Would there be a negotiation of another net of agreements? Would there be another initiative replacing that? Would there be another trade policy that would come into place seeking to advance their interests?"

Azevedo was of the view that it is very early to decide what the implications are. "We have the responsibility to wait and see what the effect will be of any decision taken in the early days of any administration, and see what the overall strategic policy for trade will be."

Azevedo also said that he just does not know what the trade policies are. "I heard different statements, or different sentences, which are taken out of the context of what the discussion could be looking at the whole strategic definition of what trade policies will look like."

He further said: "I don't think that we have even the new team in place, though I think we have to give them a chance to sit down, look at this from a broader perspective, look at this in an environment where there will be other components in play other than votes, and see what will come out of that discussion."

"At that point in time, once we see what the trade policies are, I think that's the kind of conversation that we should be having, and see what the impact of that would be globally, whether there are risks inherent."

"Many of the things that were said, I don't disagree with. Other things that were said, I have doubts about what they mean. So I would like to hear more clearly what they mean in the context of the global policy that will be adopted at the right time," said the DG.

Asked if he had a plan for the WTO in case Trump decides to take action, Azevedo said that the organisation will continue doing what it does. In other words, all these agreements that happen outside the WTO are not new, and have been happening since 1947 and even before that, and they will continue to happen.

Asked if he is worried about Trump's threat to pull out of the TPP and re-negotiate NAFTA, which will be a hit against free trade, the DG said that it depends on what else comes with the measure.

"So, is that a re-negotiation of the TPP? Is that a substitution of the TPP with another network of agreements? Is that the launching of another initiative to have bilateral trade deals? Depending on all these other things that would happen together with that, you would have a different answer to your question."

"And you would have a different impact on trade and trade liberalisation," he said. "I haven't heard, at this point in time, anybody say that trade is bad for the United States... I have heard sometimes concerns with certain types of trade or certain types of competition that are deemed to be unfair or whether certain types of agreements are deemed to be unbalanced."

Earlier, Azevedo said that any talk about trade today cannot happen without looking at the broader context.

"The outlook for trade is dismal. We have revised the forecast for 2016 from 2.8% to 1.7% and if this does actually happen, it will be the slowest pace of trade growth since 2009."

He also highlighted recent political developments. In Europe, Brexit has a very strong trade component and "we have to keep an eye on that."

There are many elections going on in the major trading partners, "so we have to be looking closely at trade policy adjustments in whatever direction. So we have to keep an eye on that also."

On top of that even in many of those elections, it is clear that there is also a sense in some communities that trade can be disruptive and that it may cause harm to certain communities that are affected by competitive and cheap imports.

"And I think this is a legitimate point. Trade does have sometimes a disruptive effect. The fact is that while it does that there is no doubt that trade brings overall benefits to the economy, particularly the economies that are more open and that embrace trade more freely are the ones that develop most and are growing faster and that have better chances of sustainable growth," said Azevedo.

"However, if we don't look at this undercurrent that we see more visibly even in advanced economies, we will be missing an important part of the picture," he said.

"We realise that those undercurrents are strongly associated with feelings of being marginalised and with feelings of lack of support and associated also with the shifts that are happening in the labour markets."

"What we have identified so far in early studies that the WTO is conducting is that trade is a very small component particularly in the issue of labour markets. Out of every ten jobs that are lost in an advanced economy, normally not more than two are lost due to trade. The other eight are lost due to innovation, new technologies, higher productivity."

It is not trade that is provoking unemployment, it is the constant and very effective search for higher productivity levels, Azevedo maintained. "So any response to that, I think will have to be cross-cutting and horizontal."

"If you don't have the right diagnosis, you don't have the right medicine. If the medicine is simply protectionism, the outcome will be that you will harm the patient."

He said that in the WTO, at this point in time, "we see a lot of dynamism. WTO members are energised by the fact that we have been very successful in the last two ministerial conferences with the outcomes that we had both in Bali (2013) and Nairobi (2015)."

Azevedo said that some "big ticket items" would be the Trade Facilitation Agreement which is an agreement that would increase exports around the world by $1 trillion, the Information Technology Agreement (ITA) expansion which covers $1.3 trillion in trade and the elimination of export subsidies for agricultural products.

He also pointed to the Environmental Goods Agreement, "which we are trying to finalize this year", covering more than $200 billion.

Looking at the ministerial conference in Buenos Aires (MC11 in December next year), he said that negotiations and conversations about what we can achieve at that point in time are ongoing.

There seems to be relative consensus among members that "we want to do something, we want to deliver things there."

"The other thing that is also consensual is that we have to be realistic of what can be done. So we have to be mindful that any outcome in any area of the conversation will not be the end of the road. It will just be one more step in the direction that we set to ourselves."

Azevedo said that members are working on the ‘traditional issues' like agriculture, services, industrial goods, rules, particularly fisheries subsidies, and also areas which are not so traditional, like the emphasis being given to small and medium-sized enterprises, and e-commerce.

He also pointed to a range of other issues.

"What we lack at this point in time is clarity about what they (members) want to achieve in each of those areas," said Azevedo.

He said that the path to MC11 and what will be harvested there will be in the hands of members.

Meanwhile, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Dr Mukhisa Kituyi, earlier this week defended the role of international trade and how it can help developing countries in creating more jobs and tackling inequality.

In an article published in The Guardian newspaper on 23 November, and excerpts of which were made available in an UNCTAD press release, Dr Kituyi said: "As an ex-politician myself, I know that politicians must do a better, more honest job of discussing the costs and benefits of trade."

"Too often in the global north, leaders, dictated by electoral needs, talk down trade, storing up problems for the future," the press release quoted him as saying.

"To blame trade for job losses is to use a convenient scapegoat, but it ignores both the benefits of trade and the disruptive nature of technology," Dr Kituyi said.

"Trade does not explain the relative decline in labour productivity. Nor does it account for the erosion in social protection."

According to the UNCTAD head, what trade does do is provide the jobs required by rising populations in the developing countries.

"The nature of trade is changing, shifting to services, to developing countries, and to more being done online. But it is always going to generate jobs. And this is an urgent priority for any sensible politician," he said. +