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The Doha Round as it relates to the APEC region

31 May 2006

The Doha Round as it relates to the APEC region

Hon Phil Goff Speech to the Business Symposium on Trade and Investment Ho Chi Minh City, Viet Nam

I am delighted to be here at this important gathering to offer some thoughts on the World Trade Organisation's Doha Development Agenda from an APEC perspective.

Comprising 21 economies in the Asia/Pacific region, APEC's key objective is to promote economic development and trade within the region. Removing barriers to trade is the key to achieving that goal.

As a regional grouping, APEC has always, however, been a firm advocate for progressing trade liberalisation multilaterally through the WTO process. This is a viewpoint strongly endorsed by its Business Advisory Council, ABAC.

The ABAC Chair's letter to Leaders last year stated the following: "nothing will do more to expand trade in the region than the successful conclusion of the DDA negotiations ? and it is the best opportunity available to APEC member economies to significantly progress towards the Bogor Goals".

Like ABAC, APEC leaders, ministers and officials continue to place the highest priority on the WTO Doha Development Round.

The region has been an enormous beneficiary of the multilateral system. It has helped spur some of the highest growth rates the world has seen ? growth that has helped to pull millions of people from poverty and seen firms from this region become global commercial leaders.

WTO membership is now essential for any country's global competitiveness. The admission of China and Chinese Taipei into the WTO gave both a strong boost to the WTO and acted as a catalyst for those economies' deeper integration into the APEC region. The prospective admission of Viet Nam and Russia into the WTO will further spur growth in the APEC region.

The WTO is also the only viable vehicle for dealing with a range of issues of critical interest to us all, such as export subsidies and domestic support ? seldom addressed in Free Trade Agreements ? that can severely distort trade.

Similarly, the WTO has a strong and effective Dispute Settlement Mechanism that is available to all economies ? small and large, weak and strong equally. This adds real value to the international trading system.

The WTO is also able, within a binding multilateral framework, to take forward work commenced elsewhere.

For example, APEC is rightfully proud for having being at the forefront of work internationally on trade facilitation, helping the speed and ease of goods crossing borders. Similarly, it was APEC that generated the world's first 'list' of environmental goods.

With APEC having established some intellectual frameworks around this work and having embarked on a number of helpful initiatives, the issue of trade facilitation and environmental goods has now been formally picked up in the DDA negotiations, which promises to give these issues greater prominence and reach.

APEC is doing important work in other areas of the trade agenda, such as investment and competition, and I hope that in due course these issues can be fed into the WTO.

Just as the WTO matters enormously to APEC, APEC also plays a collective role in supporting the WTO. APEC was effective in helping drive the WTO process forward in the painful closing period of the Uruguay Round when the risk of failure looked very real.

At that time APEC publicly stated that if the Round stalled or failed APEC would consider proceeding to liberalise on a preferential regional basis. This threat, coming from a grouping representing around 60 per cent of the world economy and nearly half of world trade, had an immediate effect.

It unquestionably helped unlock intransigent positions, enabling the Uruguay Round to go on to conclude successfully.

In this context, it is important that the WTO is a major focus of this Symposium. It will also be the major issue for APEC Trade Ministers as we meet tomorrow and Friday.

The reality is that we are, once again, at a critical juncture in the WTO negotiations. Since Hong Kong, we had not made the April 30 deadline for establishing modalities for agriculture and industrial market access.

Tough decisions need urgently to be made in order to move the current round of negotiations forward.

We're looking for commitment to real liberalisation. For New Zealand and many others, including developing countries, freeing up agricultural trade through eliminating export subsidies, substantially reducing trade-distorting domestic support, and especially through opening up markets substantially, is critically important.

So too is getting real results on non-agricultural market access, services and rules.

It is also important to emphasise that these negotiations were deliberately entitled a 'Development Round'. They are designed to make a contribution to growth globally, but in particular in developing countries.

We must ensure that the WTO can demonstrate its ability to contribute to global sustainable development in a manner that brings together commercial interests and the global environment.

An outcome on cutting fish subsidies and reducing tariffs and barriers for environmental goods and services, for instance, will help create such a win-win situation.

A result that delivers the real improvements to global trade envisaged by the Doha mandate will require significant changes to domestic policy settings in many countries, not least in agriculture.

These changes require courageous decisions from key developed players such as the European Union and the United States. We should not underestimate the size of the political challenge confronting those governments as the negotiations enter the critical phase.

Those countries have already shown leadership in their preparedness to take some of the tough decisions, but they need to go further, in domestic subsidies and market access, to bring these negotiations to a successful conclusion.

The flipside of that is that others also need to come to the party in other areas; Brazil and India and other developing countries in industrial market access and services, as well as doing their bit in agriculture.

It's a simple negotiating fact that we will only get a result if it is balanced across countries and sectors. Part of that balance certainly involves developing countries receiving special and differential treatment.

New Zealand has long supported giving developing countries targeted and appropriate flexibility. But it's also the case that all members, apart from the least developed, need to make a contribution to reform.

And the best "development" outcome we can get from this Round will be substantial liberalisation across the DDA agenda.

The stakes are high. Success in this Round is vital for the development agenda, for companies and countries wanting to take advantage of the opportunities the global economy offers, and for the long-term health of the multilateral trading system.

And the current window of opportunity is narrow. If we miss the chance to finalise a deal before the end of 2006 when the United States fast track Trade Promotion Authority effectively runs out, it may be some years before we have another opportunity.

There is no guarantee that we will be able to sustain political momentum for the process if we miss this year's deadline.

Reflecting this state of affairs, ABAC, when it met some two weeks ago in Montreal, once again asked APEC governments to show leadership in moving the global economy away from failure.

ABAC members "urged our governments to lead the global economy in pushing the round forward to a successful and timely completion".

I hope that the culmination of our meeting on Thursday and Friday will respond to that call and result in APEC trade ministers issuing a clear and very strong statement on the importance of the Round and the need for all economies, including those within APEC, to take the hard political decisions which will ensure the round succeeds.

Finally let me touch on the issue of the proliferation of Free Trade Agreements and Regional Trade Agreements. There is a direct link between these and the WTO.

Almost all countries have, in the last few years, developed a rapid and deep affection for FTAs. We are seeing a massive expansion in preferential trade arrangements globally.

This is as much the case within APEC as it is elsewhere. At the time APEC came into being there were only three FTAs within the region. Now there are over 20, with many more under negotiation or consideration.

I am of the view that properly constructed FTAs ? and by this I mean those that are comprehensive, of a high quality and open to accession by others ? can buttress and support the global trading system.

But I am also aware that many FTAs do not fit that description. They are very selective in product coverage and have extremely complicated rules, particularly in relation to Rules of Origin.

It is these FTAs which have given rise to significant and quite justifiable business concern about increasing transaction costs from this proliferation of FTAs; the so called 'FTA spaghetti or noodle bowl effect'.

Again this is an issue ABAC has raised with APEC governments and I think it is important that governments pay close attention to those concerns.

A successful DDA will help lessen those pressures for more and more preferential FTAs, which are partially but not exclusively a result of a sense of malaise and drift in the WTO negotiations.

Equally it is difficult to escape the view that a failed or stalled Round would lead to an intensification of existing FTA/preferential activity.

These realities are another reason we must work hard for the Round to succeed.

Beyond the Round, however, there are things APEC can and is doing to try to minimise the transaction costs for business from this proliferation of FTAs and RTAs.

It is engaged in an active programme of developing 'model measures' for FTA chapters that aim to promote greater FTA coherence in the region.

This is an important issue that Ministers will be discussing over the next two days and again I am hoping we will respond in a positive and forward leaning way to the interests of business.

Let me conclude, therefore, by saying there is no more important issue for APEC and the region's ongoing prosperity than a successful outcome to the DDA Round.

APEC has in the past played an important role in helping move WTO negotiations towards a successful conclusion. We have another opportunity now, at this critical point in the DDA negotiations, to again play a constructive role in helping unlock key blockages in the Round.

Unless the Round succeeds there is a serious risk of the global system fracturing with a consequential intensification of preferential FTA activity. None of us will gain from such a scenario.

Thank you

ENDS

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