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RA S H I D S . KA U KA B

EMERGING ISSUES AND THE MULTILATERAL TRADING SYSTEMSOME ISSUES AND IMPLICATIONS

FOR DEVELOPING COUNTRIES

WTO GENEVA WEEKCUTS INTERNATIONAL, GENEVA

SESSION GENEVA, 12 DECEMBER 2012

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OUTLINE

• Some emerging issues: brief implications for developing countries

• Emerging issues and the multilateral trading system: a development perspective

• Way forward: some suggestions for developing countries

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I. SOME EMERGING ISSUES

• World is changing but that is nothing new: what is new is the pace and complexity of changes• Power balance and politics: emerging economies;

RTAs• Economics and finance: Euro debt crisis;

exchange rates• Resources gaps: food, water, and energy• Interplay of issues: climate change• Business and markets: global supply chains• Driving force and opportunity: innovation and

technology

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I. EMERGING ECONOMIES: SOME IMPLICATIONS

• Alternative and growing markets for other developing countries

• Diversified power balance in the WTO

• Can they provide finance, technology, and markets for value-added products?

• Can they bring more equal distribution of power in the WTO?

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I. RISE OF RTA: SOME IMPLICATIONS

Challenges: • Rules on new issues and deeper disciplines on issues

covered in the WTO (WTO+) thus setting precedents e.g. on IPRs, investor-state dispute settlement

• Diverting attention and resources from the MTS

• Creating web of overlapping and conflicting rules

• Marginalisation of smaller developing countries

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I. RISE OF RTA: SOME IMPLICATIONS

Opportunities:

• Larger economic spaces for smaller developing countries

• Testing new rules and new issues

• Building negotiating experience and skills

• Basis for alliances in the MTS

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I. ACCESS TO RESOURCES: SOME IMPLICATIONS

• Growing demand: global population growth; Chain and India factor; expanding global middle class; inefficient use

• Growing demand for not only energy but for raw materials, water and land

• Impact on long term prices: increase and volatility

• Rise in disputes including at the WTO

• More export restrictions

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I. ACCESS TO RESOURCES: SOME IMPLICATIONS

Resource-rich countries• Urgent need to use gains from commodity/resource price boom

for diversification and structural transformation of economies• Sustainable management of natural resources

Resource-poor countries• Stable access, e.g. to food and energy resources• Development of appropriate MTS disciplines on export restrictions

General• Investing in renewables• Regional arrangements• Negotiating better agreements

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I. CLIMATE CHANGE: SOME IMPLICATIONS

• Will induce changes in what is produced where and how, and what is traded and how

• Will increase frequency of shocks to production, productivity, and hence trade flows

• Some countries may be tempted to use trade policy measures to deal with “carbon leakage”, e.g. through border tax adjustments

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I. CLIMATE CHANGE: SOME IMPLICATIONS

• Dealing with private standards: convergence or equivalence; need for technical and financial resources

• Dealing with new “regulations”: negotiations, disputes, adoption

• WTO: using the existing agreements and provisions; negotiations on environmental goods and services

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I. GLOBAL VALUE CHAINS: SOME IMPLICATIONS

• Innovation/conception-production-marketing networks spread across countries, firms, and goods and services

• Lengthening of supply chains with greater fragmentation of tasks: growing trade in intermediate goods and services

• Inducing changes in the way trade flows are measured

• Participation in global value chains as an opportunity to trade out of under-development and poverty

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Where in the Value Chain Matters

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• Impact on multilateral trade negotiations: “re-think” of trade flows and their origins as trade in tasks with incremental values being added at each stage, located in different countries

• Governance of private standards: e.g. for agro-industrial value chains where compliance is costly and is a constraint for SMEs

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I. INNOVATION AND TECHNOLOGY: SOME IMPLICATIONS

• Current gap between developed and developing countries

• A key determinant of productivity enhancement

• Contribution to economic growth and development

• Importance of technology transfer

• In-built flexibility in the MTS to adapt to technological developments to maximise their contribution to trade and development

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II. EMERGING ISSUES AND MULTILATERAL TRADING SYSTEM: A DEVELOPMENT PERSPECTIVE

Performance of the MTS: Current

• Regular functions: reasonable though limited developing country participation

• Negotiations: Doha Round stalled but important developments must be preserved

• Dispute settlement: reasonable though very limited developing country participation

• Discussions: increasing but remain limited

• Development: gap between rhetoric and reality

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Performance of the MTS: Emerging Issues

• Dealing with emerging issues: whether and how (mandate and manner)

• New negotiations: mandate needed which should be based on the core competence of the WTO and the interests of all its Members

• Doha Round and regular WTO work: some issues can be addressed

• Dispute settlement: may become the default option

• Discussions: expect and prepare for more

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International Trading System

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• Strengthening vertical links: MTS should reflect grassroots' aspirations and concerns, and aim for development outcomes

• Finding horizontal links: MTS is only a part of the system of global economic governance and hence should let specialised institutions deal with issues under their respective mandates/competences while collaborating as appropriate

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III. WAY FORWARD: SOME SUGGESTIONS FOR DEVELOPING COUNTRIES

Objectives

• An equitable and well functioning system of global economic governance with a development-oriented MTS

• Strengthening vertical links and finding and implementing suitable horizontal links

• Coordinated and strategic actions at the national, regional, ACP and multilateral levels

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Actions at the National Level

• Technical, human and institutional capacity building

• Regular and systematic Inter-ministerial coordination and multi-stakeholder consultations

• Investing in human resources development, renewables, and innovation

• Strategic relationships with regional partners, emerging economies, and developed countries

• Sustainable management of natural resources, including through better negotiations

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Actions at the Regional Level

• Enlarging regional economic spaces through own FRTAs

• Common strategies to deal with emerging issues

• Developing new and development-friendly rules to deal with emerging issues

• Preparing for better participation in the MTS

• Careful and coordinated negotiation of RTAs with developed countries and emerging economies

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Actions at the MTS

Preserving useful gains of Doha Round

• SP and SSM (food security)• Hybrid approach to environmental goods and services

(environment and climate change)• Commitments for technical and financial assistance• Measures to deal with preference-erosion• Situation-based approaches to commitments, e.g.

paragraph 6 in NAMA, differentiated commitments by SVEs, RACs, etc.

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Actions at the MTS

Improving participation in Regular Bodies

• Sectoral Councils and Committees (e.g. CTG, CTE, CTD, CTS, TRIPS): brining up emerging issues of interest and safeguarding against entry of emerging issues from the back door

• Technical Committees (e.g. SPS, TBT): raising and dealing with technical issues related to emerging issues where needed

• TPRB: making strategic use of the opportunity • All Bodies: monitoring for the implementation of the existing

commitments by trading partners

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Actions at the MTS

Safeguarding interests through DSU

• Monitoring developments: on-going consultations, cases, outcomes and their implications

• Strategic participation: as third parties and as complainants

• Reform: participation in DSU review negotiations

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Actions at the MTS

Initiating and responding to discussions

• Making use of Regular Bodies

• Organisation of dedicated seminars and workshops on selected emerging issues

• Joint events with other relevant international organisations

• Working with like-minded and development-friendly NGOs

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THANK YOU.

QUESTIONS AND COMMENTS ARE WELCOME