by
James D. Wolfensohn
President
The World Bank
Geneva, May 13, 2003 On May 13, 2003, WTO Director-General Supachai Panitchpakdi, IMF Managing Director Horst Köhler and World Bank President James Wolfensohn made a joint statement the WTO General Council meeting on coherence. Following are Mr. Wolfensohn's remarks at the meeting. Mr. Chairman, Director General, my colleague, Horst Kohler, your excellencies, You must understand that after eight years at the World Bank, it is the peak of my expectations to come and speak to this group which, I know, beavers away at the issues of trade, speaks a language that I scarcely understand but know to be important.
To arrive here and, after a significant briefing by my colleagues, to try and to get the language right is a hazardous task for someone who's just come from Bhutan. I tell you that because, in Bhutan, the issue of trade and finance is all measured in terms of human happiness and I nearly stayed there because it seems so much simpler than the work that you're doing here, or indeed the work that we do at the Bank. But nonetheless, I came back because Dr. Supachai gave a remarkable presentation at the IMFC meetings and indeed my colleagues and I have, in recent years, sought to build the relationships that we have with this distinguished body. Putting it in my terms, the reason that we are here is that our daily work, in terms of poverty alleviation and the advocacy which we are engaged in, both in Monterey and Johannesburg, in relation to addressing the questions of poverty and improvement of social equity and the achievement of the Millennium Goals, about which my colleague Horst Kohler has spoken, all have at the center a range of important contributions that we speak of regularly. When we speak of Monterey and we speak of Johannesburg, we talk of a partnership between the developed and the developing countries, we talk about the undertakings on the part of developing countries to improve governance, to have legal and judicial reform, financial sector reform, to build capacity, to fight corruption. With NEPAD, in terms of the African countries, the actions have been taken not because they're forced but because the countries themselves have decided that these are essential preconditions to development. On the part of the developed countries, they have said: "If you do that we will give you support and capacity building, we will increase the development assistance that is made available provided that it is spent effectively" And then they say: "And we will open the markets for trade" And today it seems to me that we are addressing the question, dealing with this issue of trade. And when we talk about Coherence, it is integral to the work that we are doing in the Bank, that trade be considered alongside each of these other considerations. And yet all too often the issue of trade is treated as a specialist subject, for specialists, without it being integrated into coherent discussion. We don't even attend the meetings as observers in relation to trade. I'm not seeking it because frankly I go to enough meetings but if one were to be suggesting what was sensible, it would be sensible to have people around the table who are addressing the fundamental question of development and we would be present to make whatever contribution we could in terms of trade, just as Dr. Supachai and WTO should be present in our bodies. But it is impossible to consider the question of development, the question of equity, as Horst Kohler has spoken, the question of economic development, without an integral consideration of the question of trade. It makes absolutely no sense to help countries boost their agricultural production if they have no markets. It makes absolutely no sense to boost industrial production if tariffs and other inhibitions to trade do not permit the sale of goods and the manufactures.
The issue of opening markets in developing countries to manufacturers from more efficient and more productive developed countries is also something that as a matter of policy should be adopted but needs to be dealt with on the basis of understanding the fragility and the sequencing and the importance of giving support to developing countries so that they can adapt to the new conditions of free trade as they are set up under the WTO agreements. So, at whatever level we are dealing, the issue of a coherent approach to development includes necessarily the issues of reformation of an economic structure, reformation of a social structure and reformation of a trading structure. And that is indeed what you're engaged in, in the Doha Round, and why it's necessary to bring about an integration of the considerations that we have in the IMF with the work that Horst and his colleagues are doing, and the Bank with the work that we are doing, and here, of course, in the work that you are doing. And may I say that my own judgment is that we have come a long way in terms of work at the staff level but I am absolutely delighted that we now have a chance to engage at this level, which I think is all to infrequent in terms of exchanging ideas. So, I'm delighted to be here, and there are three particular areas that I'd like to address:
The first, in terms of what we think is important, is the issue of coherence between trade and development in the field of agriculture. My colleague Horst Kohler has already addressed a number of these issues and you are very familiar with the rhetoric. We speak quite often of the $50 billion or so that is available in overseas development assistance, of the $300-plus billion that is provided in agricultural subsidies, of the rather amusing statistic that the average European cow lives on $2.50 a day subsidy when 3 billion people live under $2 a day and, for the benefit of my Japanese friends here, the average Japanese cow lives under a subsidy of $7.50 a day. These are, of course, eye catching statistics but they do, in fact, reflect the imbalance between the issue of subsidies and the issue of free and open access to markets in the area of agriculture. And given, as Horst reminded us, that the issue of poverty is so often a rural question, it is for us at the center of our considerations in terms of the alleviation of poverty. What we are looking for, as a matter of advocacy for poor people, is what many of you are seeking, which is a better deal in terms of agriculture and that would allow for effective development and effective addressing of the question of poverty. We also recognize that this is not just a North-South issue, that the South-South issue is equally important, that 25 percent of trade is in the South-South area, and that the importance of development is something that is already under consideration in your deliberations and which is important. We also recognize that speaking of freeing up markets will affect some people well, and will affect some people badly in relation to existing preferences, and that there will be a need for a period of adjustment. We have looked at a series of issues about what are needed to be tackled. The one of course is the cutting of subsidies in OECD countries, especially those that have the greatest impact on production, using instead transparent, decoupled payments to support farmer incomes and meet rural development objectives. We are suggesting finding a tariff cutting formula that results in genuine cuts in tariff levels and tariff escalation in all countries and one which also gives credit for liberalization that is undertaken between negotiations. The conversion of Tariff Rate Quotas in agriculture and specific duties to ad valorem tariffs, which provide a more transparent protection. Find a safeguard mechanism which protects poor producers against import surges while encouraging tariff liberalization. The adoption of liberal unilateral rules of origin under preference schemes such as the "Everything But Arms" agreement and the African Growth and Opportunity Act, especially for clothing and textiles, with these rules harmonized across countries.
And let me add here, of course, that while agriculture is at the center of what we are conceiving, it's not the only thing in terms of developing countries, and that the service sector, your work on TRIPS and Public Health and the anti-dumping discussions are all central to the work that we are engaged in. And this is an area, these areas, are areas in which I think we're speaking and we're talking about, where it's obviously essential that we have cohesion in the discussions that are being undertaken here. And let me get now to the issue of a rational framework for the Special and Differential Treatment, which is an area that I have spent now some hours on and will not set myself up as an expert. I'm sure all of you know a great deal more about it than I do, but I did ask my colleagues to at least do a research paper for me to see if there was a way in which we could make some contribution and, as the Fund has also done, we too have explored this issue. And I've come up with some approaches which might be relevant and useful and which we're submitting to the Director General but which essentially seek to approach this not on the basis of individual treatment but try and come up with some more generalized approaches that would be worthy of consideration. Exploring the possibility of all exports from low income countries entering the OECD countries tariff and quota free and doing so, would simplify rules of origin. We recognize the problems faced in the poorest countries in implementing the WTO rules, the issue of capacity and resources, and let me say here that we've been working for some time with the Secretariat in terms of trying to support the issues of training and capacity building using a distance learning facility unit programs which we've devised together and which I believe have shown some merit and have been quite useful in the work that you're doing. We've also recognized that if you get rid of the S&DT, that in the poorer countries that have been asked to accept WTO principles, there is a significant element of fragility and that the issue of timing and support and giving a basis on which there is a safety net, is something that in which, we, as the World Bank, can help. As you make decisions in relation to trade, we're a natural partner to assist the countries in terms of that safety net and that support which is necessary. And the last thing, of course, is that, in the work that we're doing, as was mentioned by my friend Horst, is adding the poverty reduction strategy papers and in the strategies that we're setting forth, the whole question of trade has been integral to these programs, is something that is taking increasing place in the work that we are doing. And finally, of course, there is the question of a better integration between us at the institutional level, better cooperation between us.
The fact that this is the first time in eight years that I'm here - and maybe the last time that you invite me here - but it's at least eight years since I've been invited and maybe that says something. That each of us are going in our own different ways and that there really needs to be a recognition at our level that we can't go our separate ways. We know we cannot go our separate ways in relation to the issue of trade, and it's not just us, it's UNCTAD, it's UNDP, it's ITC, it's OECD, bringing us all together under the leadership of WTO. There's a crucial issue for us in terms of achieving our individual objectives, and so the need to increase the relationship between us is apparent. I looked at the work that we're doing on Integrated Framework in conjunction with the WTO, I took out just the volume on Senegal, and as I looked at it, I looked at the action plan - it's not just an action plan on trade, it's an action plan which relates to how the economy functions, to the capacity building, of the physical needs to take advantage of trade opportunities, of the whole question of development, of the whole issue of education, of training, even of health, and gets into the questions that we're dealing with here. So it is sort of nonsensical that we haven't had a better approach to the coherence of our endeavors until today and we are indeed extraordinarily happy that this new approach that has been suggested by your Director General to build on the work of our staffs is something that we are more than happy and anxious to be supportive of. So let me say in conclusion, Mr. Chairman, our mandate from our Board is the issue of alleviation of poverty and in the question of alleviation of poverty we have a number of issues, but central amongst them is the question of trade. We cannot deal with that issue without dealing with the question of trade, and so we welcome very much the opportunity of exchanging views with you here, we look forward to continuing discussions, and I want to say how much I appreciate the chance of coming and being with you to open this new dialogue. Thank you very much, Mr. Chairman. |
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