WASHINGTON, July 17, 2001-On the eve of the G-8 Summit in Genoa, World Bank Group President James D. Wolfensohn met today with the chief trade negotiators of the United States and the European Union to urge that the next round of global trade talks be a "Development Round." Present at the meeting were EU Trade Commissioner Pascal Lamy and US Trade Representative Robert Zoellick. The needs of developing countries, which now account for nearly one-third of global trade and comprise over three-quarters of the World Trade Organization's 141 members, are expected to be high on the agenda at both the G-8 Summit and the WTO's 4th Ministerial Conference this November 9-13 in Doha, Qatar.
In the meeting at the World Bank's headquarters in Washington, Wolfensohn emphasized the importance of trade for growth, productivity increases and poverty reduction in developing countries. Over the past 30 years, trade has been an engine for growth, and those countries that have participated most in the global economy have grown most rapidly.
"Developing countries have collectively reduced their trade barriers, removed nontariff distortions, and improved their macroeconomic management, and this has been one of the most important driving forces for growth and poverty reduction in the developing world. However, too many countries have been left out," Wolfensohn said.
"For trade to promote development that really benefits the poor, we have to focus on the needs of developing countries inside the trade negotiations and also advance a complementary agenda outside the WTO," he said. "The international community needs to provide increased aid and technical assistance, and create a global framework for standard setting that is more fully representative of the interests of developing countries."
Wolfensohn outlined elements of a 'complementary agenda' that balances development and trade priorities. He explained, "the World Bank is committed to supporting trade-for-development and intends to step up this effort in coming years."
According to World Bank research, countries often missing out the benefits of trade liberalization include the low income countries of Africa and other least developed countries (LDCs). Many of these nations depend on agricultural exports, which face the highest barriers in industrial countries. Prices of agricultural exports have been particularly volatile and demand for them has been growing slowly relative to other traded products.
The EU recently decided to grant free access to all products of the world's poorest countries in stages through a program known as "Everything but Arms." The US also has granted some trade preferences to poor countries through its Generalized System of Preferences and expanded programs for Sub-Saharan Africa and the Caribbean.
"If all wealthy countries were to grant complete access," said Wolfensohn, "the exports of the least developed countries would expand by more than 11%, with significant benefits to the poor."
Even more important, he said, are global efforts to reduce barriers in products that are produced by poor people around the world. High barriers in agriculture and labor-intensive manufactures, such as apparel, penalize the poor.
Wolfensohn observed that currently, OECD countries spend more than $300 billion a year on agricultural subsidies, roughly equivalent to the entire GDP of Sub-Saharan Africa.
According to Wolfensohn, the average poor person faces barriers to selling his or her product abroad that are substantially as much as two or three times a relatively wealthy worker. Tariffs in agriculture in rich countries are three times higher than those on manufactures, and this does not include agricultural subsidies. "If you want to promote development, agriculture has to be on the trade negotiating table," he asserted.
In trade, the Bank is taking a lead role in revitalizing the Integrated Framework for Trade Related Technical Assistance to Least Developing Countries (LDCs). Under consideration are ways to expand similar technical assistance and capacity building for non-LDCs and middle income countries. More generally, the Bank provides extensive policy advice on ways to enact reforms to take advantage of global trading opportunities that benefit the poor, and on ways to improve the investment climate so when market access and reforms create opportunities, domestic and foreign investment will respond.
The Bank also helps developing countries increase their capacity to trade through investments in transport and telecommunication, improvements in customs and other public services. As basic building blocks for prosperity, these investments can enhance the benefits of trade liberalization.
A Complementary Agenda: Developing Countries need broader support to make trade work for the poor
The World Bank is moving ahead to support a "complementary agenda" outside the WTO. The institution has increased trade-related technical assistance, boosted education and health lending, and expanded support for social protection (including pensions and unemployment insurance). It is one of the leading lenders and advisors for environmental protection.
The Bank is proposing international action in three areas:
Provide "aid for trade" capacity: More "aid for trade" - through assistance in eliminating internal barriers to trade expansion, such as inadequate port infrastructure or inefficient customs services. Implementation of WTO commitments have costs, and developing countries will need support.
Address environmental and labor issues through global action: Address other global public goods issues - including environmental and labor standards - through appropriate international forums and direct assistance to developing countries.
Push ahead with developing-country trade liberalization: Encourage developing countries to further liberalize. Developing countries have already cut their average tariffs in half, from 30 percent in the early 1980s to 15 percent today, but further liberalization of goods and services would promote greater productivity and higher living standards. International support may be necessary during trade adjustment, including to ensure social protection programs.