‘The chief responsibility lies here,’ Lamy tells G-8

WTO Director-General Pascal Lamy’s consultations have only shown “marginal” movement in the negotiations and the responsibility now lies with leaders of the major economies to give their ministers more room to negotiate, he told the Group of Eight Summit in St. Petersburg on 17 July 2006.

Present at the meeting were: leaders of the G-8 — Canada, France, Germany, Italy, Japan, Russia, the UK and the US — and Brazil, the EU, India, China, Mexico and South Africa, and the heads of the African Union, Commonwealth of Independent States, International Energy Agency, International Atomic Energy Agency, United Nations, UNESCO, World Bank and World Health Organization.

This is what Mr Lamy said:

The round of multilateral trade negotiations that began almost five years ago is drawing to a close. We will soon know its outcome — whether it is to be a success or a failure. And if I am particularly grateful to President Putin for this opportunity to speak to you, it is because I have the feeling that the answer lies with those of you who are seated around this table today.

Not that you can decide for the other Members of the WTO: we need a consensus of 150 Members. Nor will the negotiations be limited to the handful of issues that I shall briefly be addressing before you here.

But the fact is, that the chief political responsibility lies here, with 85 per cent of the world's GNP and 75 per cent of world trade, and that whether we like it or not, the remaining topics of negotiation now depend on solving the agricultural and industrial conundrum.

The message I wish to transmit to you is simple and brief. It boils down to two points:

At this stage, the deadlock in which we are caught will lead us to failure very soon if you do not give your ministers further room for negotiation; deadlines are only useful on that condition.

I am aware of your domestic political problems. However, I ask you to ponder, in the decisions you make, the risk of a failure, which is considerable — and indeed every bit as political.

Where do matters stand now? A fortnight ago, I was given a mandate to hear confessions of negotiators, beginning with your negotiators, on how much room for manoeuvre they had when it came to reducing agricultural subsidies, opening up agricultural markets, and opening up industrial markets. There were some good news, but they remain marginal, and the beacons that have been lit have yet to mark out a landing zone for these three topics. Clearly, you need to move closer on these issues, which means that you must be willing to revise the instructions that you have given your ministers.

On the face of it, if we look at the figures, the differences that separate you at the end of negotiations are not insurmountable: a few billion trade-distorting agricultural subsidies, and that would have to be eliminated or transformed within a few years; a few billion in supplementary agricultural exports for some, and hence supplementary imports for the others, and a similar order of magnitude for industrial products. In other words, a few percentage points in addition to the concessions already proposed.

So the problem is not technical, but political. What is at issue here is how your public opinion views these few extra percentage points in terms of benefits obtained. And quite frankly, the price you have set for these concessions is too high. We all know how politically difficult it is to change that price. We know that an added effort has a cost for you. But I am convinced that if we are to reach a compromise, that cost will have to be accepted. What I am asking you to do, since it is ultimately up to you to decide what your parliaments vote on, is merely to weigh this cost against the cost of a failure.

Failure would mean scrapping the results that we have accumulated at the negotiating table over the past five years, results that would make this round the most ambitious of all the rounds concluded over the past 50 years, whether in terms of opening up trade in agriculture, industry or services, or strengthening disciplines in the areas of subsidies or trade regulation. In fact, these negotiations are already potentially worth two to three times more than the preceding negotiations.

Above all, a failure would be a blow to the development prospects of the three quarters of WTO Members whose economies are poorer or weaker than yours and for which integration in international trade represents the best hope for growth and for improving their systems of governance. This is why you all agreed to call this round “the development round”: it was to be a contribution to the Millennium Development Goals.

Finally, a failure would send out a strong negative signal for the future of the world economy and the danger of a resurgence of protectionism at a time when the pace of globalization is weighing heavily on the social and economic fabric of many countries and when geopolitical instability is on the rise.

A trading system based on multilateral rules is the least expensive insurance policy available to the world economy. You have all been reaping the benefits of that policy for many years now. But though it may not be expensive, it is not free, and I am asking you to put in an added effort to renew it for the years to come by deciding, all of you, to take this opportunity to give your ministers now more room for negotiation.

Thank you for your attention.