Introductory Address by

Dr. Surakiart Sathirathai

"WTO at the Crossroads: Challenges Ahead"

Bangkok, 25 November 2006

Distinguished Guests,
Ladies and Gentlemen.

I am honoured and delighted to have the opportunity to address this distinguished gathering on the subject that is close to my heart. I have always taken the keen interest in the subjects of GATT, international trade and later WTO ever since my student time and I have developed them into the areas of my expertise throughout my academic career for more than 25 years now. My research works and teachings at various institutions have been GATT and WTO related. The keen interests in these subjects followed me through my time in politics both as Foreign Minister and Deputy Prime Minister. When I met Director-General Pascal Lamy at the time when he was still the EU Trade Commissioner, our lengthy discussion was no doubt concentrating on the issues of international trade and the future direction of EU-ASEAN economic partnership.

I could not help feeling that the issues were even more of global significance as I ran my 2-year campaign for the position of United Nations Secretary-General. Visiting all developing regions and learning more of their development concerns and priorities, I felt the urgent need of forging partnerships with developed and developing nations as well as a need for international institutions to address the development challenges.

Both the question of the WTO and the Doha Round drew attention of Leaders of both developed and developing countries. Trade is recognized as a driving engine for economic development and holds great potential to bridge the widening gap in the world economy. Indeed, the Doha Round or Development Round is unprecedented in terms of the scale of opening trade in scope and the number of countries involved.

Director-General Pascal Lamy estimated that cutting trade barriers by a third would boost the global economy by 600 billion US dollars. But the question remains, how can we guarantee the developing world's share in such trade increases? Take Africa for instance. By some estimates, a one percent increase in Africa's share of world trade would benefit Africa by over 70 billion US dollars. But how exactly can we increase Africa's share of world trade by one percent?

There needs to be guaranteed market access for the goods of developing countries. For many, that involves agricultural products and commodities. Elimination of agricultural subsidies would go a long way towards increasing the relative price competitiveness of agricultural commodities of many developing countries. Indeed, the Uruguay Round had succeeded in creating the first comprehensive set of multilateral trade rules in agriculture. Today, the world expects the Doha Round to be able to do much more. It is regarded as a "once-in-a-generation opportunity" for all WTO members.

Since the launching of the Doha Round, trade negotiations have struggled to reach an on-time conclusion. Unfortunately the timetable continues to be delayed. Why has agriculture been a core issue of the impasse? Though agriculture represents less than 8 percent of world trade, food production remains a sensitive sector for both the rich and the poor nations. Contention has yet to be resolved over the issue of effective reduction in farm subsidies and reduction of agricultural tariffs for improved market access on the part of developed countries. Reduction in subsidies continues to be perceived by developing nations as not going far enough whilst insistence on flexibility which could negate the principle of market access was unacceptable to some developed and developing nations.

For the developed economies, the impasse means a delay of negotiations. For the developing economies, it means an erosion of development efforts with a devastating impact on the livelihood of the people. The deadlock of the WTO negotiations has clearly distorted trade and undermined the principles of free and fair trade and non-discrimination. It has diminished the hopes and expectations of people of the developing nations for a better livelihood. The hope for job opportunities and income generation is hampered by the barriers to the free flow of trade. The efforts of many developing countries in attaining the Millennium Development Goals for poverty eradication are being undermined.

However, the current impasse and its implications to the global trading system must not detract our efforts to address the imbalances of the global economy. Developing countries cannot afford to remain complacent. They must continue with their development strategies by adopting innovative approaches that best fits their needs and concerns. This is the challenge, which I foresee for the WTO to address. I wish to offer some of my observations, which I believe are of priority to developing nations in pursuing effective development strategies.

First is the exchange of experiences in development strategies. There is no "one-size-fits-all" approach to development. But effective development strategies can be drawn from the successes and failures of others attempting to integrate into the global economy.

Take Thailand for instance. Guided by the principles of self-help and partnership, Thailand's development strategy builds upon the inner strengths of our culture and society to benefit from globalization while minimizing its negative effects. Inspired by and based upon His Majesty the King's philosophy of "Sufficiency Economy", sustainability is the ultimate goal of Thailand's economic progress. The philosophy applies moderation, reasonableness and self-immunity as the key functioning factors. Through this philosophy, the economy learns to avoid excessiveness and to strike a balance to achieve sustainability. At the same time, the economy learns to increase productivity and international competitiveness without going beyond its reasonable means. This two-prong direction, namely avoiding excessiveness and increasing productivity, aims at reducing poverty on the one hand and creating growth on the other. Without learning to strike the right balance between these two major economic policies, no development will ever sustain.

That is Thailand's story. But many developing countries may have gone through successful self-help schemes, effective partnerships and jobs and income creation programmes that are worth consideration. Some countries have built partnership to share local knowledge necessary to turn financial resources into shared prosperity.

I am glad to say that by working together through South-South cooperation, developing nations in many regions have been able to unleash their productive potential. Yet, many more countries and their hundred of millions of impoverished citizens have not been so successful. Based on the success and failure stories, the United Nations, the WTO and other international institutions can serve as a pool of initiatives and expertise to spur different tailor-made development schemes for sustainability in these countries.

Apart from looking at individual country, each region has to be looked at for the different factors that may retard economic growth and development. Some regions, such as Central Asia face geographic isolation. The construction of roads and telecommunication help these distant regions create productive ties with the rest of the world. In sub-Saharan Africa, by contrast, the first challenges are disease control, soil fertility, and expanded educational opportunities. In the Pacific Islands, their survival is increasingly determined by natural disasters and climatic change.

When we look at Asia, we are addressing the diverse development challenges. Asia contains some of the most advanced economies as well as sixty percent of the world's poor. As neighbours with common borders, common problems, and shared goals for prosperity and security, Asia is making progress in effectively linking our markets and industries, pool resources, share know-how, and assist each other in times of need.

In southeast Asia, we uphold the principle of "prosper thy neighbour". Sustainable development does begin at home, but it does not stay at home. To prosper, we must be open to one another and to the world. We must ensure that our neighbours must also prosper, and that our neighbourhood remains peaceful. By forging strategic economic cooperation in our neighbourhood, we hope to find better ways to use our natural resources, share responsibility for infrastructure, develop our products, link our markets, and strengthen our joint participation in the international economy.

WTO can play an important role in the exchange of development experiences both between countries and between regions.

My Second observation is on the significance of the productive sector. Trade negotiations are necessary but in themselves do not guarantee a fair share of the development pie, particularly in enhancing the domestic productivity and international competitiveness of the developing countries. Any regional and bilateral trade agreements cannot bear fruit if the relevant country is without a vibrant productive sector.

Attention is needed in linking the objectives of trade negotiations with the capacity of the productive sector. This is a key area in which the interests of developing countries can be served. Trade negotiations must benefit the potential productivity of the grassroots economy. Trade negotiations must aim at having their potential nurtured and developed, and provide the people at the grassroots level with opportunities to pursue the right to development. That conviction is all we need to build our capacity for genuine sustainable development.

As it stands, much of the potential of the developing countries are hampered by weak economic and technological infrastructure and supply side limitations. The WTO and other development institutions such as the UNDP and UNCTAD can help build up the real productive sectors of member countries. They can provide technical assistance in the formulation of economic policies and the necessary legislative adjustments needed to attract foreign investment. They can draw up effective training programmes to enhance the ability to produce. And they can help turning a non-productive into a more productive unit of the society.

My third observation is on the special needs of and the special attention given to the economies of the Least Developed Countries (LDCs). Special and differential treatment still needs to be applied. An enhanced Integrated Framework for LDCs, enabling them to more effectively make better use of the "Aid-for-Trade" approach, should continue to receive global support. The delay in negotiating the Doha round means a delay in the implementation of duty free/quota free for LDC products.

Fourthly, is the proliferation of free trade arrangements. As the WTO is perceived as being in a struggle, many countries are strengthening bilateral and regional partnerships with key partners. There are fears in some quarters that this trend might lead to a weakening of the multilateral system. But I believe it need not be so. I believe that bilateral free trade agreements which are WTO consistent and regional economic integration can serve as building blocks for promoting the multilateral trading system.

Fifth is the issue of IPRs which also lies at the heart of the Doha Round. Protecting innovative and creativity serves, in principle, to stimulate the development of new products for consumer benefits. However, we must remain vigilant to the use of IPR as well. There is a need to strike the right balance between IPR protection as the rewards for the creator on the one hand, against the dire need for the right framework to ensure that knowledge and technology under IPR protection would be properly and timely disseminated. This is particularly pertinent to TRIPS and Public Health. Accessibility and affordability of life-saving medicines such as those for HIV/AIDS, malaria, and avian flu are beneficial to all. Hence, we must continue to work together in order to ensure the right balance for mankind.

Lastly, is capacity building for trade negotiators of developing nations. Multilateral rules and standard setting will not provide a balanced global trading system and would only accentuate global inequality if developing countries are not brought on board. I therefore take pride to have personally taken a direct hand in the establishment of the International Institute for Trade and Development (IITD) in Bangkok in 2002.

As Foreign Minister, I recalled taking up the idea of establishing this institute with UNCTAD Secretary-General Ricupero that led to the opening of the IITD in Bangkok in 2002. The Institute has been most supportive for developing countries to better prepare themselves for the growing complexities of economic globalization, including further liberalization in trade, financial and investment. As I attach my personal sentiment to this institute, I must congratulate the institute in selecting its capable director. Unfortunately, he was so capable that he had to prematurely relinquish his term to become the present Minister of Commerce, Excellency Minister Krirkrai Jirapat.

Distinguished participants,

The pace of further liberalization should be pursued progressively and consistently with the developmental levels and objectives of individual members. A trade round is to be completely successful only when all members are able to fully implement their agreed rights and obligations and gain benefits in so doing. Attempts to link social issues with trade such as labour standards must not be protectionism in disguise.

The Doha Round needs to resume in good faith. The major players need to show extra flexibility in their negotiation positions. Compromise needs to be reached amongst the developed and developing nations. We need more meaningful offers to open markets and eliminate non-tariff barriers. It is the responsibility of all to ensure that confidence in the multilateral system is restored and that the WTO is relevant to all economies.

Given the current impasse, I am hopeful that faith in the multilateral system will be restored. There have been indications from Geneva of resumption of talks at the technical level. Building upon that, just last weekend, the Leaders of APEC expressed their political commitment to the strengthening of the multilateral trading system and to the resumption of trade talks as a matter of absolute priority towards achieving a balanced and more ambitious outcome. APEC represents a vibrant region accounting for 60 percent of GDP and 50 percent of world trade. Their voice carries much weight as APEC comprises many of the major players as the US and Japan in pushing the Doha Round forward.

I am hopeful that the WTO, as a member-driven organization, will be able to mobilize concerted efforts and cooperative spirit of all WTO members to help guide our multilateral trading system towards attaining a more balanced and sustainable growth and development. Challenges ahead are for all of us to overcome if the WTO and its members choose the right direction at the crossroads.

Thank you.