Press conference with World Trade Organization Director-General, Pascal Lamy, United States Trade Representative, Ron Kirk, Canadian International Trade Minister, Ed Fast

Subjects: global trade talks, Eurozone, world economy, Trans-Pacific Partnership.

Transcript, E&OE

23 May 2012

CRAIG EMERSON: Each year on the sidelines of the OECD Ministerial meeting Australia hosts a meeting of members of the World Trade Organization to seek to add momentum to the global trade negotiations. We've just held such a meeting which went over time because there were a lot of views expressed at that meeting.

We concentrated on two or three topics, recognising that at the ministerial meeting in Geneva in December last year, there was agreement to fresh thinking; to new pathways to the finalisation of the Doha Development Round that had been going for more than a decade. That meeting agreed to look at breaking the round into its constituent parts, breaking the linkages between those different negotiations, so that we could bring home some of the more important negotiations sooner rather than later, instead of waiting for a grand bargain to appear – a grand bargain that had eluded the world for a decade.

The discussion today centred on these issues: the process of Least Developed Countries acceding to the World Trade Organization (WTO); the negotiations around trade facilitation; also some discussion about an Information Technology Agreement; and a little discussion about a services plurilateral [agreement].

I think they basically cover the issues, but the context is this: that Europe itself is still in the grip of, at the very least, an economic slowdown. The world is looking for new sources of jobs. Across Europe and the United States, during the global financial crisis, 12 million jobs were lost, and we need obviously in this part of the world to look for new sources of growth, but also, very importantly, to ensure that the developing countries, including the Least Developed Countries, have sources of job creation too.

In simple terms, trade equals jobs and we have moved past the idea that exports are good and imports are bad. Imports can help reduce the cost of living; they can provide inputs into value chains for the re-export of goods that contain those inputs and, therefore, it's not the case that imports of themselves are bad.

So the discussion did lead to I think a high level of agreement that we would do everything possible to conclude the negotiations on the LDC accession package before the summer break. This is a reaffirmation of an outcome of the ministerial meeting in Geneva last year, but it is one based on an analysis of the progress that has been made and I'm pleased that there was that reaffirmation of the commitment to do everything possible to bring the LDC accession package to a successful conclusion before the summer break.

The next discussion was around trade facilitation, which relates to customs procedures and procedures at the wharves, at the ports, and more generally in importing countries. It's estimated that the trade facilitation package constitutes some 44 per cent of the total value of successfully completing the Doha Round and, importantly, that two thirds of those benefits would accrue, in fact, to the developing countries of the world, including the Least Developed Countries.

And that is because if the processes, the customs procedures are simplified, then costs are reduced and that is good both for consumers in those countries, and for producers who are relying on imported inputs in their production processes. We went through a technical discussion about what needs to be done to complete the negotiations on trade facilitation. But there was a high level of agreement that this must be a priority, that we must continue to remove the disputed areas in the text and not bind that up in negotiations in other areas, whether they be in agriculture or whether they be in industrial tariffs or the other elements of the Doha agenda, consistent with the MC8 decision that we would break those linkages.

There was finally discussion around the Information Technology Agreement, that I think now comprises 70 countries. So this is an agreement that has grown in time and grown in scope and there were views expressed at the meeting as to how we might make further progress in that area. I will now move over to Pascal Lamy to add any views and then of course, invite both Ron Kirk and Ed Fast to make any further comments that they might wish to do.

PASCAL LAMY: Thanks Craig, not much to add, I think you've summarised this meeting extremely well. We started this morning, a few of us, discussing here in public, the relationship between trade and jobs and how it works "in the machine room". Which is how you ensure that customs procedures - "oil", "the transmission belt" - work better than they do, which of course is less eye-catching, less headline-grabbing, and takes a bit of time, but it's at the end of the day what needs to be done.

And I think the sort of engagement which there now is and which this meeting has shown on moving forward this trade facilitation negotiation – not that the rest of the Round is left aside – but that there's still work to be done on how we can move forward the other topics. There is some sort of low-hanging fruit there, that may happen, and then we create the momentum we need.

Same on Least Developed Countries' accession. Again, probably not a headline-grabbing issue, although this is extremely important and the experience has shown that the ones that have joined the WTO recently, have done extremely well in terms of growth and poverty reduction.

So those are the two main themes - Information Technology Agreement and services plurilateral sort of second rank; main focus on short-term, how do we move forward the trade facilitation agreement. I wouldn't say we are nearly there, but there is the prospect for moving short-term, and the LDC accessions, where I think the marching orders are very, very clear. And I hope that the sort of clarity which appeared this morning will be replicated in Los Cabos a few weeks from now, including at the level of the G20.

EMERSON: Thank you Pascal.

RON KIRK: Let me at least begin by thanking our colleague from Australia for bringing us together yet again. It's difficult for me to admit that the spectacularly inspiring setting in which we usually hold these [meetings], at the Australian Embassy - maybe locking us in a room not conducive to staring out the window may have actually helped us advance in a more practical way!

The good news is that it does feel as if an overwhelming majority of the body understands the practical implications of the decision that we made at our ministerial in December - that we have to do things differently. And that is, as attractive as it might be for some to continue to try to link progress on one issue to others that they consider important, that that linkage too much resembles, you know, the horrific figure from the Terminator series that once all of the marbles start coming together you end up with the same monster you've been battling the entire movie. And that a more practical approach is 'let's make progress where we can'.

One of those issues in which there is almost universal support is to immediately address the long-desired issues of accession of LDC members. It's not a part of our Doha mandate, but it is an area where we can demonstrate that we can come together and do something we haven't done, frankly, the last ten years, and that's make a decision and advance trade liberalisation, albeit in an area that may not be as sexy, but that countries cannot compete until they are in the WTO, and they address basic areas of infrastructure and needs that are embedded in an issue like trade facilitation, and at least it feels as if there is more and more momentum so let's address those two.

So I want to make it plain the US is fully supportive of those. There are other issues we are equally committed to, particularly given the enthusiasm in our business communities for addressing services liberalisation and in expanding the Information Technology Agreement, but in the spirit of practising what we preach, we are committed and ready to work with our other colleagues to address at least the immediate opportunity we have to conclude our work relative to the LDC accession and to see how much progress we can make on trade facilitation and I hope others will join us in that same spirit.

EMERSON: Thank you Ron. And Ed, any comments?

ED FAST: Well, thank you very much. I too want to thank Minister Emerson for hosting the meeting, our informal working session this morning, and also for the participation of Pascal Lamy, as well as Ambassador Kirk. We had a very productive discussion.

First of all, let me highlight the fact that today the OECD is releasing its ICITE study, which highlights the role which trade plays in driving job creation in our economies. This is likely going to be the definitive work for some time on trade as a key driver of economic growth in our economies. It's certainly a position that our government in Canada has taken for quite a while. We have based our trade policy on that, and certainly that is shared with our colleagues here at the table.

In terms of the session we had this morning, I concur that there is a very significant majority consensus that, in fact, we do need to move forward in finding deliverables that reaffirm the relevancy of the WTO as the pre-eminent forum within which rules-based trading takes place. And there were a number of different areas that we focused on. Obviously the LDC accession process was mentioned and again the goal is to complete that by the summer break. The plurilateral services agreement, the ITA [the Information Technology Agreement], as well as work that's being done on exchange rates; this is another area that we can perhaps make progress on in terms of moving ahead, whether it's within the WTO Doha Round or outside of it.

Canada has long been a champion of trade and of opening doors to help our businesses, investors and innovators compete in the global marketplace. In fact our country is in the midst of the most ambitious pro-trade plan in our nation's history, but we also do recognise that a strong, effective multilateral trading system is critical to our success. And I reasserted that position earlier in our informal meeting.

The role of the WTO – as essentially being the tool under which rules-based trading takes place – is critical to the long-term success of the global economy. We have long supported an ambitious conclusion to the Doha Round, but despite our best intentions and efforts, the Round has stalled, which is why much of the discussion today focused on some key deliverable that can be harvested right now. Rather than focus on what we cannot do, we need to focus on what we can do, at least in the short-term.

Multilateral trade can help each of us reach our shared goal of creating jobs and spurring economic growth. Over the last year, I and some of my colleagues have advocated for a positive WTO work environment, focusing in on new approaches, including small group discussions such as the one we had earlier today.

I'm very pleased that negotiators have begun exploring new initiatives that I mentioned earlier. And I'm also pleased with our progress in the area of trade facilitation. Trade facilitation is a true win-win for all countries, and it particularly benefits small and medium-sized enterprises and LDCs, as was mentioned earlier. These are all great opportunities to breathe fresh life into the Round, the Doha Round, to get countries working together and to perhaps most importantly, to renew people's faith in the multilateral trading system. Successes like this prove that the multilateral system can succeed with a shared commitment to fresh thinking and new approaches. So I'm glad that my colleagues feel that way. I look forward to working with them to unlock more of these opportunities and to get the multilateral trading system back on track. Thank you very much.

JOURNALIST: The EU has said that in terms of negotiating an agreement with the United States, they favour a more comprehensive approach. Are you open to that comprehensive approach they've laid out?

KIRK: Contextually, I'm not sure how that relates to what we were discussing this morning. But let me make it plain that we've made it plain that our mandate from the leaders was to consider everything, including a comprehensive agreement, and I think everyone understands that we could certainly achieve the largest benefit by having a comprehensive agreement. But our mandate was equally to be honest in assessing what some of the challenges are to get there. This is spectacularly the most explosive and mature commercial investment relationship in the world. With that maturity comes the ability to be honest with one another and recognise that there have been reasons that we have not been able to do that before. So what we have expressed is that, as we go about exploring how we can further create economic growth and jobs, we do it in the time frame that our leaders have challenged us to do. Let's just be honest enough to examine whether there might be issues that historically stood in the way and if there are, come up with a credible path. But we have not ruled out anything.

JOURNALIST: Did you discuss trade relations between the EU and emerging economies during today's meeting? And what is your view on the prospects for trade between the EU and the emerging economies, especially China, given that the Eurozone crisis continues to worsen and that the value of the euro is dropping against the Chinese currency?

LAMY: We've had this discussion with the background of a world economy that's not doing well, and a forecast for trade that this year is clearly under par. You know that we published our forecast for world trade a few weeks ago - that it will be below 4 per cent in volume, which is 50 per cent below the sort of 6 per cent benchmark we've had for the last ten or 15 years. Why are volumes of trade so low this year? Basically, because world growth is low by historical standards. And one of the reasons is that European growth is very low by historical standards. Now this of course does impact on other countries including China, for whom the EU remains a very deep, rich, important export market. So this slowing of European growth has an impact on world growth and has an impact on Chinese exports - clearly. Now, in the meantime, Chinese authorities have started getting the first results of China growth rebalancing, which started some years ago, as you know. And it's happening. So that one can be optimistic enough to believe that in the case of China, the domestic engine will supplement what the foreign engine will not provide. So that overall Chinese growth remains in the sort of eight-nine per cent which has been forecast this year, which of course for the rest of the world is a major issue. Because if that's the case, China is becoming if not the main, at least one of the main, importers world-wide – not just an exporter, which is what China was seen to be by others, but the main importer world-wide, which then of course has a big bearing on activity, growth and jobs as well.

JOURNALIST: I don't know if Mr Kirk and Mr Fast discussed this at all but does the US have any intention or plans to invite Canada to participate in the Trans-Pacific trade talks?

KIRK: I think you know that technically … the Trans-Pacific Partnership Agreement was designed to be an open architecture and with the hope and aspiration certainly of the nine of us who have joined so far, that it could become a vehicle by which all of the 21 members of the APEC cooperative would aspire to join. Canada has formally first of all expressed that in a real way with the announcement by their Prime Minister that they would like to join, so that the issue of an invitation is not relevant. What is important now is that the US made a commitment at the conclusion of our hosting of the Ministerial in Honolulu that we would immediately begin to act on that, and we have done so. We are required by our law to put a notice in the federal register, which we did, and to get comments from Congress and the stake-holders relevant - not only to Canada, but Japan and Mexico as well, and we have been working with them on the issues identified on that.

FAST: If I can just follow up on that, and say that questions should be addressed to all the TPP partners and not just to the US. What I can say is that we've had consultations with all of the nine TPP partners. Those consultations we believe have gone well and have made a very compelling case that Canada should be at the negotiating table; that we bring a high level of ambition to the table and that we would be a significant asset at the table for the current TPP partners. Obviously, it's in the hands of the nine partners as to the timing of when new entrants will be bought to the table and also, who will be brought to the table.

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