Permanent Mission of the European Union to
the World Trade Organization (WTO)

EU statement by Executive Vice-President Valdis DOMBROVSKIS

Geneva, 16/09/2021 - 00:00, UNIQUE ID: 210917_24
Local Statements

EU priorities for the future of the WTO ahead of MC12

 

Ladies and Gentlemen, I am delighted to be in Geneva, one of the global capitals of multilateral cooperation. And of brilliant thinkers.

One of the city’s greatest minds, philosopher Jean-Jacques Rousseau, once famously said that 

‘To live is not to breathe, but to act’.

Ladies and Gentlemen,

It is high time for action.

In about two months, Ministers will gather here for the 12th Ministerial Conference of the World Trade Organization.

But they will meet at a time when the case for global trade rules – sometimes even free trade at large – is alarmingly contested.

So, today I would like to talk about two things:

First: Why we need to reform the WTO.

Second: how we get there.

***

On the first point:

I know I am preaching to the converted here. For most of us the case for openness and fairness is a no-brainer. 

The World Trade Organization at the heart of the multilateral trading system has contributed to stable economic growth for over a quarter of a century. And GATT even for much longer than that.

This, in turn, has helped lift millions of people out of poverty[1].

Research suggests that, on average, after joining GATT and/or the WTO trade between members almost tripled.

And that matters because global trade helps create jobs!

Let me give you a few numbers from Europe. 38 million jobs in the EU depend on exports. This means that nearly 1 in 5 jobs is linked to EU exports to non-EU countries.

But there is much more to the story beyond those figures.

Global trade rules have created predictability and stability. In the aftermath of the COVID-19 pandemic, a stable trading environment is more important than ever to stimulate economic recovery.

So, why am I emphasising these basic facts?

Well, in some way the rules of global trade are like oxygen. They have been with us for so long that we start forgetting about them. We take them for granted.  But, if they were to disappear, we would immediately remember how vital they are for us to function.

We have to acknowledge that benign neglect is not a solution – it sucks the oxygen out of the room. 

A fragmented trading system based on power relations will harm everybody and benefit no one.

It would also hit the interests of those developing countries that are less integrated in global trade. That would be particularly tragic at a time when we are witnessing a historical effort by African leaders to integrate their continent.

For me, in the end, it all comes down to the question of what we want:

  • Do we want a stable and predictable trading environment, or uncertainty?
  • Do we want the WTO as an independent arbitrator on trade disputes, or do we want unmanaged clashes with negative repercussions for everybody?
  • Do we want a forum to develop new trade rules for the future, or see where power conflicts will take us?

To me it is clear: The world without a functioning WTO is a worrisome place.

***

But business as usual is not an option, either.

The face of trade has changed considerably since the foundation of the WTO. Meanwhile, the rules that govern the organisation have not.

In its current form and state, the WTO is caught between a rock and hard place.

Its negotiating function is paralysed.

Its dispute settlement system is frozen.

And its membership is deeply divided as to the direction in which the Organization should go – there is an absence of common purpose.

Some even argue for a WTO 2.0 of like-minded countries as the only way forward.

It is beyond all question: The WTO is in urgent need of reform.

***

This takes me to my second point. How do we reform it?

The EU set out its vision for a reformed WTO with concrete proposals in its renewed trade policy strategy in February. Without going into too much detail, let me highlight a few overarching ideas, which I believe will be key as we look beyond the immediate outcomes of MC12.

Broadly speaking, we believe a deep reform should work along three tracks:

  1. First, we need to restore the centrality of the WTO in international trade negotiations:

Trade rules need to finally catch up with the realities of the 21st century. For example, this century is digital and trade rules need to reflect that. Of course, the list doesn’t stop there: We need to address issues such as investment facilitation and update rules on subsidies, including both industrial and agricultural subsidies. On agriculture, people have been expecting new negotiations since the end of the Uruguay Round in 1994. We need realistic but meaningful outcomes here. Efforts on these as well as on transparency should be complemented by a meaningful negotiation agenda on domestic support.

We also need to conclude negotiations on fisheries subsidies as a matter of priority. There are of course differences between the various constituencies. And we need to bridge them.

But we believe that the text we have is a good basis. And it would require a little bit of courage from each of us to get into the landing zones. 

A pragmatic result on these issues would be a boost for the WTO.

So, let’s be pragmatic.

Let’s admit that the perfect can be the enemy of the good – and focus on delivering outcomes in the real world, rather than reaching for the stars.

Let’s combine areas where multilateral agreements are possible with those where we can only achieve progress through open and inclusive plurilateral agreements.

  1. Second, we need to design trade policy to meet the new global challenges.

The pandemic is yet another reminder that trade does not exist in a vacuum and that cooperation is key.

The EU believes trade can and must play its role in addressing the big tests of our time – from health issues to climate change to digital.

On the pandemic response, I would like to take this opportunity to thank Director-General Dr Ngozi for her unfailing efforts to promote equity in vaccine production and distribution. By connecting the relevant dots and actors, she has really moved the needle on the international debate.

The EU has long been a global leader in medical goods. We will continue to step up production to benefit others as quickly as possible. We have already exported more than 700 million vaccines to 130 countries and we plan to do more.  We have already committed to donating 250 million doses.  We will add a new donation of another 200 million doses to low-income countries until the middle of next year. And we are also supporting the development of production outside of the EU. Just recently, we committed to mobilise 1 billion euros to help the establishment of mRNA production capacities in Africa. This initiative aims at tackling all the barriers to production, from infrastructure and production capacity to training and skills, supply chains management and a strengthened regulatory framework.

This is what is needed to ramp up production. Globally, the production of vaccines has increased at unprecedented rates. It is estimated that more than 11 billion doses of COVID vaccines will be produced in 2021, while the total annual global output of all vaccines before COVID was only 5 billion doses.

However, now that the manufacturing capacity is coming on board, we need equitable access to vaccines so that they get to the arms of the global population.  Here is where the WTO, through the trade and health initiative, can play a role, by facilitating trade and avoiding any restrictions or barriers to trade.

This is why the EU is working towards a Ministerial declaration on trade and health at MC12. 

On climate change, we need to put our heads together on this and other environmental challenges, too. Here we should explore how the trading system can help us reach climate neutrality, for example, via the liberalisation of environmental goods and services.

The 21st century is the digital century – e-commerce is a rapidly growing force in global trade.  Accordingly, the e-commerce negotiations at the WTO can and should shape modern rules to facilitate trade in this burgeoning sector.  We should use MC12 as a launch pad to give it further impetus.

In addition, we need to help the WTO establish a dialogue with other international bodies. In the area of labour, for instance, the WTO should work to reinforce its cooperation with the ILO on how trade policies should promote decent work.  This is particularly important to ensure that trade is free from forced labour.

And those are just some of the avenues worth exploring.

At the same time, we have to be honest with ourselves that the WTO is not the tool to solve all the problems of the world.  But we can make small, yet important steps to deliver for the global community, in areas that matter.  

  1. Third, we need to work together to fix the dispute settlement system.

In a world of growing geopolitical tensions, a well-functioning dispute settlement system is critical to avoid the escalation of trade conflicts. Sober, independent adjudication will help depoliticise trade. We acknowledge the concerns about the functioning of the Appellate Body.  And we are open to consider major reforms - provided that they make the dispute settlement system more effective and legitimate.

It cannot just simply be a question of returning to 1995. And even less of going back to the days of the GATT when disputes were regularly blocked and conflicts escalated. At MC 12 we need to start a serious process of negotiations on dispute settlement reforms with a view to have a fully functioning system no later than MC13.

***

We cannot achieve any of this on our own. We need to work with all WTO members. In the process, we will have to address painful questions. But this will be the only way for us to set the WTO on track and help it stay relevant in the 21st century. 

With effectively 8 weeks to go until MC12, this is a critical moment.

We need all hands on deck. We have to stop speaking past each other and focus on what unites us rather than divides us

The case for the WTO is irrefutable.

It has served our economies well for decades.

Let us act and get things moving.

Thank you.

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