As the World Trade Organization (WTO) celebrates its 25th anniversary, Director-General Roberto Azevêdo reflects on the WTO's achievements and the extraordinary challenges it faces in the years ahead.
Message from Director General Roberto Azevêdo
Over the past quarter century, the WTO has helped transform international economic relations.
The existence of binding rules governing global trade in goods and services has facilitated enormous growth in cross-border economic activity. Since 1995, the dollar value of global trade has nearly quadrupled, while the real volume of global trade has increased 2,7-fold, far outstripping the growth experienced by global GDP over that period, which doubled.
Average tariff rates have been cut by almost half, from 10,5% to 6,4%. For the dozens of economies that have joined the WTO since its inception, accession has entailed deep reforms and commitments to open markets that, according to studies, have brought with them a lasting increase in national income.
The WTO has helped to make market conditions predictable, and this has combined with improved communications to enable the emergence of global value chains. By being able to move components and related services between different locations, companies have been able to distribute the production of manufactured goods across different countries and regions. Trade within these value chains accounts for almost 70% of world merchandise trade.
The emergence of global value chains has been key to enabling rapid growth in developing economies, which have regained lost ground, while increasing purchasing power and consumer choice in all countries. It is no coincidence that poverty has been reduced at an unprecedented rate over the past 25 years: in 1995, more than one in three people in the world lived below the extreme poverty line set by the World Bank at US$1,90. Today, the extreme poverty rate is less than 10%, the lowest in history.
In recent years, WTO members have agreed to streamline border procedures through a landmark Trade Facilitation Agreement that is expected to boost trade by more than US$1 trillion annually. They have also liberalized trade in information technology products and eliminated harmful export subsidies on agricultural products.
Despite these considerable achievements, it is no exaggeration to say that the WTO is now facing challenges that we have never faced in our relatively short history. Over the past two years, governments have introduced trade restrictions covering a substantial part of international trade: US$747.000 billion worth of global imports have been affected in the past year alone. Growing uncertainty about market conditions is causing businesses to postpone investments, weighing on the growth and future potential of our economies. What governments in the WTO do to address these challenges will influence the course of the global economy for decades to come.
Quiet dynamism
Overall, there is no doubt that the WTO and the trading system we oversee are viewed by all 164 members as a public good worth preserving and strengthening. This may explain the quiet dynamism in the corridors of the WTO. The energy is palpable, and it is a sign that profound changes are afoot.
The WTO's negotiating functions are entering a phase of experimentation that promises to yield new rules that will be directly relevant to the 21st century economy and to current concerns about sustainability.
As 2019 draws to a close, we are seeing the all-important negotiations to end the most damaging fisheries subsidies that are depleting our oceans resume. Members know that we must reach an agreement by June, at our XNUMXth Ministerial Conference in Nur-Sultan, Kazakhstan, or collectively take responsibility for missing a key Sustainable Development Goal target. Negotiations on agriculture have received new momentum, and members are taking pragmatic steps to see where agreement can be reached on vital issues.
Various groups of Members are also working to establish new rules on a range of issues – from e-commerce to investment facilitation to domestic regulation in services – with a view to making trade more efficient and predictable in cutting-edge sectors of the economy. Members are also seeking to make it easier, safer and more viable for women and small businesses to participate in global trade, which would help make trade more inclusive.
It is true that we suffered a setback on the dispute settlement front in late 2019, when Members failed to agree on reforming the Appellate Body. However, I have already begun consultations with Members to discuss all aspects of dispute settlement reform at a high political level, both in Geneva and in capitals, with a view to identifying possible solutions. At the same time, many Members are considering various creative interim options, in order to keep a two-stage dispute settlement system operational while a permanent solution is sought.
I continue to believe that the WTO is more important than ever for the global economy, job creation, growth and development. And despite the uncertainties facing trade today, I believe that 2020 offers real opportunities for us to achieve significant results. There is every chance that the negotiations taking place in Geneva will bear fruit in Nur-Sultan in the form of new agreements or new frameworks. Indeed, the XNUMXth Ministerial Conference may well result in a set of agreements that will be among the most important in the history of the Organization.
If the past 25 years have taught us anything about the WTO, it is that the Organization is resilient and resourceful. We have served our Members well over the past quarter century and will continue to do so in the future.
25 years of WTO achievements and challenges https://t.co/uAALP5xepX pic.twitter.com/OuSPFlP58X
— WTO in Spanish (@OMC_es) January 1, 2020
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