Lamy: WTO in 2012 - Stronger WTO, Stronger Secretariat

On his reappointment as the WTO DG, Pascal Lamy outlined his plan for the WTO for the next 4 years. Below is his full speech, which emphases added by me.

Lamy: "Strengthening the WTO as the global trade body"

Director-General Pascal Lamy, in presenting to the General Council his vision for the WTO for the next four years, said on 29 April 2009 that "the WTO, as a living organism, should continue to improve its capacity to rapidly react to global challenges, as we are seeing in the current crisis, and to contribute to devising solutions to those challenges. The reinforcement of the multilateral trading system, in particular through the conclusion of the Doha Round, should be our guiding light. In the constellation of global governance, let's work together to see the WTO star shining ever brighter." His presentation was made in the context of the Director-General appointment process.

Statement by Pascal Lamy, WTO Director-General

Mr Chairman,

Thank you very much for the opportunity to express my views and for providing an occasion for a dialogue with all members about the next four years. I hope that this process allows us to distance ourselves, albeit briefly, from our day-to-day concerns, and to look at the bigger picture.

As the poet Carl Sandburg once said: "a politician should have three hats. One for throwing into the ring, one for talking through and one for pulling rabbits out of if elected." The good news is that I have the hat. But the bad news is that we do not yet have a rabbit to pull out of the hat!

Jokes aside, I approach this exercise very much in the same spirit that I did in 2005; that is, remaining at the service of all WTO members and contributing to the strengthening of this Organization.

Let me start by reiterating my deep belief in the primary purpose of the WTO, which is to open trade for the benefit of all. The pursuit of openness, the guarantee of the most-favoured-nation principle and non-discriminatory treatment by and among members, and a commitment to transparency in the conduct of its activities, remain our founding political values.

I remain convinced that the gradual opening of domestic markets to international trade, with justifiable exceptions or with adequate flexibilities, allows the achievement of sustainable development, raising people's welfare, reducing poverty, and fostering peace and stability.

But this does not mean that the benefits of rules-based trade opening accrue automatically to everyone. Hence the notion of a "Geneva consensus", which I enunciated in this same room in 2005. It is about trade opening but it is also about proper domestic and international policies, which help translate more open trade into real, increased and perceived benefits for our citizens.

We are living in a time of crisis. Its full social impact is still to come and it will inevitably create political pressures. And it is precisely now, when protectionist temptations abound, that the value of the multilateral trading system is all the more apparent to us. The GATT-WTO system of global trade rules patiently constructed over the last 60 years is first and foremost a provider of confidence for economic operators. And, as the crisis has shown, confidence is today the missing link to bring the world back onto a path of growth.

Therefore, our main objective for the years to come, as I see it, is to strengthen the role of the WTO as the global trade body. This means making the WTO more development-friendly, more "user-friendly", so that its benefits are felt by all, large and small, rich and poor, strong and weak.

Our core business is opening markets and designing trade rules. This is and will remain our unfinished business. Our task is far from over.

If we agree on this overall objective, which I believe we all do, how can we increase our chances of achieving it?

Based on the experience of the last four years and on the consultations I have had with many of you in recent weeks, there are four areas which, in my view, we should work to improve. These four areas are: negotiations; implementation; coherence; and outreach.

Delivering on the negotiations

Contrary to conventional wisdom, the WTO is more than its negotiations. But delivering on the negotiating mandate of the Doha Round remains the litmus test of our collective ability to strengthen the global trading system. This is why I believe that concluding the Doha Development Round is and should remain our number one priority.

Beyond the trade-offs required to conclude the Doha Round and also beyond the market access that it will bring, lies its hugely important systemic value. The biggest prize in the Doha Round is the certainty, predictability and stability it will bring to global trade. It is in a moment of crisis, such as the one we are witnessing today, that the value of this insurance policy increases.

The hard fact is that concluding the Doha Round is difficult precisely because its results will be meaningful: this Round is two or three times greater than previous ones, in terms of cuts and commitments. Also, this is a Round focused on benefits for developing countries — this is a true Development Round. If measured in terms of duties foregone, two-thirds of the potential benefits of tariff and subsidies cuts resulting from this Round will accrue to developing countries' exports.

What we need to do as of now is to reset the process at a political level, building on where we left it last year.

We have walked along the Doha Round path for seven years now and we are 80 per cent of the way there. We have done it together, with a bottom-up, inclusive process. A lot has been achieved — if you look back from where we started, there is a fairly long list of issues where views have converged. I believe the time is ripe to start taking the negotiations to the last phase; i.e. to run the last mile.

Looking beyond Doha, there are many new ideas floating around on potential areas for future work. Many of these have also come up in my consultations with you. Take climate change, where I am convinced that the first step should be a multilateral agreement embracing all major emitters that we all hope to see emerge at Copenhagen. Issues relating to food security, energy, labour, competition, investment or financial protectionism, however defined, are also in the air.

My own sense is that our capacity to project ourselves into the future depends on our capacity to make the present happen. These issues do not belong in the current agenda. Obviously nothing prevents us from thinking about the future but I believe serious work on any future topic should commence when the finish line of the Doha Round is firmly in sight.

Let me mention two areas which are part of our current mandate and which, in my view, deserve more of our attention: Regional Trade Agreements and Rules of Origin.

On RTAs, it is difficult to see why such deep concessions and commitments are undertaken today in the context of preferential agreements, without any consequences in the multilateral context. We all know this is a complex issue and that there are differences between RTAs aiming at deep regional integration and other free trade agreements. But, if we are serious about the prevalence of the Most-Favoured-Nation principle, we should collectively think about some way of gradually "multilateralising" concessions made in free trade agreements. Food for thought for Article XXIV negotiators.

On Rules of Origin, the proliferation of different regimes — regional, bilateral or even unilateral — needs, in my view, to be addressed head-on, in order to simplify the lives of trade and economic operators.

These two examples — RTAs and Rules of Origin — show that the WTO's current agenda is anything but old-fashioned. A lot of what we do today was already in the agenda of the Uruguay Round, even in the Tokyo Round to be more precise! But the fact is that they remain as relevant, if not more so, for economic operators today.

There are also a number of ideas being floated as far as the negotiating processes are concerned. Many have been explored in the Sutherland Report as well as in the Report of the Warwick Commission.

We currently operate within three constraints: decision-making by consensus, all negotiating items bundled into a single undertaking and a bottom-up negotiating process.

I do not think the "consensus about consensus" should be reopened. Taking decisions by consensus increases the legitimacy of agreements reached in an international forum, which is necessary and welcome, as the degree of legitimacy decreases with distance from domestic political processes.

The question then is how to build consensus. Resorting to the well-known concentric circles' approach is probably the only efficient method available. But it demands a rigorous transparency commitment by all: everyone must do his/her part. We must recognize that there is not yet enough transparency in the way we currently work — hence, there is room for improvement.

We also need to find ways to move faster to the centre of gravity on the negotiating topics, to increase efficiency. Here, in my view, there is something to be learnt from the negotiating processes of other international forums.

Sectoral and plurilateral agreements or concepts such as "critical mass" have already been tested. But again, I believe this should not be the focus of our work at this stage.

Improving implementation

The second area of future focus should be improving implementation of existing agreements. When one looks at the functions of the WTO, there is a striking contrast between the sophistication of the negotiations, the solidity of the Dispute Settlement Mechanism and the fragility of surveillance and transparency, which is nevertheless one of the pillars of the multilateral trading system.

The mandates for notifications and peer review are there, but in my view not enough attention and resources have been given to their implementation. A certain lack of overall vision and of analytical capacity handicaps the surveillance function of the WTO.

There are, however, some bright spots. Progress has been made in transparency in Regional Trade Agreements, for example. And with the monitoring of the measures taken in response to the crisis we have shown that we can collectively make a more muscular use of these mechanisms. But many committees register a poor record of notifications and — most importantly — of their quality and examination. As one of you told me the other day, we have been collectively a bit lazy in this field.

The challenge is how to improve this. We could make better use of technical assistance, focus more on the capacity of members to comply with their notification obligations and better prepare them for a more effective peer review. We could better operationalize Trade Policy Reviews. We could also redesign notification formats so that they become multipurpose. An improved surveillance process would surely increase trust in the system and avoid jamming the dispute settlement mechanism, through an "early warning" system.

As for dispute settlement, my sense is that overall it is working well. In addition to what is being negotiated in the DSU review process, there are some areas for improvement, such as reducing the administrative costs for the Secretariat — the length of submissions and annexes to be translated is one issue to be tackled — and addressing peaks of activity.

Compliance with dispute settlement decisions is also an area to be given attention. As is the participation of developing countries in dispute settlement, where I believe that a boost to the Advisory Centre on WTO Law would surely be welcome. And also how to make better and more frequent use of good offices, mediation and arbitration, procedures which are provided for in our existing rules.

Building on coherence

The third area I would alike to flag is how to ensure more coherence both internally and externally.

Starting with the Secretariat: my view is that, in spite of past progress, there remains a need to further de-compartmentalize divisions, improve internal communication, enhance mobility of staff, make use of task forces - such as the one we have for crisis monitoring - or establish pools of experts, for activities such as Trade Policy Reviews, technical assistance and accessions. We should also have more informal sessions and seminars with members, to look across areas covered by the WTO.

Externally, the WTO is one of the planets in the global governance galaxy and its know-how can be leveraged even more to tackle global governance challenges. The main ingredients of global governance are efficiency and legitimacy. The key to combine these two elements is coherence.

We have used our convening power to ensure a more coherent approach to different issues in the international trade and economic agenda. In the last four years we have strengthened the functioning of the explicit coherence mandate that the WTO has with the World Bank and with the International Monetary Fund. But we have also worked to expand the WTO's coherence with other international and regional organizations. I intend to continue working along these lines.

Aid for Trade and the Enhanced Integrated Framework are clear examples of that. Monitoring of the measures taken in the context of the current crisis is another example. Trade finance and the recent initiatives to convene stakeholders at the WTO to address this issue globally are also examples of our capacity to promote a coherent approach to global problems. The same can be said of the Standards and Trade Development Facility (STDF). We should build on this in the future, and pay more attention to the regional level, which is becoming more and more relevant, including for our trade-related technical assistance.

We are engaged in joint research with other international organizations, such as the ILO, the OECD, UNCTAD and Regional Development Banks. A joint study on trade and climate change jointly produced by the WTO with UNEP will soon be published.

On a more macro level, the building of bridges with the UN system, with trade being part of the Millennium Development Goals' endeavour and through my own involvement in the Chief Executives' Board, should also help to improve coherence in our work with the United Nations family.

Boosting outreach

This is one area where, despite our efforts, a lot of work remains to be done. There continues to be a disproportion between the activities we have amongst ourselves - over 7,000 meetings taking place in the Centre William Rappard every year - and the intensity of interaction with our environment and the public.

Starting with our own circle: there is room for improvement in the interaction with small and non-resident delegations. A review of the proportion of training resources offered to these members should be done, so as to ensure that their needs are addressed.

Then, reaching out to non-members, we have accessions, an area that many of you have pointed out as needing focus in the coming years. There is a certain malaise amongst acceding members, as they feel that the bar for accession seems to continuously rise. There are specific concerns on the part of LDCs on the use of the guidelines for their accession to the WTO.

Accession is a complex process, necessitating both domestic ownership and capacity, which require hard work in many acceding members. However, I believe that there may be merit in devoting more focused efforts as well as ensuring greater political attention to accessions, in particular those of Least Developed Countries. I for my part also intend to do so when this is required.

Turning now to our external stakeholders — NGOs, parliaments, staffers, academics, business — there is also a need to strengthen networking and increase transparency.

In the past four years, we have worked to enhance our engagement with civil society. We have launched a pilot accreditation project of local NGOs to facilitate their access to the WTO premises during Ministerial Conferences, Trade Negotiation Committees, and General Councils. We have devolved a greater portion of the organizational aspects of the WTO's Public Forum to civil society, allowing civil society to itself shape the Forum. I myself have regularly engaged with NGOs both in Geneva and during my travels, acknowledging their input in our work.

We have made better use of our website and of electronic dissemination, through webcasts. We have strengthened our outreach to academics, in particular those in developing countries. Just this week we have launched the WTO Essay Award for young economists.

But there is more to do. In my consultations with civil society ahead of this meeting, a number of ideas were raised. For example, a greater opening of our Trade Policy Reviews or greater engagement of civil society on the ground during WTO Technical Assistance missions. These ideas are worth exploring together.

Special attention, in my view, should be given to parliamentarians and staffers, who hold the keys to deciding agreements at the end of the day and adopting legislation in a WTO-consistent manner.

Our most challenging outreach problem, though, remains with the general public. The WTO has very high notoriety — but low popularity, even if this is changing, in particular in developing countries. The WTO is too complex to be user-friendly. Communicating WTO is like telling people that Lord Jones has died when they did not even know that Lord Jones was alive! Its complexity is a handicap — something which deserves serious thought. We need to think how we communicate in a friendlier way.

We have improved our WTO website, which is very well-rated amongst surfers of the web, but more can be done, using all three languages.

In sum, we need to change gear. The classic asymmetry in the politics of trade - the many who benefit are silent, the few who suffer are vocal - means that the burden of proof is on us. It is for us to make the case for open markets and better regulation. We need to have a better radar picture of media reporting on the WTO. Public perceptions continue to be too dotted, especially in the non- English speaking world. There is a need for further engagement with domestic and regional media. And the WTO Secretariat cannot do it alone; we need to work on this together.

A Secretariat at the service of members

Let me now turn to the Secretariat. It is small but beautiful. Comparatively small in size and therefore capable of rapidly adjusting to changes in priorities, in workload as in tasks. Beautiful because it is full of powerful intellects and efficient professionals and support staff devoted to servicing you.

My overall objective, as the head of the Secretariat, is to enhance its capacity of providing support to members. For that, there is a need to keep modernising the Secretariat, while keeping it frugal. Version.3 changes have increased productivity — and will continue to do so.

As to recruitment, I will continue to adhere to the principles of expertise, merit and diversity. In the last four years and even within the very limited overall staff turnover, we have increased the number of nationalities of our staff: we have added eight new nationalities from developing and Least Developed Countries. Sixty per cent of staff recruited at junior professional level have come from developing countries and LDCs. Half of them had gone through one of our internship programmes. Two-thirds of our internships went to developing-country and LDC young professionals.

But there is more to be achieved in terms of improving diversity, including on gender mainstreaming, as well as in improving our internships for young professionals, as suggested by some of you, in particular from developing and Least Developed Countries. I will continue to advance this.

We have worked to make the WTO a greener organization by developing a plan to cut down emissions. In this context I believe that we could work together to use more technology and reduce the paper flow to Delegations. As far as the Secretariat is concerned, I intend to pursue the objective of achieving a paperless Secretariat by 2012.

On the building, our aim is to keep the renovation costs within the envelope which has been agreed by members. The renovation works have already started in the south wing, with the date for the end of the entire works being Autumn 2012. By then, we will have renovated the Centre William Rappard and built its extension in the current south parking — local political specificities permitting of course. I count on the support and well-known lobbying skills of you all to engage in this important local campaign !

There will be the unavoidable disturbance during the works which we will strive to keep to a minimum. There will also be difficulties with parking, even if the Secretariat has vacated all but a handful of parking slots on site for your use. In advance I count on your understanding for the disturbances during the renovation and construction period.

Also on the Secretariat, I believe we have to increase its services, its support and its analytical capacity. The issue cuts across all areas of improvement I have identified.

We cannot do our work better without seriously increasing our research, analytical and dissemination capacity. We need to work further on our databases, in terms of accessibility and interoperability. But simply producing and publishing data is not enough. We need to be able to better analyze and share it. The WTO needs to become more of a reference on trade knowledge, i.e. on the analysis of global trade policy data and statistics. We need to move from production to interpretation, from raw numbers to trade intelligence. And again, this is key to all areas: negotiations, monitoring, dispute settlement, technical cooperation and outreach.

Also, we need to continue operating as a forward-looking radar on trade issues, but in a more systematic way. We need to be fully aware of new issues and examine potential future obstacles to trade, to be at the cutting edge of awareness of the shaping factors of world trade, to continue to better serve you. This requires efficient networking — and hence a stronger base in the WTO, so as to be able to provide members with simulations, quantifications, scenarios and options.

The changes introduced in the Secretariat so far have increased our efficiency, but we are working at near-full capacity. To be able to further improve our services to you, to be able to respond to requests for analytical work, we will need to increase our resources. Staff will have to be strengthened with more economists, lawyers and communication specialists. There is scope for redeployment which I will continue to do. But my own sense is that this will not be enough.

My approach to our budget has been a simple one: the budget is a forecast, not an authorization to spend. If there is money left, we give it back — which we have done. And the introduction of an activity-based budget will make us more accountable to you. We will have an occasion to discuss this in our next bi-annual budget. I count on your support for this.

One issue of particular concern is the current situation of the WTO staff pension plan. The plan, as you are aware, is of the collective responsibility of WTO staff and members. Apart from the negative impact of the crisis on the plan, it also suffers from an actuarial deficit, which should be addressed urgently. I trust that members will give due attention to solving this problem in the near future.

While on budgetary issues, I have a concern with the issue of arrears, in particular those of our poorest members. Some thought must be given to how they could start from a clean slate. Another concern is the increase of trust funds, which implies costly administrative work. We should seriously consider whether there is scope for the integration of at least some of the current activities provided by trust funds into the regular budget.

Let me close by addressing the question of WTO ministerial meetings, which many of you have raised during our consultations. We should de-dramatize ministerial meetings, make them a more regular exercise, where WTO activities are reviewed across the board, to ascertain the level of satisfaction of members with the running of WTO activities and to address priorities at a political level. We have not had a ministerial meeting since 2005 and my own sense is that we should not close 2009 without one. A regular ministerial meeting is one thing; ministerial involvement in negotiations is another. We should not confuse the two.

In conclusion, Mr Chairman, no major surgery needed in the WTO. No major overhaul of the system is required. But rather a long to-do list to strengthen the global trading system. I am ready to do my part and to assist members in achieving the objectives of this Organization. The WTO, as a living organism, should continue to improve its capacity to rapidly react to global challenges, as we are seeing in the current crisis, and to contribute to devising solutions to those challenges.

The reinforcement of the multilateral trading system, in particular through the conclusion of the Doha Round, should be our guiding light. In the constellation of global governance, let's work together to see the WTO star shining ever brighter.

I thank you Mr Chairman.