- The Washington Times - Sunday, September 7, 2003

Special correspondent John Zarocostas in Geneva interviewed Supachai Panitchpakdi, director general of the World Trade Organization (WTO), for The Washington Times last week about the WTO ministerial conference in Cancun, Mexico, opening Wednesday and seeking to advance global trade talks that face a Jan. 1, 2005, deadline. Mr. Supachai, 57, is a former deputy prime minister of Thailand and a respected economist.

Question: What is your message to the ministers from 146 countries who will meet in Cancun, and what is the purpose of the talks?

Answer: My hope is that the ministers will come to Cancun with a strong wish … [to build] a foundation for our final success towards the end of 2004. …

I hope the ministers [will] look at the draft ministerial text carefully, and also the cover letter, so that they would have the full information of what has gone before … Because there are areas in which we have made progress, but there are still a number of key areas in which we would definitely need political decisions to be made … [They should be ] … prepared first to face the controversial issues; second, to make courageous decisions; and third, prepared to compromise — to have flexibility …

Q: The negotiations in Geneva did not achieve the progress you sought in the areas of agriculture, nonagricultural products, and reducing tariffs and nontariff measures in these areas. Why expect progress in Cancun?

A: I consider the work that we have done at Geneva adequate to provide the ministers with background information. Although we cannot yet agree on some of the figures for market access for agriculture and manufacturing, I think we have identified areas which countries should consider as priorities.

For example, in agriculture, I think there is a convergence in the area of market access on the need to adopt some sort of a blended formula. I think … that is quite crucial, because that’s a key issue for market access. …

But we still have to grapple with some areas of concern, and I will just mention two — how to deal with some parts of domestic support, for example, the question [of subsidies with less trade-distorting effect because they are subject to production constraints], and how to deal with the mandate from Doha. (Editor’s note: This is a reference to the November 2001 declaration of the Fourth WTO Ministerial Conference in Doha, Qatar).

The sentence that says “with a view of phasing out [agricultural] export subsidies” — how to make a decision to reflect that kind of an ambition from Doha. Because I think we need some kind of decision on export subsidies. I find that these are well-identified areas, areas in which ministers will have to take political decision. They’re bound to do it. They have not as yet … put a number [on it] … but they may have to think in terms of the time frame, so that deadlines may [lead to] crucial decisions to help determine how far we can go. Because all this has to do with deadlines.

Q: Many poor, developing countries are saying [that] for them to make any movement in areas of interest to rich countries, they want to see substantial movement in Cancun on agriculture — otherwise forget about movement in the other areas of interest to rich countries, and specifically, the new issues such as trade and investment, trade facilitation, transparency in government procurement, and [trade] and competition policy.

Do you think that message has gotten through to key capitals like Brussels, Washington and Tokyo?

A: Having had some conversations in the last few weeks and last few days with people around the world, I have the feeling that key capitals of developed countries are mindful of the primacy of agricultural reform, the sign of which is the joint paper that has been produced by the [European Union] and [United States].

Of course, it’s not something accepted at the moment. But it’s something that we worked on for years in the Uruguay Round [1986-1994] before there could be an agreement between the U.S. and the EU on agriculture. Now we have that, and although I don’t think it’s the end of our discussion, at least it sends out the kind of signals — they reflect in their joint paper the need for agriculture to be treated upfront.

And now that the group of developing countries — they call themselves the Group of 20, and that includes China, Brazil, India and South Africa — I think they are proposing something in response to that paper. …

It shows that at least here, we have back-and-forth negotiations. People try to recategorize positions, moving their positions. This augurs well for Cancun. We’re not there yet, but at least we have identified at least four or five areas of differences, from which we can start our negotiations successfully, fruitfully, in Cancun.

Q: What would be your message to a businessman about what could come out of this round, and what’s your message to the average consumer and household? What are the benefits [for them] out there?

A: If this round comes out on time — meaning around the end of next year — it would send out the signals that at least in our multilateral undertakings, [in terms of] the success of predictability and the degree of predictability businessmen should be able to rely upon, we would be creating a better environment … in the fast-globalizing world.

We would also be sending out signals that we could deal with the difficult issues of the world. Namely, intractable issues in the areas of agriculture, public health, trade and environment …

So not only in the traditional areas of manufacturing, but there will be other areas, which are more difficult. And also, we are embarking, as you know, on services negotiations. It would send out the signal that countries [will] move to modernize their economies, basing them more or less on the knowledge industry. That we will be facilitating that kind of move, in the area of services that will be related to the modern technology.

And also for consumers, it would mean they would have more choices. There would be a larger degree of competition that would result in the improvement of consumer welfare. I’m sure the prices will be more competitive, and the quality of products should be quite enhanced.

Q: On the question of reducing tariffs on goods and agricultural products. A lot of developing countries have made the argument that many tariff revenues are still very important for government budgets, and to have drastic cuts would put them in a bind. The counterargument is that lowering duties — some down to zero, or harmonizing to low levels would generate a lot of momentum in economies and would generate more revenues through other means. How do you find a balance here?

A: According to some impartial studies, by the [International Monetary] Fund mainly, it has been shown that the question of erosion of revenues due to trade liberalization has been damaging only in a restricted number of countries. It’s not been a prevalent case. In certain ways, more economies are totally dependent on key single commodities for revenues, and this could be creating some damaging effects. In general terms, customs reforms so the efficiency in collecting revenue could be increased can more than compensate for the loss in revenue.

Second, the trade-creating effects on economy, meaning that it could lead to more job creation, that would be an avenue for the market to be adjusting itself so that jobs could be created instead of having governments intervening into the market and using public money to do so. … If trade can help to do the job, without having to put public funds, we should allow trade to do the job. … Customs reform will go a long way towards compensating for the loss of revenue.

Having said all this, I recognize that some countries really can be hurt because of the erosion of earnings. We’re going to carefully look at some of the trade-policy reviews to identify which areas, which countries in this group, would be strongly affected by the erosion, so that we can start a program together with the Fund and the World Bank to put up certain assistance, and we’re doing this. …

Q: The political understanding brokered on Aug. 30 easing access to essential drugs for poor nations has removed a political hot potato from Cancun. What does this mean for this institution? How do you interpret this agreement?

A: I will answer the easy one first — what it means for this institution. It means that we are capable of doing a service to mankind, not only in commercial terms, but also to alleviate humanitarian problems. … I think this is a good means to establish that kind of an image. It also helped to confirm the development background of this round.

This is a key agreement that we have reached before going to Cancun. It’s one of our earliest agreements besides the LDC [least-developed country] accessions. And … it’s good for symbolic value, in terms of trust building.

But it also does have some implications, which will have to be proven by practical implementation of the exemption. I do realize that a number of [non-governmental organizations] and some representatives of pharmaceutical industries are saying this may not make much of a difference.

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