WTO chief Lamy talks to The Daily Star on prospects and challenges ahead
Bangladesh is moving ahead rapidly showing cohesion in adjusting to various changes and demands, and has the potential to become an emerging economy, Pascal Lamy, director general of the World Trade Organisation, said yesterday.
“Bangladesh achieved a huge reduction in poverty; there has been growth in trade and education and also progress in gender streamlining, though many challenges still remain,” Lamy told The Daily Star in an exclusive interview in Chittagong.
Replying to a query about the reasons for the stalemate in the Doha Round and the conflicting groups that may be involved in this, he said there was stalemate in only one of the 20 topics under negotiation, namely industrial tariff reduction.
He added the conflict was between the rich and the emerging countries, with the US and its allies on one side, and China and the like on the other. The US argues that China has become a bigger economy and trader, and so its tariffs have to go up. China, on the other hand, argues that this is not the right time for it to take this step.
Lamy thinks this issue has now become more of a political issue than anything else.
The Doha Round is the current trade-negotiation round of the WTO which commenced in November 2001. Its objective is to lower trade barriers around the world for facilitating the increase of global trade.
Although there is a belief that there has been a growing tendency of protectionism against the backdrop of the current financial crisis, the WTO DG thinks quite the contrary.
According to him, there has been less protectionism than expected given the size of the economic and social shock.
He, however, agrees there were slippages in some countries but, “Protectionism is one dog that did not bark during this crisis.”
The WTO introduced monitoring process in 2008 and the organisation has so far proved to be “the bulwark against protectionism”.
On scaling down of multilaterism in the wake of the stalemate in Doha Round and the crisis that multilaterism may be in, Lamy thinks multilaterism, be that in trade, investment, exchange rates or disarmament, is in a “worse shape than it was in the ’90s”.
The main reason for this, he says, is the old matrix prevalent in multilaterism — that is the western matrix. Although there has been a geo-political move from the West to the rest, this matrix has not been able to reflect the new geo-political balance.
Another reason for the lack of progress in multilaterism is that governments have been rated lower than before and they were also weaker. He also said governments were more interested in short-term issues like winning the next election.
Asked about the fate of the Least Developed Countries (LDCs) in case the Doha Round is not completed, the WTO director general said with the exception of the US, duty-free and quota-free access has increased over the last 10 years.
He added that emerging countries like China and India now provided 97% duty-free and quota-free access to the LDCs. These countries have taken these measures on their own accord.
Market accessibility for some LDCs has also increased, he noted, saying Bangladesh now exported ten times more garments to Europe than to the US.
“The problem is that the US Congress does not want to vote in favour of this measure as it clearly wants a price for this and that too from the emerging countries.”
On the movement of natural persons as outlined in GATS mode 4 and the impediments in getting it off the soil, Lamy says there have been quite a few changes in the way issues are resolved in the WTO now. Issues which can be resolved without difficulties are selected and these are concluded as “early harvest”.
The GATS (General Agreement on Trade in Services) is a treaty of the WTO that entered into force in January 1995. The treaty was created to extend the multilateral trading system to service sector.
“The GATS mode 4 would benefit specialists and Bangladesh also needs to specialise in certain services. Specific market access to LDCs in some areas would be given preferences and these countries would have to negotiate a priority list,” says Pascal Lamy.
Expressing optimism about the outcome of the next ministerial round of talks at the end of this year, he added they had now done away with the “nothing agreed until everything agreed” dictum. They have now taken the “let’s move the train wagon by wagon” approach.
With this new approach, he is confident, some matters could be resolved before the end of the year.
On a personal note, Lamy, whose second term as WTO DG ends on 31 August this year, says it is too early to say what legacy he would be leaving behind. But he firmly believes that overall, the WTO is now stronger than ever before and has reasonably “weathered” many obstacles.
The organisation has moved quite aggressively, he said, adding that lots of things had changed for the better.
Finally, commenting on his first-ever visit to the port city, he said Chittagong was the lifeline for trades in Bangladesh.
“It is improving, it is becoming larger, but at the same time it needs vast improvement in areas like logistics, transport connection and customs operation. The important thing is to have the capacity and capability to unload cargo from larger ships quicker.”
He added that given the new pattern of trade, where there is big competition worldwide, the ports that have the best logistics and quicker facilities in clearing cargo get more traffic and more trade.
Source: The Daily Star