WORLD TRADE  
ORGANIZATION  WT/MIN(05)/ST/33 
14 December 2005 
 (05-5968) 
MINISTERIAL CONFERENCE 
Sixth Session Hong Kong, 13 - 18 December 2005 Original:   English/ 
 French 
 
  
ORGANIZATION FOR ECONOMIC COOP ERATION AND DEVELOPMENT (OECD) 
 
Statement by Mr Donald Johnston
 
Secretary-General  
 
(Speaking as an Observer) 
 
 
 It may seem trite to declare that the Doha Development Agenda offers major opportunities for 
growth and economic development through trade.  But it is a message worth repeating.  With over 
one billion people living in poverty, this is a comp elling challenge – and a ch allenge we must meet. 
  Nature abhors a vacuum.  If multilateral acti on stalls, other initiatives will fill the gap.  
Bilateral and regional trade deals will proliferate ev en more than in recent years.  And plurilateral 
agreements, covering just specific sectors or areas of  activity, will be reached.  There will be other 
negative consequences as well in terms of opportuniti es forgone, most importantly, a failure to bring 
much of the developing world out of abject poverty.   I would remind you of the wisdom of Shakespeare: 
 
"There is a tide in the affairs of men, 
Which, taken at the flood, leads on to fortune; 
Omitted, all the voyage of their life 
Is bound in shallows and in miseries ." 
 
 To use this analogy, we are now at the flood and must act, but the tide of opportunity may 
well recede quickly if the potential provided by the Doha Round is not seized.  And if not seized, what 
would be the consequences?  What shallo ws and miseries would a failure portend? 
  Departing from the multilateral process would be particularly costly for developing countries.  
Many – especially smaller and poorer developing countries – would be excluded from bilateral deals 
and risk being marginalized.  Moreover, those developing countries which are offered bilateral 
arrangements are hardly likely to emerge as the net beneficiaries when negotiating with a major 
power.  
 The opportunities forgone from a lack of  progress on the multilateral front will be 
considerable.  Take trade facilitation as an example.   We calculate that developing countries would 
capture two thirds of the worldwide income gain s from a DDA agreement in this area, which would 
be forgone with no agreement.  Furthermore, if trade facilitation reforms are restricted to 
OECD countries, we estimate that the resulting tr ade diversion would cause a 3 per cent income drop 
in developing countries. 
 
 In addition, some $68 billion which would accr ue to developing countries from full tariff 
liberalization would be forfeited. WT/MIN(05)/ST/33 
Page 2  
 
  In the area of agriculture, a failure to improve market access would seriously prejudice 
farmers, as well as consumers, throughout the world, including in developing countries. 
  The striking gains on offer from further liberali zation of trade in services would be forgone 
and again, developing countries would be among the principal losers. 
 
 Developing countries' own liberalization is a key element in all these areas;  a failure to move 
forward here would result in the huge opportuniti es arising in South-South trade being compromised. 
  Beyond the gains forgone, there would be serious systemic risks arising from stalled 
multilateral reform.  Existing distortions to trad e and economic activity would become entrenched, 
making it increasingly difficult for developing countries to compete fairly in world markets.  We have 
a clear example in agriculture, where 30 per cent of  OECD farmers' receipts come from a combination 
of government interventions in markets and budgetary  payments.  Even more importantly, fully three-
quarters of this support comes via the most trade-di storting types of policy instrument such as import 
tariffs and export subsidies. 
  If the momentum of multilateral rule making is not maintained then the risk of resorting to dispute settlement procedures will be heightened, fu rther eroding the effective functioning of the 
trading system.  
 Moreover, the continued growth of regional an d bilateral deals, in the absence of strong 
multilateral disciplines, would impose further heavy burdens on business, through the complexity of 
proliferating rules of origin and technical standards with which firms have to deal. 
  Clearly failure of the DDA Round would result in billions of dollars of potential benefits 
being forgone, especially for the developing world.  I have mentioned agriculture, but here we should 
specifically identify cotton, of vital importance to ma ny of Africa's poorest countries.  But  we should 
also add industrial tariffs;  services;  rules in anti-dumping;  subsidies;  countervailing measures and 
fisheries subsidies, which are so damaging to developing countries.   How do we ensure that there is sufficient politi cal will to avoid these pitfalls and so realize 
the full promise of the WTO-based system?  First, we  must, collectively, foster a deeper appreciation 
among our publics of the benefits of multilateral mark et opening.  And by 'we' I cast the net wide.  
This activity must embrace government, civ il society and international organizations. 
  The second track, without which the first would si mply be more empty rhetoric, requires us to 
pursue coherent and mutually supportive policies in ot her fields.  Trade policy needs to be placed in a 
broader domestic framework which recognizes that ma rket opening works best when it is backed by 
sound macroeconomic policies, flexible labour markets, a culture of competition and strong 
institutions.  Market opening will yield its biggest fr uits in a policy environment which facilitates the 
movement of labour and capital from de clining to expanding areas of activity. 
 
 Through this lens we can see and promote trade reform as a necessary tool of growth and 
development rather than as a concession paid to ot hers.  And through this lens it might then be 
possible to agree on a mechanism whereby once a country's trade under regional deals reached a 
certain level, preferences embodied in those d eals would be multilateralized on an MFN basis. 
 
 Policies at the national level must acknowledge that globalization does result in a decline in 
certain areas of activity, and that measures are needed to smooth the n ecessary adjustment for the 
people concerned.  In some cases targeted measur es may prove effective in correcting for market 
failure, but when used such measur es should be transparent and cost-effective.  In particular, should it 
be considered necessary to use safeguard measures,  it should be on the basis that their potential  WT/MIN(05)/ST/33 
 Page 3 
 
 
 benefit in providing breathing space for – and publ ic acceptance of – structural adjustment exceeds 
the costs they entail.   Nowhere is policy coherence more important  than at the interface between trade and 
development.  According to the joint OECD-WTO trade capacity-building database, since the launch 
of the DDA, the total volume of trade-related assist ance has increased steadily  to reach $3 billion in 
2004.  And aid for infrastructure, which can have  major direct and indirect effects on trade 
competitiveness, is now over $10 billion.   It is clear that as part of the DDA, there needs to be a strengthened aid for trade component.  
In terms of the supply of aid, and assuming that the commitments given by Heads of State since 
Monterrey are fulfilled, the OECD projects the bi ggest ODA increase ever over the next five years – 
from $80 billion in 2004 to $130 billion in 2010.  Clearly there is scope for more investment in aid for 
trade, as broadly defined.  
 However, aid for trade is not just a questi on of more money.  In fact, the development 
community has greatly improved its effectiveness in the pursuit of its key underlying principles:  local 
ownership, alignment around national systems and strategies, harmonized donor efforts and 
management for results.   The Integrated Framework embodies these principl es and it should be carried further, with 
more financial support for boosting policy and implementation capac ities of programme countries.  
The scope, definition and instruments of a wider aid for trade agenda will clear ly require more work.  
The OECD aid and trade communities stand ready to contribute to this debate. 
  If, to consider the converse, we are seeking an example of policy incoherence, we need look 
no further than cotton.  As I mentioned a few minutes ago, something clearly has to be done to 
address African concerns in this sector;  but not in isolation.  Technical and financial assistance to the 
cotton sub-sector should comply with general aid effectiveness practices.  And the pursuit of a 
DDA outcome on cotton that is more ambitious and more expeditious than that sought for other 
commodities should be built on the foundation of an ambitious result for agricultural liberalization 
more broadly. 
 
 Bringing the DDA to a successful conclusion will help address some of the critical challenges 
presently facing the international economy:  incl uding the persisting globa l imbalances, population 
ageing and poverty.  Our shared task must remain to complete the DDA by the end of 2006.  This in 
turn may require countries to leave behind mercan tilist thinking founded on offers and concessions 
and recognize that the economic interest of ever y country is furthered even through unilateral 
liberalization on a Most Favoured Nation (MFN) b asis.  This has been demonstrated through 
OECD analysis.   As Director-General Lamy suggested in his opening remarks, let us be courageous and be willing to take some risk for the benefit of all. 
 
 OECD members must recognize that they have a particular responsibility.  They also must 
recognize that there is too much at stake to allo w this venture to fail.  As the Shakespeare quote 
continues:  
"On such a full sea are we now afloat; 
And we must take the current when it serves, 
Or lose our ventures. " 
 
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