I have the honour to speak on behalf of Mercosul (Argentina, Brazil, Paraguay and Uruguay) and associated countries (Bolivia and Chile).
We associated ourselves to the statement made by Venezuela on behalf of the G-77.
We thank Ambassador Rubens Ricupero, Secretary-General of UNCTAD, for his important analysis of the current situation of international trade.
We also thank UNCTAD for the presentation of the reports.
In eleven years of existence, Mercosul has made important strides. Between 1991 and 1994, we set up a free trade area. In 1995, as the common external tariff entered into force, we became a customs union. The establishment of an enlarged market stimulated trade and investment. Between 1995 and 2001, foreign direct investment totaled more than 230 billion dollars.
Mercosul’s progress goes beyond the economic and trade fields. We have signed agreements and promoted cooperation in areas such as justice, education, health, social rights and consumer protection. Mercosul also contributes to the political stability in the region, by strengthening democracy and promoting interdependency among its members. The so-called democratic clause forbids non-democratic countries to take part in the process of integration.
In line with the principle of open regionalism, Mercosul and associated countries do not discriminate against third countries and have negotiated trade agreements with other countries and groupings. We are carrying out negotiations with other countries in the continent and with the European Union to create free trade zones.
Integration between Mercosul countries is not an isolated effort. It is part of our search for an open, competitive and equitable participation in the international economy.
These achievements explain why the presidents of Mercosul countries, in a meeting held in Buenos Aires last July 5, “emphasized that Mercosul is a strategic alliance that goes beyond the short-term difficulties facing Member States”. Mercosul is a long-term project. In spite of its present difficulties, we keep looking at the future, because we believe in our common destiny. An important example of this approach is the decision to coordinate our macroeconomic policies, which emphasizes Mercosul’s role in the consolidation of sound national policies and in the strengthening of the region’s credibility.
Mr. President,
The reforms in the financial and trade areas that developing countries have put in place over the last years, however necessary, were not enough to promote sustained economic growth and solve social problems. Today, there is a growing consensus about the need to create an international environment favorable to development. In this regard, it is essential to consider alternatives to modify and update the international financial system with a view to avoiding financial crises in developing countries.
The international economy has undergone particularly difficult times in which both short- and long-term hurdles must be faced.
Figures concerning the international economy are discouraging. This is the first time since the 70s that all regions face a simultaneous economic slowdown. In 2001, foreign direct investments fell by 50%. Net financial flows from developing to developed countries continued. Exports of developing countries, which had grown by 14% in 2000, increased only 1% last year. The prices of most commodities kept falling, remaining below the levels of 1997. World economic growth, which had been almost 4% in 2000, did not exceed 1.3% in 2001.
This situation calls for monetary, financial and trade measures to stimulate economic growth. Developed countries hold a special responsibility in this process, because their macroeconomic policies have a worldwide impact.
But beyond pursuing these short-term policies, it is necessary to face structural problems. One of the main imbalances in the world economic order lies in the field of trade.
The international trading system does not benefit all countries because of its inconsistence. On one side, there is the grandiloquent rhetoric of trade liberalization. On the other, the untiring practice of protectionism. This contradiction jeopardizes the credibility of the trading system.
This imbalance dramatically hinders developing countries’ efforts to enhance the standard of living of their populations. One of the areas where this imbalance is most alarming is agriculture.
The richest countries, which speak up for free trade, impose barriers to agricultural liberalization. Protectionist policies of developed countries cause significant losses to developing countries, having a severe impact on their populations and on governmental efforts to combat poverty. An example of these policies is the subsidies offered by OECD countries to their farmers, which exceed US$ 1 billion a day and have even increased lately. These subsidies are seven times higher than the present levels of official development assistance.
Given the slowdown in the world economy, we placed at the core of the Doha mandate our resolve to move ahead with the process of reform and liberalization of trade policies so as to ensure that the trading system can fully play its role of stimulating recovery, growth and development. We committed ourselves to starting negotiations to substantially improve market access. One year has gone by since the Doha Ministerial Conference and the multilateral negotiations on agriculture are stalled.
Lack of solidarity in international trade explains why agricultural negotiations have not progressed in the WTO. In the most recent summit of Mercosul and associated countries, the Heads of State “highlighted the need to achieve the objectives of the Doha Ministerial Declaration to ensure that the multilateral trading system is based on rules which stimulate economic development and are capable of preventing protectionist pressures…”
They also expressed “their concern over the substantial increase in agricultural subsidies, which hinder our countries’ potential for exporting and promoting growth (…) and reaffirmed that agricultural negotiations should necessarily result in a substantial improvement in market access, in the elimination of all forms of export subsidies and in the substantial decrease in domestic support that distorts production and trade”.
As the Group of Cairns stated in its most recent meeting, held in Bolivia on October 18, if there is no successful result in the agricultural negotiations, the whole process launched in Doha will be in danger. We urge developed countries to adopt a constructive approach so that we can move forward with agricultural negotiations, fully respecting the deadlines originally established, including that of March 31 for the definition of the modalities for further liberalization.
Mr. Chairman,
In the search for a more equitable international trading system, other issues should also be urgently addressed. It is necessary, for instance, to eliminate tariff peaks and escalation; prevent antidumping measure from being used for protectionist ends; strengthen and implement the principles of special and differential treatment in favor of developing countries; prevent the TRIPS Agreement from becoming an obstacle to the promotion of development and to the implementation of public health policies. Moreover, it is necessary to resist the temptation of pursuing new protectionist policies, avoiding measures such as the safeguards recently imposed on steel imports.
Mr. Chairman,
History has taught us that trade can be a tool of stability or disruption. There are unique moments in which we have to take a decision on how to use it. More than half a century ago, on the creation of the GATT, we concluded that trade liberalization could contribute to world stability. Now, as the WTO takes its first steps, we are called upon to reaffirm that conclusion. And the way to do so is to eliminate the severe asymmetries and the unfairness of the international trading system. Mercosul is firmly committed to this objective, but much will depend on the developed countries’ willingness to negotiate.
Thank you.