Keynote Address by his Excellency, Mr. Geir H. Haarde at the Parliamentary Meeting on the Occasion of UNCTAD XI.

6/16/2004

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Parliamentary Meeting on the Occasion of UNCTAD XI

Keynote Address by his Excellency

Mr. Geir H. Haarde

Minister of Finance, Iceland

"Assuring Development Gains from the International Trading System and Trade Negotiations"

Mr. Chairman, Mr. President, Excellencies, ladies and gentlemen.

First, allow me say that I am honored to have been given the opportunity to serve as a keynote speaker at this Parliamentary Meeting on the occasion of the 11^th session of UNCTAD.

We, as parliamentarians and as policy makers, have a special role when it comes to enhancing global gains from trade and I believe that constructive discussions, like we have here today, will help us in carrying out this important responsibility. This is particularly important now, when our journey towards achieving the Millennium Development Goals has recently been given added strength following the European Union's positive input into the Doha negotiations.

Mr. Chairman,

History has shown that international trade is a major engine for development. A growing number of developing countries have already benefited greatly from pursuing deeper integration into the world economy, which in turn has generated resources for sustainable development and poverty reduction. However, difficult challenges are often associated with trade liberalization. If not handled with care, these challenges risk becoming the root of deep grievances, which may undermine the general confidence in free trade, and thereby create a major set-back in the path to broader global prosperity.

We, as policy makers, should take these challenges seriously and ask ourselves, how can we assure development gains from the international trading system and trade negotiations? This is the topic of our discussions this afternoon.

Trade liberalization is only one, albeit very important, part of the development process, and trade liberalization is, in and of itself, not equivalent to development. However, trade and trade liberalization can enhance a country's access to a wider range of goods, services, technology and knowledge, and thereby generate resources for economic and social development. Nonetheless, it is important to realize that the benefits from trade can take a long time to materialize, and that they are felt unevenly across time and space. Therefore, trade liberalization needs to be an integral part of each country’;s development policy.

The developing countries are caught in a complex situation: Without significant economic growth, they will not be successful in the fight against poverty and without trade, growth is impossible to spur. But at the same time, in order to reap the gains from trade liberalization, developing countries need to invest substantial resources in preparing the ground for the effects of opening up markets. The developed and developing countries have a joint responsibility to provide these scarce resources.

Mr. Chairman,

The Monterrey Consensus established a milestone in the global fight against poverty. It creates a framework of shared responsibilities between the developing countries and the developed countries. It is within this framework that we should analyze the issue at hand.

The Role of Developing Countries …

A fundamental priority to reap the gains from trade is that national governments in developing countries prepare and put into practice national development strategies that incorporate trade in a way that effectively promotes sustainable development and poverty reduction.

The strategy should be developed through consultations among all stakeholders - government, parliament, the private sector and civil society - with the aim of creating a broad support for the way forward. Moreover, the strategy’;s institutional, structural and social concerns should be treated equally with macroeconomic and financial aspects. Here, the Poverty Reduction Strategy process is a promising one, and worth strengthening further.

In addition to liberal trade and investment policies, the development prospects of countries and their ability to benefit from expanded trade opportunities depend on various behind-the-border issues, such as stable macroeconomic policies, pro-growth regulation and competition policy, investments in infrastructure, human capital, governance and the rule of law. A central aim of a comprehensive development strategy is to minimize any initial negative effects of reforms involved in opening up national markets and thereby facilitate the maximum gains from trade.

The Role of Developed Countries…

The international donor community plays an instrumental role in addressing the challenges facing developing countries by helping them strengthening their trade related capacities. Indeed, by adopting the Millennium Development Goals and the Monterrey Consensus the international community has embraced a global partnership for development, which includes, amongst other things, the promotion of an open, rules-based, predictable, non-discriminatory trading system.

Trade related capacity building involves a range of inter-related activities which are executed in partnership between the actors involved:

Multilateral agencies are the main avenue for trade capacity building. We have come a long way in developing these programs, and through the years some key lessons have emerged on how development assistance, such as trade capacity building, can bring about the most effective results.

Key premises for effective trade capacity building are efficient mechanisms of coordination and harmonization amongst donors and implementing agencies. Moreover, a long-term integrated and comprehensive approach is needed so as to ensure that each activity or project is a part of a cohesive program. Here, the Integrated Framework, is especially worth mentioning, as it is an important mechanism for better coordination of funding for trade related assistance and capacity building, as well as for increased harmonization of policies amongst the principal donors

It is important to note that much of the trade-related development agenda cannot be only addressed by the WTO. I believe there is also an important role for other multilateral institutions, such as UNCTAD, within which issues are addressed through a process of cooperation and voluntary action, as opposed to negotiation and binding dispute settlements. In particular, UNCTAD plays an important role in integrating a development perspective into international trade deliberations, not only as an important provider of technical assistance and trade-related research, but also as a forum for intergovernmental discussions and debate. Other institutions that can play a constructive role include the World Bank and the regional development banks.

Mr. Chairman,

Assuring development gains from the international trading system and trade negotiations is a challenge. This challenge can only be met through international partnership, but the success of this partnership dwells on one indispensable premise; improvements in market access through the successful outcome of the Doha Development Agenda.

We, as parliamentarians, have an instrumental role to play, both when it comes to ensuring a successful outcome of the Doha Development Agenda, as well as securing the subsequent development gains. Successful outcome demands an enforced political will and it is our role to persuade the skeptics and raise public awareness of the benefits of trade liberalization. It is our role to strengthen parliamentary dialogue and cooperation with multilateral institutions active in the field of international trade. It is our role to narrow the gap between rhetoric and practice and ensure governmental follow-up to commitments is made.

These roles are to be taken seriously, because a successful Doha Development Agenda, along with a global partnership in securing the development gains from trade, will offer the best possible means of reaching the Millennium Development Goals.

Thank you.