Statement by Mrs. Brigita
Schmögnerová, Executive
Secretary
at the
Economic
and Social Council at its 2003 Substantive
Session
(Geneva, 18 July 2003)
(Regional Cooperation: Development
Dimensions of Trade Negotiations -
a UNECE Perspective)
Mr. Chairman, Excellencies, Ladies
and Gentlemen,
Regional cooperation
in the field of trade in the UNECE
region is very advanced. It encompasses
the EU and, on the Atlantic side,
NAFTA, which includes the USA and
Canada, UNECE member States. These
trade arrangements have increased
the prosperity of member countries,
as well as their integration within
the world economy. Enlargement of
the EU next year to 25 countries not
only means further progress in regional
trade whereby a single market in Europe
will expand to 450 million people
but is also an act of global strategic
importance as it will increase prosperity
and security in Europe.
Our discussion topic
today is timely as multilateral trade
negotiations are at the centre of
the international debate in the light
of the preparations for the forthcoming
Fifth WTO Ministerial Meeting, and
also as the non-EU accession countries
are considering closer trade arrangements
among themselves and with the European
Union.
The process of WTO
accession concerns many of the countries
in the UNECE region. Our regional
commission has a practical role to
play in helping transition economies
to make progress in transforming their
economies and comply with the WTO
accession requirements. Mr. Chairman,
as you know, UNECE does not have a
mandate in trade policies but has
a recognized expertise in trade facilitation.
Participants in the second International
Forum on Trade Facilitation organized
recently by UNECE in cooperation with
other international organizations
agreed that, whether or not a decision
on modalities of negotiations in trade
facilitation is taken in Cancun, transition
and developing countries urgently
need technical assistance and capacity
building if the benefits of trade
facilitation are to be spread more
fairly. In some instances this is
already happening, particularly through
public/private partnerships.
Accession to the
WTO is currently a major concern for
several of our member States. Almost
all the countries in South-East Europe
are members of the WTO - except for
Bosnia and Herzegovina, and Serbia
and Montenegro, both of which are
in the process of accession.
Among the countries
of the former Soviet Union, Armenia,
Georgia, Kyrgyzstan and the Republic
of Moldova are members of the WTO.
The larger countries - Kazakhstan,
the Russian Federation and Ukraine
- are in the process of accession,
as are Azerbaijan, Belarus and Uzbekistan.
Tajikistan has begun the process.
Only Turkmenistan remains to take
a decision about joining.
The accession process
is demanding and time consuming. While
in general the challenge for those
countries seeking accession is to
strengthen broad market-based institutions,
there are pressing issues that are
more specific to the countries in
the UNECE region. I would like to
mention three in particular:
Firstly: The formerly
centrally planned economies had virtually
no market for goods and services and
the regulatory structure was underdeveloped.
To modernize their economies and eventually
join the WTO, these countries must
strengthen competition and develop
an efficient market infrastructure.
Secondly: None of
the UNECE transition economies in
the process of WTO accession has ever
benefited from the status of developing
country - despite the fact that some
of them have a very low GDP per capita
and a large proportion of their population
live in poverty. This makes the process
of their WTO accession politically
more difficult as negative consequences
might - in the short term - deteriorate
their economic and social situation.
The governments therefore primarily
have to sell to the electorate the
longer-term benefits of WTO accession,
such as improved access to foreign
markets, improved attractiveness to
FDI, external pressure on domestic
producers to improve their competitiveness,
and benefits to consumers and importers
arising from lower tariffs.
Thirdly: In general
WTO accession is considered to be
an engine for reforms and an accelerator
of transformation. In order to mitigate
short-term negative consequences of
WTO accession, the Governments must
adjust the speed of accession accordingly
and negotiate transition periods.
On the other side excessive concentration
on concessions, including protection
of the interests of a few business
groups in less competitive sectors,
is costly as benefits from accession
are postponed or not shared by the
major part of the population.
Making progress towards
WTO accession is consistent with the
development of bilateral Free Trade
Agreements (FTAs) and Regional Trade
Agreements (RTAs) in South-eastern
Europe and particularly in the CIS.
As already indicated, WTO accession
drives the progress in reforms. Convergence
in reforms is needed if bilateral
FTAs and RTAs are to be effective.
So far despite the fact that nearly
all CIS countries have signed bilateral
FTAs and many RTAs have been concluded
among the CIS members, implementation
of trade agreements is poor. It is
marked by the introduction of new
trade bans, export restrictions, and
non-tariff measures. In addition,
FTAs and RTAs often cover less than
60% of trade and import tariffs for
the rest of the goods remain high.
The process of WTO accession will
speed up the process of concluding
RTAs and the efficacy of RTAs through
codifying import liberalization into
the legislation of the applicant countries.
One of the recent initiatives in the
CIS region was towards creating a
"joint economic space" among four
countries: Russia, Ukraine, Belarus
and Kazakhstan. The four countries
intend to coordinate their economic
policies and legislative environments
and liberalize tariff and non-tariff
barriers. As all the contracting parties
wish to be WTO members, the RTA has
to be compatible with WTO principles.
Divergence in WTO
accession is often an additional barrier
to the functioning of RTAs. When the
Kyrgyz Republic recently, as a new
WTO member, agreed to implement low
tariff regulation, the other member
of the Euro-Asian Union (EAU) - another
RTA in the CIS region - immediately
reacted by imposing protective measures
on imports from Kyrgyzstan. Some cooperation
among the WTO applicant countries
in the CIS and particularly those
which have concluded RTAs among themselves
will increase the positive results
of the agreements, to say nothing
of the benefits in the negotiation
process that include increased negotiating
power of applicants. Nevertheless
as in the case of FTAs there is no
obligation to apply harmonised external
tariffs that they can negotiate separately.
So far the CIS countries have decided
to negotiate membership independently
so that there is no, or a very limited,
coordinated approach in the WTO negotiations.
Mr. Chairman, in
May 2004, ten more countries will
join the Union: Cyprus, Czech Republic,
Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovakia and Slovenia.
Bulgaria and Romania are expected
to join in 2007 and Turkey's situation
will be reviewed at the end of next
year.
Recently, Croatia
applied for EU membership and some
other countries, especially in South-eastern
Europe, are also considering doing
so. At the same time, the European
Union has developed bilateral relations
through Association Agreements with
its Eastern European partners, Partnership
and Cooperation Agreements (PCAs)
with the CIS, and finally Stabilisation
and Association Agreements with its
partners in South-eastern Europe.
The implications
of EU enlargement for those countries
in the region which, for the present,
will remain outside depends to a large
extent on whether they benefit from
a trade-creating effect or suffer
from trade diversion. The general
view is that if enlargement boosts
economic performance in the EU as
a whole, and especially if it increases
the rate of economic growth in the
acceding Eastern European countries,
it will have an expansionary impact
on imports from the non-acceding countries,
and therefore on their gross domestic
product. The extent of that impact
will depend on the strength of the
boost to European economic performance,
the share of the non-acceding countries
in total EU imports and on the ability
of those countries to respond to increased
demand.
Overall, the EU common
external tariff is generally lower
than the individual tariffs of the
accession countries. Specifically,
the average tariff levels in Poland
and Hungary (the two largest economies
to join the EU in 2004) will fall
significantly. Tariffs on agricultural
products will fall in Hungary from
31 per cent to 16.2 per cent and in
Poland from 34 per cent also to 16.2
per cent. With regard to fisheries,
most of the accession countries will
have to raise their market access
tariffs on joining the EU, although
both Poland and Hungary will have
to reduce them.
Existing bilateral
preferential trade arrangements between
acceding EU member States and non-acceding
countries will have to be terminated.
These include Ukraine's agreements
with Estonia, Latvia and Lithuania,
and Hungary's agreement with Serbia
and Montenegro.
EU enlargement will
in a number of cases also disrupt
cross-border trade as a result of
the introduction of the new EU visa
regime, for example that between Poland
and Ukraine, between the Kaliningrad
province and Lithuania and Poland,
between Belarus and Poland, as well
as between Russia and Estonia, Latvia
and Lithuania.
The above implications
of EU enlargement should not have
negative consequences for the non-acceding
countries. Negotiations are continuing
between the EU and Russia regarding
the Common European Economic Space,
the new model of cooperation between
the EU enlarged and the Russian Federation.
The EC recently defined its new neighbourhood
policy in the project of a "Wider
Europe" that includes new neighbours
in Eastern Europe and the Mediterranean.
Both approaches aim to avoid new divides
in the UNECE region and may serve
as a major instrument of further integration
within the European region aimed at
supporting stability and long-term
economic growth for all the countries
concerned.
To focus attention
on the opportunities that enlargement
brings, UNECE has launched a "wider
Europe" programme consisting of sectoral
workshops on energy, trade, transport
and environment. Each workshop explores
the future shape and direction of
economic integration in the region
over the next 10 years, providing
an opportunity for member States,
the business community, civil society
and academic and research institutions
to come together to look "beyond enlargement"
and assess how economic cooperation
could be strengthened in an enlarged
Europe, Caucasus and Central Asia
included.
Mr. Chairman, I have
just outlined the implications of
the most important ongoing trade negotiations
on the development of the UNECE region.
Before I conclude, I would like to
share some thoughts on how important
I believe it is to ensure that these
different negotiations are well coordinated.
The simultaneous
negotiation of trade agreements at
the bilateral and plurilateral levels
by countries with emerging market
economies poses a number of challenges.
As already highlighted it is important
to ensure that commitments taken at
different levels are mutually supportive,
coherent and non-contradictory.
Secondly, more dynamic
interaction is required between the
private and the public sector in many
emerging market economies in the UNECE
region.
Third and perhaps
more fundamental is capacity building.
The simultaneous negotiation of different
agreements has often meant that scarce
human resources in the public service
were spread even more thinly, sometimes
preventing participating countries
from securing their major interests.
Mr. Chairman,
To the extent that
resources are available, UNECE will
assist its member States in meeting
these challenges and try to ensure
that all the countries of the region
enjoy the full benefits of integration
within the international trading system.
Thank you.
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