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Blanco: Free trade agreements are rendering WTO rules obsolete

Dr. Herminio Blanco

This Day (Nigeria) | 21 Mar 2013

Blanco: Free Trade Agreements are Rendering WTO Rules Obsolete

Dr. Herminio Blanco, the Mexican Candidate for the position of the Director General of the World Trade Organisation (WTO), visited Nigeria recently to canvass support for his aim. He spoke with Abimbola Akosile and Damilola Oyedele on the global trade scenario and his readiness to effect change, among other issues. Excerpts:

How experienced are you for this job?

The experience that I bring to this job is the fact that I was the Chief Trade Negotiator to the agreement between Mexico, the US and Canada, which is NAFTA. I was also the Minister in charge of the negotiations between Mexico and the European Union. I was Minister of Trade of Mexico up to the year 2000.

Since then I have been in the private sector and I am on the board of many Mexican companies and companies from other countries. We have our own consulting company which gives services to governments and corporations in how to invest in Mexico, how to export, how to import and how Mexicans can invest outside our country.

What challenges are being faced by the WTO especially in the face of accusations that the organisation has not done enough to protect the interest of the African continent?

The WTO has worked very well in at least two important aspects and it has failed in one important aspect, which has very close relations to the potential impact in the region. It has worked very well because it has established rules for trade between the 159 countries which are now its members.

It has also worked very well in solving disputes between its members; whenever a country stops or puts impediments before the exports of another country, there is a mechanism which is a judicial mechanism that helps solve these problems. That brings equilibrium among all countries regardless of their size. Those two elements have worked very well.

The challenging process now is the fact that during the last 12 years there has been a process of negotiations that have not come to a successful conclusion. Those negotiations are topics, which are of high relevance for Africa, for the countries of this region, and that is why we have come to visit Nigeria. Nigeria plays a very important leadership role in this region and we believe that with our experience and skill, we can bring these negotiations to a successful end if we are chosen to be the next DG of the WTO.

Benefits are many; I would outline some which are relevant to this region. On the side of agriculture, the topics being negotiated refer to the decrease of tariffs, reduction of taxes that are paid when the products from West Africa enter different markets. There is need to discuss how to decrease the level of subsidies on products such as cotton which is very important to some of the countries in ECOWAS.

It is also of prime importance that with respect to agricultural products, export subsidies are eliminated. Many relevant benefits are still on the table if the negotiations can be concluded. There is a sense of frustration especially among countries of lower level of development. They have been waiting for many years for these negotiations to end so that they can start to receive the benefits of better markets, markets which are less volatile and conditions which would bring more investment and create more jobs and prosperity for the people of the region.

There is fear that big countries like the US would deliberately frustrate these negotiations to protect their economies, lending credence to the feeling of frustration among smaller nations who already feel they do not benefit from being members of WTO. How would you handle these especially in dealing with the world economic powers?

This is a very good question. Mexico is a country that has enjoyed the benefits of trade. It is a country that nowadays exports items worth $1billion daily, and that has helped many families to move up the ladder of income in middle income families. So we have seen that trade is a useful tool for development. In Mexico we have a mix of regions which have quite a bit of development but many regions have some level of poverty comparable to central America and some parts of Africa.

First of all, my experience has been to lead very important negotiations for really small countries. I have negotiated with really large countries for small countries. Indeed in these negotiations in Geneva in the WTO, there is a strong discussion mostly between developing countries and the rather large economies. Those discussions have been stuck and paralysed for a while and that has stopped the benefits to spread into regions like Nigeria.

If you win, how would you convince a country like Nigeria to develop its non-oil sector and reposition its economy in a way that would make it more competitive?

As DG, the most important job at this time is to help countries bridge the gap between the negotiating positions. However in the WTO and together with other organisations, there are resources that can be put to bear to help countries develop different technical capacities, not only opening markets for products for countries of the size, importance, and resources that Nigeria has; it is fundamental, but also for technical assistance. Given the leadership role Nigeria plays in this region, its neighbours can be very good customers for products that Nigeria produces.

What specific reforms do you think are needed to reposition the WTO to be more relevant?

The perception is that it is one of the best and multilateral organisations; that is true. However the great challenge that is faced by the WTO is that trade and investment modes are changing rapidly, the rules being negotiated in the WTO are becoming obsolete especially when compared to Free Trade Agreements (FTAs) negotiated all over the world.

One good example is the Trans Pacific Partnership, an agreement between the US, Mexico, Canada, Peru, Chile, countries of Asia, and Japan has announced its desire to join. These are negotiations with rules which are much more modern and adaptable to the way business is done nowadays. The other big negotiation is the negotiations between the US and the EU, it would bring new rules. In my opinion, the biggest challenge faced by the WTO is to solve the pending negotiations and to bring on new rules for trade and investment inside the WTO so that it would remain the benchmark for trade in the world.

The European Union’s Economic Partnership Agreement for the ECOWAS region has raised fears that it is a ploy to open up African markets without commensurate access to European markets for Africa. What is your opinion?

Mexico has an EPA with the EU and it has been very useful for us. We basically import from Europe some machinery and some technical products. We also manufacture different products in which we are highly competitive; Mexico has become one of the most competitive countries in terms of manufacturing of vehicles, buses, big trucks. So we see a trade agreement with Europe as beneficial because when you decrease your trade tariffs for importation of parts and machinery, then you improve the competitiveness of your country.

Indeed our agreement with the EU has done that, our negotiations with the US has done that. When you open up your market for services or for components, you can produce more extensively and export products that are more diversified. That has been the experience of Mexico. By negotiating the EPA, this region can also improve its competitiveness.

So what are the chances of Mexico clinching this seat?

We have received good support from many countries. This is my second trip to Africa and we have received good feedback. Now in Nigeria, we would meet officials of the Nigerian government, especially ministers. We represent two realities; of a country that has developed regions, and very poor regions.

I have also negotiated with big countries and small countries. So I believe that makes me a very attractive candidate. The selection process starts April in Geneva. It is a tight race, candidates for Africa, Latin America, Middle East, New Zealand, and Asia. But we believe our experience and feedback received gives us good chances.

Herminio Blanco was Mexico’s former Minister of Trade and Investment. He is the founder and CEO of IQOM, a company that provides online daily analysis of events affecting commercial and trade operations in Mexico and Latin America. He has a Doctorate Degree in Economic, University of Chicago, USA. Blanco speaks Spanish, English and French

 source: This Day