'From Doha to Dhaka: EU-Bangladesh cooperation for sustainable development' Seminar on Everything But Arms initiative Dhaka, 21 November 2001 I am very pleased that my first trip after the successful WTO Ministerial in Doha last week has taken me to Bangladesh. This is no co-incidence. In a way, this symbolises what Doha was about: rebalancing the multilateral trading system in favour of developing countries and putting the WTO firmly on the path of sustainable development for the whole planet. Doha has paved the way for a new and more collaborative global relationship between industrialised and developing countries. And one of the objectives of my visit here today is to flesh out what form this collaborative relationship could take in the concrete case of the EU and Bangladesh. In my discussions and meetings yesterday with the Honourable Prime Minister, the Minister of Foreign Affairs, the Minister for Finance and Planning, and, of course, in particular the Minister for Commerce, I have been thoroughly made aware of the difficult economic situation in the country and its export industry not only because of a troubled global economy, but also as a consequence of the events of 11 September and the ensuing action against this heinous terrorism. Let me repeat here what I told my interlocutors: the EU is prepared to support Bangladesh in its endeavours towards economic stability, better integration into the world trading system, opening up new trading possibilities and paving the way for increased market penetration. In so doing, I think we ought to work along three main axes: multilateral, bilateral, and autonomous policies. The multilateral framework Let me start with the multilateral framework in which we operate. I am very pleased with the outcome of the Doha Ministerial last week, as I hope Minister Chowdhury is. This is not to say that all the EU's ambitions (or those of Bangladesh) have come true. None of us walked away having secured all our needs, but I think there is positive news for all of us. Let me just highlight two of the key results as I see them: First of all, the multilateral trading system emerges reinforced from Doha. Ministers from 142 countries demonstrated their commitment to international economic co-operation, to a reinforcement of the rule of law in international trade, and to the peaceful resolution of trade conflicts. It is also, of course, overall reinforcing that China and Taiwan have joined the WTO. This permits us really for the first time to talk about a World Trade Organisation. All this, I think, is a boost to a faltering world economy and a major contribution to stability in a world that has been badly shaken by the terrorist attacks of September 11. Secondly, Doha has seen developing countries emerge as a substantial negotiating force. Before I left for Doha, and in the months, indeed years of preparation beforehand, I made no bones of the fact that the EU firmly believed that it was paramount for the WTO membership to forge ahead with an agenda that provided a better balance for developing countries. This has been achieved to a very large extent: the integration of the development dimension runs like a red thread through the Doha declaration, from market access (covering tariff peaks, export subsidies and trade defense instruments) over rules to the special provisions on development. WTO members commit to a comprehensive strategy for trade-related capacity-building, they recognise the special needs of least
developed countries and confirm the commitments made at the 3rd UN Conference for least developed countries, which will be integrated into the WTO work programme. This will facilitate the accession of least developed countries to the WTO and improve their market access. Special and differential treatment provisions will be reviewed with the objective of strengthening them and making them more effective. Add to this the separate declarations on implementation and on TRIPs/Access to Medicines, and what emerges is a real "Doha Development Agenda". But Doha was of course only the end of the beginning - we are now entering a phase of very intensive negotiations during which we need to turn declarations into actions. And in this endeavour, the EU would like to work closely with Bangladesh, as a leading LDC, to make sure that the Doha ambitions are implemented to our mutual benefit and that of the multilateral trading system. Doha is also only one, albeit a major, building block for a more equitable global system. We want to create a virtuous sequence that leads us from Doha to Monterey, where we will need to address the question of development finance, and on to the Rio + 10 Summit in Johannesburg in September next year. We need to use all the multilateral tools at our disposal if we are to make real progress towards sustainable development. Bilateral EU-Bangladesh relations But we also have of course our own special bilateral relationship to move things forward. Today's seminar coincides with the first Joint Commission meeting under the new EU- Bangladesh Co-operation Agreement on partnership and development which entered into force on 1 March 2001. Compared to the beginning of relations between the European Union and Bangladesh in the first half of the 70s, the Co-operation Agreement on Partnership and Development is an expression of the strides made in the relationship since then. The Agreement is a sound basis for an enhanced and deepened 'working together' in the years to come to the benefit of Bangladesh and the European Union. The new agreement embraces a broad scope of co-operation between the EU and Bangladesh, thereby reflecting the progress of globalisation, the firm establishment of a European single market followed by economic and monetary union, and the development of a market economy in Bangladesh. Trade and commercial co-operation, environmental policies, transfer of technology, the establishment of a more favourable climate for private investment, science and technology, the fight against drug trafficking and money laundering - all these will come in support, so we hope, of the policies Bangladesh herself has devised to foster development and integration into the global economy. Our bilateral agreement thus offers valuable instruments to turn the opportunities provided by the multilateral system into real gains. But our co-operation reaches well beyond the sphere of economics: it is supplemented by activities in the field of information, culture and communication, which will promote a better understanding of Bangladesh in the EU and vice versa. Autonomous instruments: the EU's "Everything But Arms" Initiative But let me revert to the trade question. As you will know, the EU is Bangladesh's largest trading partner, taking up almost half of your exports. Presently, among least developed countries Bangladesh is the most prominent exporter to the EU, representing 20% of the
total exports from all least developed countries to the European market. Over the last five years, Bangladesh's exports to Europe have doubled. Bangladesh has enjoyed in the last decade a growing trade balance surplus with the EU, in keeping with our respective development stages. This is, of course, to a large extent due to the preferential access Bangladesh has enjoyed to the EU market since the 1970s through our generalised system of preferences, and in particular to the absence of any quantitative restrictions notably for Bangladesh's readymade garment exports to the EU. The EBA initiative, which brought us here today, builds on this access and further improves it. Let me briefly recall the background: As you know, this initiative goes back well before Doha, indeed as far as the Singapore WTO Ministerial in 1996. The idea was to translate some of our lofty ambitions into tangible actions: for my part, I inherited a position where we stood uneasily on the fact that we had liberalised "essentially all" trade. This was not good enough. So we decided to liberalise not only industrial products - including textiles and clothing - but also agricultural imports, and importantly, those that had hitherto been the most sensitive products. The initiative, adopted by the Council in February 2001, grants duty-free and quota-free access for all products from the 49 least developed countries, with the exception of arms. These special arrangements for least developed countries will be maintained for an unlimited period of time and are not subject to the periodic renewal of the Community's scheme of generalised preferences. Therefore EBA will continue even after 2004 and thus provides LDC economies with the necessary planning stability. I have always said that EBA is not a huge, but nevertheless a crucial, step forward. Its importance lies not only in the improved market access for least developed countries - perhaps just as relevant is the effect that the debates about EBA have had on the tradepolicy decision-making in Europe. As you can imagine, the adoption of this initiative was not an easy task for us. But we were determined to tackle entrenched domestic lobbies, and as a result, I think the debate about trade and development in Europe has made a significant step forward. We hope that other developed countries, and indeed the more advanced developing countries, will do likewise. Now what is the significance of EBA for Bangladesh? As I said before, almost 50% of Bangladesh's exports world-wide have an EU address. However, there is a heavy tilting of Bangladesh exports to ready-made garments (which represent 75% of Bangladesh's total exports to the EU). It is this export sector which has now hit very rough waters. The EBA has brought no change for exports of ready-made garments from Bangladesh in the EU market. Ready-made garments products from this country have always enjoyed zero duties and - what eventually proved more valuable - a quota-free access to the EU market. The duty-free access under GSP rules (and also under EBA), though, is conditional on compliance with the rules of origin. The reason for this is that we want to make sure that the benefits of EBA really accrue to the countries for which they were designed, i.e. the least developed countries. I am of course fully aware that in the case of Bangladesh and its woven ready-made garments industry this has been a constant difficulty, because the private sector until now has not succeeded in developing a sufficient backward linkage industry. Manufacturers of woven garments therefore have to rely heavily on fabric imports from countries such as India or China, depriving the finished product of the GSP status of originating in Bangladesh. What is the solution to this problem? In my view, not a general relaxation from the applicable rules of origin in the case of woven garments, as this would shift the benefit of GSP/EBA to non-intended beneficiaries. Instead, are there not possibilities provided by the facility of a regional cumulation of origins offered to member countries of the South Asian Association
on Regional Co-operation (SAARC) under the Community's generalised system of preferences? Last year, at the request of the SAARC members, the EU granted the benefit of regional cumulation for all exports, not just ready-made garments. I am fully aware of the discussion in this country on the eventual economic benefits of this facility for the readymade garments industry, on the one side, and the spinning and weaving industry, on the other side. There is also a value addition criterion which is not easy to meet. But before considering any new request from Bangladesh for a derogation limited in time from the rules of origin, let us together immediately examine the specific situation of the ready-made garments industry in this country to determine whether or not the SAARC regional cumulation facility offers a satisfactory solution. The cumulation facility is an offer of the EU to SAARC member countries in support of their efforts to establish a sound and working regional economic co-operation. At the same time, it is an offer to Bangladesh's ready-made garments exporters for an access to the EU market made easier. All this is particularly precious at a time when garments and knitwear exporters will come under increasing competitive pressure from other Asian countries as the developed countries are bound to phase out quotas and liberalise their respective imports from supplying countries other than Bangladesh by the year 2005. All this also reinforces the urgent need for a substantial diversification of exports to cushion and counterbalance possible future slumps in export revenues notably from woven readymade garments exports. It is here where EBA comes in: in extending duty and quota-free access to products other than textiles and clothing. For Bangladesh to reap the benefits of an across-the-board duty-free access to the EU market, to enhance its trade relationship with the EU, it needs to diversify its exports and to undertake a serious rebalancing of its export range. The EU is prepared to support Bangladesh in its efforts to determine the course to take in diversifying exports, and in building up and strengthening its trading and diversified export capacities. What we will be focussing on are trade-related technical assistance and economic development co-operation. For the period 2002-2006, we will devote an amount of 49 million for this purpose. In January of next year the European Commission will send a programming mission to Bangladesh which will have the task to advise us on which action to take. But let me be clear about one thing: The co-operation between the EU and Bangladesh in these areas will not focus exclusively on Bangladesh's trade relations with the EU. Our development and trade policy objective is to promote, support and enable a more complete integration of least developed countries into world trade, to help them mitigate the negative effects of globalisation and to put them into a position that they can increasingly enjoy its benefits. Conclusion: I have set out to you the three main axes along which I would like to move forward EU- Bangladesh co-operation for harnessing globalisation. But let me conclude by saying that multilateral, regional and bilateral co-operation can only come in support of domestic policies which are the key for a country's successful integration into the global economy. As Bangladesh is well aware, a successful approach to development needs to take account of the whole range of institutional, social and structural needs of a well-functioning society, such as good governance, an appropriate institutional and regulatory framework, social inclusion policies, public services and infrastructures and environmental protection. Of course it is for each and every government to devise its own policies. That is therefore down to the Government of Bangladesh. But rest assured that we stand ready to discuss, and support, your efforts along this road, if you so wish.
Thank you for your attention.