Shorthand version of the Press Conference held by the Minister of Economy, Bruno Ferrari, to announce the details of the G20 Trade Ministerial Meeting in Puerto Vallarta, Jalisco

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Puerto Vallarta, Jalisco, April 16, 2012.
 
BRUNO FERRARI:

Good afternoon. How are you? The reason why we are here today is to talk a little bit about the significance of the G20 Trade Ministerial Meeting to be held among other events here in Puerto Vallarta.


As you well know, Mexico, as chair of the G-20, has convened a meeting of Ministers for Economic Affairs, Finance and Industry to be held on April 19 – 20 at Puerto Vallarta, Jalisco, immediately after the World Economic Forum on Latin America.

The Heads of State of the G-20 instructed their ministers to hold a substantive discussion on the benefits and opportunities for a multilateral trading system.

Before we start with the objectives of this Ministerial Meeting and the topics to be discussed, let me give you a briefing on the significance of the G-20 and the current international trade context as a framework for what we want to do.

The country members of the G-20 represent almost 90 per cent of the world GDP, and 80 per cent of the international trade, as well as almost 60 per cent of the world population.

It is a reality, not the one we would like to, but a reality that we have to face, and an opportunity to generate a better trading relationship with other countries in the world.

The G20 member countries are: Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States.

The world trade growth was five per cent in 2011, a pronounced decline in respect to the 13.8 per cent recovery in 2010. The concern is that, according to the World Trade Organization’s last estimates, it will decline even further in 2012, down to a 3.7 per cent rate.

The WTO considers that such downturn is the result of a lack of impetus due to several disturbances, including the European sovereign debt crisis.

In Cannes, the G-20 reaffirmed its commitment to resist protectionism in every form, and to move forward on the multilateral trading agenda: Avoiding protectionism while strengthening the multilateral trading system. This reflects the implications of a multilateral system as a way to deal with protectionist practices, supporting the mandate of the Doha Development Agenda on the importance of the WTO as an active player in the implementation of transparency and an effective dispute-solving mechanism.
 
There are five specific purposes:

The countries must recognize the importance of opening up their markets that allows for a smooth trading process through global and regional value chains.

The ministers must also recognize that there is a positive connection between commerce and growth, something that is becoming increasingly evident.

This should be seen as a main concern of developing countries, particularly less-developed countries, for the integration of regional and global production chains.

As we have being saying, we should realize that every country is good at something, and that the integration of each one of them aims at making the best of what they have to offer, so that our imports bring the best quality, and our exports have a better chance of succeeding.

It is also desirable that the international organizations supporting the G-20, i.e. WTC, OECD and UNCTAD, make a deeper insight into the topics discussed in this ministerial meeting, as well as opening the possibility to improve the monitoring and reporting mechanisms against protectionism that the WTC and OECD periodically produce.

Finally, our aim is to plant the idea of a peer-to-peer examination mechanism, a call for the future practices implemented by the country members of these organizations.

Reassuring the support and political orientation given to Doha during the 8th WTC Ministerial Conference in Geneva in December last year. In addition to the aforementioned 20 members of the G-20, the Trade Ministerial Meeting will have the presence of seven invited countries: Peru, Cambodia, Chile, Colombia, Spain, New Zealand, and Singapore, as well as the Director General of the World Trade Organization, Mr. Pascal Lamy, and the Secretary General of the Organization for Economic Co-operation and Development, Mr. Angel Gurria.

The G-20 Trade Ministerial Meeting will consist of three separate working sessions. The topics proposed by Mexico are two: first, global value chains; and second, the relationship between trade and economic growth and its impact on employment.

It must be highlighted that the greater the trading relationship and inclusion of such productive chains, the greater the employment opportunities, which are an urgent necessity in today’s world.

This is the first time that ministers of the G-20 will discuss in depth topics such as the value chains and the significance of the relationship among trade, employment and growth. 

Once again, I want to call your attention on the importance of this meeting, given its great convening power, and the response it has received from so many countries and stakeholders.

The objective of the first topic is to generate a greater awareness on the importance of seamless supply chains, as well as to the conditions for a stronger multilateral trading system.

The swift technological progress and the low costs of transportation have also changed the logistics of supply chains and the world trading system, giving way to the emergence of global supply chains.

The production of goods and services has been organized and segmented globally, and different countries have specialized in different activities. Therefore, a fundamental issue is to set mechanisms to facilitate commerce and promote value chains, instead of restricting them. As I said before, if we want to compete and remain competitive, if we want to take our products to a larger number of countries, we have to do it irrestrictively.

There is no better way to compete than competing, and this is a major issue we are working on.

Barriers on inputs raise the production costs, erode business competitivity, and affect investment decisions. Thus, improving the measurement and understanding of commercial flows provides a better insight into the best way to handle existing interdependencies among economies, supported on the design of trading policies and proactive regulations which necessarily have an impact, whether positive or negative, on commerce.

At the same time, statistics reflect the true added value that results from trade, leading to a re-elaboration of the economic landscape and the commercial imbalances among countries.

As for the second topic, we must remember that trade liberalization has allowed different economies to enjoy the benefits of specialization and focus on such sectors that prove to be more productive, even defining educational policies and the formation of new professionals, specifically for this growing areas, thus ensuring employment.

Trade has driven competition, innovation, and scale economies, which have a major impact in commerce, giving the world the chance to make a better use of its scarce resources. Consequently, we have to know who uses them better, who is better qualified to deliver such resources, and who is capable of providing better logistics to deliver them at better prices.

As a result, consumers have enjoyed lower prices and greater purchase options, while competitive companies have gained access to better inputs and larger markets, which previously were inaccessible to their products.  

A greater trade liberalization goes together with a better economic performance, both in developed and developing economies.

Trade is closely related to increases in the real income and productivity gains, helping alleviate poverty around the world in a more precise manner.

There is still much work to do in this sense. Nevertheless, the conditions are given for a deeper involvement.

We must have in mind that the effects of trade on the labor market depend on multiple factors, such as: the degree of trade liberalization or exposure to the global market; the economic structure; the orientation and institutional capacity; the rigidity of the labor market; the level of human development; and the strengthening of social security networks.

Finally, we must develop a more appropriate infrastructure worldwide to make of every country a trading platform, a bridge between imports and exports, as is the case in our country.

Mexico is convinced that the G-20 is a multilateral collaboration platform. This unprecedented Trading Ministerial Meeting gives us the opportunity to look for alternatives to a sustainable economic growth, and to promote an open global economy, with a business-friendly environment for commerce and investment.

Thank you very much for your participation. I believe that now you have a better idea on the main topics to be discussed in the Ministerial Meeting that we are holding after the World Economic Forum on Latin America. Thank you again.

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