°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ NOTICIAS: DISCURSOS DG SUPACHAI PANITCHPAKDI
11 de marzo de 2004
National Day Celebrations
Port Louis, Mauritius
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Before I leave for any visit, my staff always prepare for me a very
full file with briefing notes on every possible topic concerning the
country that I am visiting. On this occasion, there was, however, one very important aspect about Mauritius that they forgot to include in my
file. Amongst all the wonderful facts and figures that they have given
me, they forgot to mention how breathtakingly beautiful your country is.
It is, indeed, a privilege and honour for me to join you during your
National Day celebrations.
In my file, my staff did, however, refer to a 1960 prediction about the
future of Mauritius by a Nobel Prize winning economist. In his report to the then Government of Mauritius, the Nobel Laureate James Meade predicted that the island's development prospects would be bleak.
Mauritius, as he saw it, was too dependent on one commodity — sugar, too
vulnerable to terms of trade shocks, too overpopulated and had too much
potential for ethnic tensions. James Meade has long since been proven
wrong. He was wrong not because he miscalculated Mauritius's adverse inheritance following independence but because, he overlooked, in his
otherwise thorough analysis, the determination of the Mauritian people
to succeed.
Meade's prediction reminds me of a “professional secret” closely guarded
by economists. As an economist, myself, I have sworn never to reveal it.
However, as I am among friends, I feel that I can safely share this
secret with you — “An economist is a highly trained professional paid to
guess wrong about the economy”.
Mark Twain, despite having the significant handicap of not being an
economist, described Mauritius closer to the truth. He said, “You gather
the idea that Mauritius was made first, and then heaven, and that heaven
was copied after Mauritius.” Being here, in a country where the sun and
the people are as generous as the sea is turquoise, it is indeed easy
for me to understand and share his sentiments.
Mauritius is, however, more than just a picturesque country. It is a
development success story which is nothing less than a miracle. In the
short period of about 35 years, the economy of Mauritius has been transformed. In 1968, Mauritius was a low-income agriculturally based
economy with a single crop, sugar. Today, Mauritius is a middle-income
country, with a diversified economy, boasting of growing service and
manufacturing sectors. While agriculture continues to be important, it
no longer dominates the Mauritian economy. The share of agriculture in
real GDP has declined from around 12% in 1990 to some 6% today. The
services sector, heavily composed of tourism and financial services, is
now by far the most important pillar in the economy — accounting for
around 74% of real GDP.
For over two decades, Mauritius has grown by nearly 6% per year. At
independence in 1968, Mauritius had a per capita income of about US
$260. Today, it is about US$3,800. Improvements in human development
indicators have been equally impressive. Life expectancy at birth has
increased from 61 years in 1965 to 71 years in 2001. The infant
mortality rate has gone down dramatically from 64 per 1,000 in 1970 to
19 per 1,000 in 2001. Virtually all households now have access to
sanitation and water, and more children are being enrolled at school
than ever before. The fact that economists today are able to quibble
over the causes of the Mauritian miracle is proof of the astounding
progress that has been achieved.
These achievements are due, in no small measure, to your determination,
your creativity and your confidence to take advantage of all the
opportunities offered by the global economy. However, this was not the
end of the story. One can quite reasonably ask — why did a small island
developing country heavily dependent on a single commodity, vulnerable
to terms of trade shocks, situated at a considerable distance from world
markets and faced with a rapidly growing population succeed — where
other better endowed countries have failed.
The answer will come as no surprise to you. The key ingredients to your
success have been political and macroeconomic stability, the rule of
law, human capital, a coherent economic development strategy, judicious
use of preferential access to key markets, a staunch belief in free
enterprise and most importantly the ability to adjust and turn adverse
conditions into economic assets. Mauritius successfully turned the
disadvantage of rapid population growth into the blessing of a dynamic
and plentiful workforce. You used your ethnic diversity, which could so
easily have led instead to social fragmentation, to gain advantageous
business links throughout the world. And you invested heavily in
educating your people and in building the institutions needed to support
development.
As a small island developing country located 30 per cent further away
from world markets than the average developing country, it was not
obvious that Mauritius should pursue a strategy of export-led growth.
Yet, Mauritius was quick to understand that with limited natural
resources and abundant human capital, it had no choice but to rely on
international trade. Certainly, Mauritius benefited from preferential
access to key markets for its most important exports, sugar and
textiles. But instead of resting on its laurels, Mauritius took
advantage of these gains to diversify the economy and expanded into
other areas of manufacturing, tourism and financial services.
This brings me to the crux of my message which can be summed up in two
key points.
The first point is this: no economy can sustain economic growth by
maintaining the status quo. I fully realize that there is great concern
in Mauritius, just as there is in other preference-receiving countries,
over the erosion of preferential margins. I can appreciate the anxiety
but I also firmly believe that the way to face the future is not to deny
that preferential margins will inevitably decline as global
liberalization proceeds apace and competition intensifies. The erosion
of preferences is without doubt a very important issue in the
negotiations and some countries have shown some sympathy to your
concerns. But it is not yet clear how far they will be ready to take
action and there is stiff opposition from other countries.
How preference erosion might be handled depends on the negotiations but
I will not mislead you into believing that preferences can be preserved
indefinitely. The time of preferential-margins is coming to an end. The
global trading environment has changed and it will continue to change at
even greater pace in the future. It has changed not just because of °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ
negotiations but also because of the emergence of new low cost
producers, and the proliferation of bilateral and regional trading
agreements. All countries, small or big, will have to adjust to this new
reality and find new sources of competitiveness.
Mauritius is fortunate in that economic adjustment is not new to this
island. The Mauritius of the past diversified from sugar into textiles
and then into tourism and financial services. The Mauritius of the
future is already taking shape with your exciting new vision to
transform Mauritius into a diversified, hi-tech and high income services
economy. As Mauritius's competitiveness is tested by global competition,
there is no viable alternative but to widen economic opportunities and
stimulate growth through openness, liberalization and an improved
investment climate. Preferential access has often been biased towards
primary commodities, making it difficult to develop a processing
industry. It can act as a drag on the economy by creating a disincentive
to develop other, more promising economic activities. It is time to
invest in a new generation of industries that corresponds better to
Mauritius's evolving comparative advantage.
The challenge for Mauritius is to remain globally competitive. Your
enterprises will need to be innovative, forward-looking and prepared to
adjust constantly to rapid developments. If these words sound familiar
to you, it is because they come directly from the Budget Speech of
Mauritius for 2003/2004. The Mauritian economic miracle did not happen
by chance. It happened because you had a well-defined development
strategy based on export-led policies. To sustain the Mauritian miracle,
new economic drivers will have to be found. The road ahead will not be
easy but I believe that Mauritius is up to the challenge of successfully
adjusting to an entirely different set of circumstances. After all, your
history is one of successful adaptation. I know you have already begun
and I commend the Government of Mauritius for embarking early on an
ambitious economic programme, the Economic Agenda for the New
Millennium.
My second point is this: no country can achieve prosperity without
international trade and the multilateral rules provided by the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ to
keep markets open and predictable. This is not to say that trade is the
answer to all of Mauritius's concerns but that meaningful solutions are
inconceivable without it. This is true for small countries just as it is
for big countries. Just a couple of weeks ago, I was in Washington D.C.
My message to the US was that as °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ's importance to the world economy
increases, so too does the challenge of making it work. Big countries
have a responsibility to strengthen the multilateral trading system, but
so do small countries, like Mauritius.
The high ratio of merchandise trade to GDP — around 90% on average — indicates the importance of trade to Mauritius. Without a multilateral
regime such as the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ system, this trade will be continually subjected
to unilateral decisions in the markets of your trading partners. With
its consensus decision making and binding dispute settlement mechanism — the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ gives smaller countries not just the guarantee of market access
but a bigger voice and clout in the trading system. It is for this
reason that 24 countries, many of which are relatively small economies,
are currently negotiating to join the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
As a small island developing country with a heavy dependence on
international trade, it is obvious that Mauritius has great interest in
the Doha Round. Mauritius has a stake in all the core areas —
agriculture, services and industrial tariffs.
In the agriculture and the industrial tariff negotiations, Mauritius has
very commendably remained constructively engaged, despite its concerns
on the erosion of preferences. In agriculture, clearly, sugar, which
accounts for some 80% of agricultural exports remains a very important
sector for Mauritius. However, I would urge you not to lose sight of the
opportunities that exist in other areas of the Round. Thanks to the
efforts of your government, Mauritius has already begun to prepare for
the future by successfully diversifying from sugar production. Three
decades ago, sugar accounted for over 90% of the total value of
merchandise exports. Today, it accounts for some 14%.
These figures do not deny the importance of agriculture, and sugar in
particular, to Mauritius but they do show a long-term shift in the
structure of the Mauritian economy. You know, as well as I do, that
preferences are under threat from all angles. From MFN liberalization,
by EC enlargement and internal domestic reforms, by unilateral trade
measures such as Everything-but-Arms, as well as by bilateral and plurilateral trade agreements.
In manufacturing, I hardly need to tell you that Mauritius, a
substantial beneficiary from the export of textiles and clothing, is
faced with the same challenges now confronting many other exporters in
the sector. The imminent termination of the Agreement on Textiles and
Clothing (ATC) will sharpen competition as new low cost competitors gain
ground. For the same reasons as for sugar, the textiles and clothing
sector will increasingly have to face the challenge of preference
erosion. However, my message to you is not one of doom and gloom. It is
a message of the necessity for continuing reform and adjustment to cope
with future challenges.
The outcome on the proposals from Mauritius on the erosion of
preferences will depend on overall course of the negotiations. My
message to you, however, is not to delay adjustment. While preferences
exist, you should use the gains from these preferences to help your
industries to diversify and adjust. Mauritius cannot afford to lock
itself into an unsustainable economic structure of preference
dependency. Leaving aside the issue of preferences, rising wage costs in
Mauritius and the emergence of other low cost competitors all point to
the need for Mauritius to find new economic niches and to move up the
production chain. Mauritius has shown the world that despite being a
small island developing country it can compete, and compete very
effectively. The World Economic Forum (WEF) has ranked Mauritius among
the top 5 countries in Africa, ahead of larger neighbours, for the
quality of its business environment. The WEF has also ranked Mauritius
as the 35th most competitive economy in its growth competitiveness
index, ahead of Greece, Italy, Mexico, Brazil, India and a host of other
countries.
I would strongly encourage you not to devote all your efforts to
fighting a rearguard action in the Doha Round when significant gains can
be made by advancing in other areas. Services is clearly an important
“offensive” sector for Mauritius in the negotiations. Today, services
account for nearly three quarters of real GDP and more than one-third of
total foreign exchange earnings. Mauritius is a net exporter of
services. Earnings from services exports have represented more than 50%
of the total value of merchandise exports in recent years and it is
expected to continue growing. Mauritius has also attracted more than
9,000 offshore entities and investment stock in the banking sector alone
has reached over US$ 1 billion. As one of the most active services
traders in Africa, it is in the interest of Mauritius to see progress
being made in the services negotiations. It is important to bear in mind
the “single undertaking” logic of the Doha Round. Progress will only be
made in services if there is also progress made in the agriculture and
industrial tariff negotiations.
So far, Africa has remained virtually absent in the services
negotiations. There are 41 offers on the table, including 28 offers from
developing and transition economies. But we do not have a single offer
from an African country. Mauritius with its strength in the services
sector can lead the way by submitting its initial offer. The services
negotiations can help Mauritius to consolidate its programme of domestic
reform and to increase its participation in world services trade by
gaining access to other markets. I understand that it is sometimes
difficult for our smaller members, due to capacity constraints, to
participate as fully as they would wish in the negotiations. The °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ
Secretariat has been doing its best to provide GATS-specific technical
assistance to African countries. But if there is more that we can do in
this area, I would urge you to let me know.
At Cancun, we saw the risks that we all face when negotiations break
down. But the setback at Cancun, is at times exaggerated. I have said
this before. No country today seriously believes that it can afford to
turn its back on freer trade, stronger rules and a more effective °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
No country wants the Doha Round to fail. Our great debate is about the
speed and the scope of the multilateral trading system not about its
relevance. After a period of introspection, we are now seeing concerted
efforts by countries to negotiate amongst themselves and to seek
balanced and equitable outcomes. This is a good sign.
It would be tragic if we were now to let the Doha Round drift. To think
that the issues before us are too difficult to tackle multilaterally or
to think that bilateral or regional agreements could serve as an
alternative, would be a serious mistake. Only the multilateral trading
system can provide the broad trade-offs that make trade liberalisation
possible. Only multilateral negotiations can ensure that poor and
vulnerable countries are not left out in the cold.
Your success is often viewed as an isolated case in Africa, a bright
anomaly of development in a continent that has otherwise not yet
achieved its promise. I hope in the future that we will able to speak of
Mauritius not as an unusual case in the African continent but as just
one among a countless number of other African miracles.