WTO news: what’s been happening in the WTO

WTO NEWS: SPEECHES - DG MIKE MOORE

13 April 2000
Moore urges trade package for poorest countries

Address to the national press club, Washington, D.C.

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Thank you Mr. President.

May I say what an honour it is to speak at the National Press Club – a place where, over the years, so many of my heroes have spoken. The greatest men and women of our time and of our parents' time, have spoken here. Franklin Roosevelt, Golda Meir, Nelson Mandela, Kim Dae-Jung, have all graced this setting with their presence. This is a tribute to the Press Club and an inspiration to others like me who are sharing this opportunity.

It was Franklin Roosevelt, together with Lord Keynes, Jean Monnet and others who sought to assure that the economic and geopolitical conditions which lead to depression and war, to famine and holocaust, could never be repeated. They learned from the Great Depression and the war that peace had to be fought and worked for with the same degree of dedication and intensity that was employed in the pursuit of victory in 1945. Franklin Roosevelt knew it was self-destructive, even for a great power like the United States of America, to retreat behind walls of protection. He knew that building barriers between nations and between people lead to friction and ultimately, to war.

In 1945, at his fourth Inaugural Address, Roosevelt said: "We have learned that we cannot live alone at peace; that our own well-being is dependent on the well-being of other nations, far away. We have learned that we must live as men, and not as ostriches, nor as dogs in the manger. We have learned to be citizens of the world, members of the human community."

Empowered by the strength of this conviction, Roosevelt provided inspiration for those who drafted the blueprint for multilateral co-operation. It is a system that has served the world well for over 50 years.

The GATT was a hybrid creature that arose from the international negotiations to set trade rules. It was not technically even an organization. It was less effective than the WTO at enforcing dispute settlement rulings and it did not cover large segments of international economic activity including trade in services, agriculture, international protection of intellectual property or textiles.

In 1994, trade ministers in Marrakesh signed the Uruguay Round agreement which brought about the World Trade Organization.

[[Few organizations have been the subject of so much attention in so short a period of time. Much of that attention has been critical, some deservedly so, much of it undeserved. And much of that criticism melts away as people come to understand exactly what the WTO is and what it stands for. The WTO is an intergovernmental organization. Governments meet in Geneva to discuss trade issues, to negotiate rules for the further liberalization of trade, to settle disputes. Governments deal directly with each other, face to face. The 530 person Secretariat, which I head, has virtually no power to determine the policies of governments. Our budget is roughly $80 million a year, or about what Michael Jordan earned in his last year in the National Basketball Association. Our budget is one-third that of the World Wildlife Fund.

Over 93 per cent of all our documents are available to the public and virtually all of those that are restricted today, will soon become publicly available. Moreover, there are few organizations, national or international, which brief the press and NGO communities so regularly and so completely. We invite journalists, NGOs, members of Parliaments, business groups, students and the general public to come and visit us, and they do.]]

All of our agreements are reached through consensus of the member governments. All of our agreements are subject to ratification by Congresses and Parliaments.

The rules-based framework for trade has provided the platform for a remarkable expansion of trade in the post-World War II era. Since 1950, global trade has increased 15 fold, providing a powerful engine for economic growth across the planet.

In this country, trade is linked closely to one-third of the 21 million new jobs created since 1993. The United States is far and away the world's largest exporter, of goods, services and agricultural products, shipping $958.5 billion worth of goods to other countries last year. US exports have risen 55 per cent since 1992. In manufacturing alone, exports have risen 91 per cent since 1989 and 35 per cent since the WTO came into force in 1995. (Manufactured exports were $694.62 billion in 1999, $514.44 billion in 1994 and $363.22 billion in 1989: Source FT).

The 11.7 million jobs linked to the exporting sector in the United States pay, on average, 13-16 per cent more than the average US wage, and these jobs underpin a labour market in which wages have risen 4 per cent in the past year.

In economic terms, there is little doubt that the United States – whose economy is now the envy of the world -- has benefited from a rules-based trading system.

Nonetheless, civil society has rightfully said that progress in the economy is not enough. International institutions must take a broader perspective. The environment, social issues including forced child labour, development and consumer rights must be addressed either directly or through improved coherence with other international organizations.

[But, decision-making in the WTO is difficult, and at the moment we do not have consensus among member governments on the role the organisation should play in these areas. Consensus of our 136 member governments is required before any agreement can approved and this will not change. Nor should it, because with each of our member governments wielding the equivalent of UN Security Council veto, each nation retains full protection of its sovereignty.]

Nevertheless, some have criticised the WTO as an organization that infringes on the sovereignty of its member governments. But as Paul Krugman stated so simply yet perfectly in the New York Times several months ago, "the WTO … is basically a commercial court. All it does is determine when countries are violating agreements they have already made." Furthermore, international agreements on issues like the protection of intellectual property rights, trade in telecommunications and financial services and agricultural actually represent an extension of US values and objectives to all corners of the world.

Consensus is beginning to form around a host of issues that may not have garnered many headlines but which are of great importance; better market access for the Least Developed Countries in the developed world, greater funding for technical assistance and training, closer cooperation among development agencies in bringing the LDCs in from the sidelines of the Multilateral Trading System.

But consensus remains elusive on a large number of environmental and especially social issues. Governments in virtually all developing countries, see the inclusion of these issues on the WTO agenda as a smokescreen cast by industrial countries for protectionist purposes. They say countries which have the financial resources and which create 500 times more waste per capita than Bangladesh and other Least Developed Countries, ought to take the lead by taking measures at home first. This does not mean that progress cannot be made in these issues down the road, but greater efforts must be made at building trust.

The way in which we make decisions, the manner in which we deal with civil society, our degree of openness to the outside world: all of these practices have been criticised in this country. The critics are not all wrong. We are now in the process of examining how we can be more transparent, more efficient, more inclusive.

Franklin Roosevelt knew that the United States had to lead. He knew that if the world was to be peaceful and prosperous, American guidance, strength and compassion were required. For more than 50 years, this country has answered the call, taken up the challenge and the world is a better place for it.

Certainly, the Multilateral Trade System owes much to the United States. The United States has been at the forefront of every one of the eight trade rounds launched since 1948. This is as important today as ever before, not just for the WTO, but for the United States, which in this increasingly interdependent era has become more and more dependent on trade for growth. In 1970 total US trade (exports and imports) was the equivalent of only 13 per cent of Gross Domestic Product. Last year, that figure had risen to 30 per cent and I don't know anyone who thinks that figure will, or should, decline in the future.

We have seen huge social and economic change before. We saw it when we left behind a society dominated by hunter-gatherers, then agriculture and to the industrial revolution. At each point of change there was massive dislocation, fear and hatred directed at leaders and kings who did not, or could not, maintain the old ways.

Today we have entered the post-industrial age, where more than ever before information is power. The internet explosion can only be equalled in history by the invention of the printing press and the steam engine. Nothing will be the same, not even that tyrant, distance. And again, America has taken the lead. Through the internet, international trade is now within the grasp of small and medium-sized enterprises that 10 or even five years ago could only dream of selling in foreign markets.

Rules for international electronic commerce are, at the moment in a state of suspension. WTO member governments are in the process of discussing how the electronic commerce work programme would move forward and whether the moratorium on charges on electronic commerce deliveries should be extended. US officials are fighting hard to see that cyberspace remains duty-free and that a solid work programme of rules is established. While others agree with this position, advocacy by the United States of an open system for electronic commerce is crucial to the formation of global rules, just as it was in the negotiations for agreements on telecommunications, financial services and information technology products.

These agreements have been fundamental in establishing a constructive, open roadmap for the global economy in the 21st century. The 1998 agreement on telecommunications covers 95 per cent of the $1 trillion in global telecommunications trade. Greater competition through this agreement has pushed rates down to as low as 10 to 20 cents per minute for calls between the United States and Japan. The surge in investment that followed this accord could lead to a 50 fold increase in capacity for fibre optic cables by 2001 compared with June 1999. Such investment will be crucial if e-commerce is to continue its exponential growth.

I think these changes are good for people. It cost a week's wages 120 years ago to put one word in a cable from my New Zealand home to London. Now on the internet transferring information half-way across the globe is almost free. The dream of working class parents in the 1950s was to buy the Encyclopaedia Britannica for their kids. But to do so cost a year's wages. Now the contents of the Encyclopaedia Britannica are free on the internet. The technology which has lead to the information revolution is good for the environment too. A pound of optical fibre shifts as much information as a ton of copper.

The 1997 financial services agreement, which came into force in March 1999, covers nearly $60 billion in financial services transactions. Not only has this agreement opened markets for exporting firms, it has also provided customers with greater selection, provided a deeper pool of capital in developing countries and introduced an element of "best practices" into markets where technology and know-how lag behind the west.

In February of this year, WTO Members launched a new round of services negotiations in hopes of broadening and deepening those two agreements and of adding some new ones as well. Discussions are underway in environmental services, express delivery, professional services and tourism.

The two sectors, agriculture and services, in which WTO negotiations are currently underway cover 65 per cent of global economic output. Half of global employment is in the agriculture sector, while services employ 29 per cent of the global workforce – and more than 70 per cent of the US workforce. These negotiations are of great importance to the trading system, to the global economy and to the United States of America.

At the moment, I do not see sufficient flexibility among governments – in either the developing or developed worlds – to lead me to conclude a round of negotiations beyond these sectors is imminent. At the moment. But this could change.

The one truly heartbreaking outcome of Seattle, for me, was that it meant a delay in addressing many of the problems that confront the WTO. It means delay in putting place a programme of support for the world's poorest countries, delays in tackling subsidies that are harmful not only because they are trade distorting, but also because they are environmentally damaging. It also means delays in securing future trade liberalization that will lift family incomes around the globe.

I'd like to take a moment to specifically address the issue of the world's poorest countries. With official development assistance contracting, it is vital that these countries turn to trade as a means of accumulating hard currency earnings. But sadly, this is not happening. In 1980, the Least Developed Countries accounted for 0.8 per cent of world trade. By 1997, the total trade of the world's 48 poorest countries had fallen to less than 0.5 per cent. Yet we know trade openings are not enough. Not when a nation faces a debt burden nine times greater than its budget for health, at a time when 25 per cent of the population is HIV positive. We know more must be done.

Among the many developing countries that find themselves in this situation of an extremely narrow supply capability, the most acute example is of the Least Developed Countries. They are the 48 nations, of which 33 are in sub-Saharan Africa, where 600 million people live or survive with barely one dollar a day, the poorest among the poor. Not by coincidence you will find in this category most of the troubled spots of the world, where you have endemic civil war, mass violation of human rights, genocide. These are countries where there is at the same time economic regression and chronic civil unrest, absence of an effective government and where as Michel Camdessus put it, one should invert Pope Paul VI's phrase "development is the new name of peace" and to say instead "peace is the new name of development."

I know that leaders in many of the world's mighty and modest nations are working to remedy this situation. Charlene Barshefsky has shown compassion and leadership here. I hope very much that in the coming weeks, I will be able to announce a package of market access opening, increased technical assistance and better co-ordination and coherence between the WTO and the key development institutions like the World Bank and United Nations Development Programme on building capacity in the Least Developed Countries.

I don't pretend for a moment that integrating the LDCs more completely into the global trading system will bring an end to all of their problems. Implementation of sound macro-economic policies, debt relief, more official development assistance for blighted regions and better governance in these countries are all crucial if we are to see these nations lifted from the quagmire of poverty. Raising living standards in the poorest countries also transforms their citizens into consumers and we all need more customers.

Perhaps no country has better demonstrated the remarkable benefits that accrue to its citizens through enhanced trade than China.

China's decision to take its head from the sand and open itself up to the outside world is one of the defining moments of the post-war era. It has done much to reduce, though certainly not eliminate, tensions between countries. Moreover, it has been a great success for the Chinese themselves. Never before in history has one country lifted so many of its people from poverty. A policy of greater openness has been instrumental in lifting 120 million people out of extreme poverty over the last 20 years.

The benefits of participation in the global trading system are obvious to many of China's economic leaders. They see enhanced linkages with the outside world, commitment to internationally agreed trading rules and the introduction of a more market-based system as being inherently in China's interests. So do I. But there are many others inside China, who have a different idea, an idea that China can go it alone, without adherence to internationally agreed rules and laws. These officials seek a nationalistic approach to economics and trade that would mirror the nationalistic approach they apply to geo-politics.

By integrating China more completely into the global economy we, as President Clinton said last month, "strengthen China's stake in peace and stability. Within China, it will help to develop the rule of law; strengthen the role of market forces; and increase the contacts China's citizens have with each other and with the outside world."

Actually America gives little out of this negotiation. It is China that now must adjust to operating inside a system of trade rules. It is China that must make concessions, including reducing tariffs on US industrial products from an average of 24.6 per cent to an average of 9.4 per cent by 2005. Tariffs on US agricultural products will be slashed by more than 50 per cent to an average of 14 per cent by January 2004. Moreover, the US will retain special strong safeguards and anti-dumping regulations which have been written into the US-China agreement.

[[Should China be spurned, America faces risks as well. I need to tell you that regardless of how the US Congress votes on Permanent Normal Trade Relations, China could enter the WTO. Should Congress vote against PNTR, the United States would be obliged to invoke Article XIII of the Marrakesh Agreement which established the WTO. Article XIII states that terms of the WTO agreements do not apply to either party. This means that the benefits accruing to all other WTO Members, in terms of access to China's market, would not automatically apply to the United States. A sobering thought when you consider the potential business opportunities in a market of 1.3 billion people.

But, assuming the political will exists, these issues can be resolved and China can enter the WTO this year.]]

Ladies and Gentlemen, it's a cliché to say we live in a world which is growing smaller each day. Remarkable breakthroughs in telecommunications, computer and transportation technology means that knowledge and ideas can be sent around the world almost instantaneously. The barriers which kept ideas from crossing borders are rapidly melting away. Goods, services, people and capital cross borders in most countries with relative ease.

This is globalization.

Globalization has its downsides too. Pollution crosses borders easily, so do criminals. But globalization is not a policy option. It's not something which politicians or political parties dreamed up one day. It is a process which dates back to the first time men emerged from caves, walked upright and decided to have a look at what was going on around them.

So how do we deal with this phenomenon? To me it's a simple proposition. The first half of the last century was marked by force and coercion. This century ought to be one marked by persuasion not coercion; by engagement and interdependence, and by a system where States settle their differences through that great equaliser, the rule of law.

I ask you to think of these brave men and women from the 1940s and others who most recently tore down the walls of economic and political oppression.

Reflect gently on those who have never had much anyway. Those who come from the poorest countries, the most distant islands and valleys who simply want a chance. Not favours, but opportunities, that we take for granted.

I say, let's welcome the future with confidence. I do, because too much is at stake for us to falter, be timid or to fail.

Thank you very much.