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WTO NEWS: 1995 PRESS RELEASES

PRESS/35
12 December 1995

No alternative to new initiatives in trade Liberalization: Director-General pays tribute to role of GATT

“Increasing globalization of the world economy through trade growth is here to stay. But if we want to enjoy the benefits that substantial trade growth brings then that process of globalization and enhanced interdependence of nations must be stimulated through new initiatives in trade and economic liberalization. Future jobs, development, improvements in social welfare, education, health and environmental protection depend on it. There is no real alternative...”

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This was the message given today by Mr. Renato Ruggiero, Director-General of the WTO, in a speech at the final Annual Session of the Contracting Parties of GATT in Geneva.

Mr. Ruggiero emphasized the contribution to world economic development of GATT, which has been replaced by the WTO, during its 48 years of life. The full text follows:

"That the economic prosperity and development achieved since the end of World War II, is to a large extent due to the quiet, persistent achievements of the GATT is not challengeable. The GATT contract was first signed in 1947 by 23 countries and grew into a broad-based multilateral system covering over 90% of world trade. Membership in GATT grew to 128 countries, of which the majority are of course developing countries. It was an enormous success. Just how much of a success can be seen by taking a look at some historical figures.

Looking at the whole period between 1820 and 1992 we find that world population grew five-fold, world GDP forty-fold and world trade no less than 540-fold. Those who think trade and the global interdependence it brings do not matter should consider those figures very carefully indeed. All the more so in respect of the periods when growth of trade was most marked. Two periods stand out. The first, was the years between 1820 and 1870 - an especially liberal period for commercial policies throughout the world - when the annual average growth of the volume of world exports was 4.2 per cent. The second, which many observers call the "Golden Age" was precisely the period 1950 to 1970 when successive rounds of GATT trade negotiations progressively knocked down the hight tariffs and the quota restrictions of the inter-War years. During those years world merchandise exports grew by 7.0 per cent a year on average. Only in the last few years of the 1990s, as the Uruguay Round was concluded and commitments to further opening of markets and new rules and disciplines have been secured, has there been some signs of a return to trade growth near that of the "Golden Age".

Increasing globalization of the world economy through trade growth is here to stay. But if we want to enjoy the benefits that substantial trade growth brings then that process of globalization and enhanced interdependence of nations must be stimulated through new initiatives in trade and economic liberalization. Future jobs, development, improvements in social welfare, education, health and environmental protection depend on it. There is no real alternative.

The role of GATT in integrating developing countries into an open multilateral trading system is also of major consequence. The increasing participation of developing countries in the GATT trading system and the pragmatic support provided to them through the flexible application of certain rules helped developing countries to both expand and diversify their trade. It could now be said that a great number of these countries have already become full partners in the system as can be witnessed by their active participation in the Uruguay Round. The task of helping to integrate further the least-developed countries is one of the challenges that lies ahead in the WTO. Similarly, the full integration of countries with economies in transition into the trading system must be achieved in order to strengthen economic interdependence as a basis for greater prosperity and world peace.

In looking back over the achievements of GATT during the past fifty years, one must not forget the critical role played in the management of the system by the four Directors-General who preceded me in this seat. Their unswerving dedication together with that of the Secretariat itself were crucial to the historical achievements of GATT during its lifetime.

Within another few days GATT will cease to exist and take its place in history. It is therefore also time to look towards the future. We have just come through almost ten years of extremely hard and complicated negotiations to ensure a transition from the narrower trading system of GATT to a broader, more ambitious system under the WTO.

These negotiations were critical to ensure the future health of the world economy and the trading system. The globalization of the world economy over the past decade has created a greater reliance than ever on an open multilateral trading system. Free trade has become the backbone of economic prosperity and development throughout the world. Partly as a result of this, there has been a shift in trade policy mechanisms from border measures to internal policy measures, substantially affecting the management of trade relations. The Uruguay Round sought to establish a new balance in rights and obligations among trading nations as a result of this phenomenon. We are gradually moving towards a global marketplace, and for that, we need a global system of rules for trade relations among partners in that market place.

The challenges that we face are therefore enormous. The only way back from this globalization in the world economy would be through depression and eventual chaos. We therefore have no choice but to move forward. In doing so, however, we must be sure to preserve to the highest extent possible the spirit and tradition of the GATT, which to a large extent was the key to its success. We have spent this year putting the machinery of the WTO into motion. We must ensure its efficient functioning for the future by preserving the pragmatism and flexibility which characterised the manner in which GATT managed trade relations among its partners.

I have had the occasion in the recent past to express some views on how we should look at the WTO and the future. I do not intend to speak at length about the future. I do, however, wish to emphasize the critical importance of this period of transition from GATT to the WTO.

A year from now, almost day to day, we shall be meeting in Singapore for the first Ministerial Conference of the WTO. This will be a significant point on the continuum of progress in trade liberalization whose momentum will advance the multilateral system into the next century. Therefore, in looking ahead, we must look not only to Singapore but also beyond Singapore.

From this perspective there are five major tasks ahead:

(i) to ensure the proper implementation of the Uruguay Round results;

(ii) to undertake preliminary work on new issues which will arise or which have already arisen as a result of the growing complexity in managing world economic and trade relations;

(iii) to ensure, in the implementation of the WTO's agenda, that progress in the multilateral system and in regional areas will be kept consistent with the principles and objectives of multilateralism;

(iv) to strengthen the political dimension of the WTO as a focal point in the management of world trade relations among its Members;

(v) to increase public awareness of the immense opportunities provided by an open, rule-based trading system for global growth and prosperity.

Our capacity to meet these challenges is greatly enhanced by the fact that, unlike the GATT, which concentrated its negotiating efforts through multilateral rounds of negotiations, the WTO provides a permanent negotiating forum. It must be able to continue negotiations in certain areas while preparing for negotiations in others. This cannot be achieved through the efforts of experts alone. It calls for continuing political attention of governments and for a continuing dialogue amongst Members at the political level. In the coming years it is therefore essential to assert the political role of the WTO as a forum for policy-making among its Members in their trade relations. Those who are at the centre of the world trading system must guarantee this role for the WTO. At the same time every effort must be made to help those who are at the periphery of the system - least-developed countries, and countries in regions such as Africa - to more fully integrate themselves and reap the benefits which the system has to offer.

If we succeed, Mr. Chairman, we will have built upon the legacy of GATT and we will decisively contribute towards a future of greater economic prosperity and world peace.