The full text of
Mr. Ruggiero's speech, given at the MENA III Conference, Cairo, on 12 November 1996,
follows I.
This
conference can make no greater contribution to improving security and peace in the region
than by encouraging strong trade links and investor confidence, which can lay the
foundation for durable economic growth throughout the region. Without economic progress,
it will prove immeasurably more difficult to achieve lasting political stability in the
Middle East. Economic progress encourages interdependence and the shared respect for the
rule of law which is the basis of stability. Certainly no lasting peace has ever been
built on the shaky foundations of economic insecurity, inequality and isolation.
The reason
why trade has such a vital part to play in building peace is because it means lowering
barriers - not only to goods and services but among nations and peoples. The elimination
of barriers creates interdependence and interdependence creates solidarity. The history of
the last fifty years has shown us all the undeniable benefits of lowering trade barriers
and opening economies. The most striking example has been in the process of European
construction, where historic enemies have been transformed into inseparable partners.
Clearly every
region has its own characteristics, and it would be wrong to imagine that the same
blueprint can apply everywhere and in the same way. But my message here today is that this
region which was for thousands of years at the crossroads of world trade should regain its
place in the centre, because doing so will help build peace as well as prosperity. This is
why the numerous applications for accession to the WTO from countries in this region are
so significant. Currently, its level of participation in the WTO is relatively low. Signs
that this is in the process of changing are most welcome.
II.
I
would like to expand a little on what it means to talk of the region regaining its place
in the centre of international trade. There are essentially two tracks back to the centre,
and experience suggests that they are not mutually exclusive but rather strongly
complementary, especially at a certain stage of development.
The first is
through regionalism. I know that there are several efforts at regional trade and
economic initiatives among Middle Eastern and North African countries, and I hope that
such initiatives will be encouraged to produce positive results.
Regional
initiatives are important because they can help countries at a comparable level of
development to move relatively quickly in opening their economies and in deepening their
interdependence.
Regionalism
is important as a means of facilitating the integration of the economies concerned into
the mainstream of the global economy. This is the role that future negotiations between
the EU and Mediterranean countries aimed at establishing a free trade area in the next 15
years should play. Regionalism can also encourage a common approach to issues in
international debate or negotiation. But above all, regional trade initiatives are a
powerful instrument to decrease or eliminate tensions.
However, the
rapid advance of global economic integration means that while regional initiatives remain
important, they are not sufficient by themselves to address successfully the new
perspectives of the international economy. That is why we need a second track, which is
the rule-based multilateral system. And that is why the multilateral system is of
fundamental importance to the economic prosperity of this region.
III.
Globalization
is an irreversible process. Its momentum comes from the advance of technology, of
communications, and of access to information, as well as from the international flow of
goods and finance. To stop this autonomous process or to slow it down is almost impossible
- even if we would restore high protectionist walls around each nation or each group of
trading nations. It would be in any case a tragedy not just for economic progress but also
for security and peace. The only sensible way is to make globalization work for all of us.
That this is
entirely possible is shown by the fact that a third of the world's twenty-five leading
exporters are now developing countries. Developing countries now account for a quarter of
world trade, compared to less than 20 per cent a decade ago. If current trends continue,
this figure could reach 40 per cent by the year 2010 and over half by 2020.
These
statistics also describe the huge diffusion of technology and economic power that is
currently underway. This is nothing less than a fundamental shift in the economic
equilibrium of the world. It shows up in the fact that developing countries who open their
economy and adjust to the unprecedented opportunities of globalization are in many cases
now the locomotives of growth, for industrialized economies as well. At the beginning of
this decade, industrialized countries in Europe and North America have emerged from
recession mainly because of the increased import demand from developing countries.
This shows
the growing economic weight and leverage of developing countries. You have economic power,
and the potential of much more. There is thus no need for defensive attitudes. And the
rule-based multilateral trading system gives you the level playing field you seek - it is
yours to play on as hard as you can.
New
technologies are changing the trading system as globalization expands towards an even
greater human dimension. What this means is that the lines representing our different
worlds - developed, developing, least-developed - are becoming blurred. In linking
together our economies through satellites and fibre optics we have also linked together
our futures. This region has to share all the benefits of this new scenario.
When WTO
ministers meet in Singapore next month there will I hope be, firstly, an encouraging
review of what has been achieved in the first two years, especially the positive
experience of the dispute settlement procedures, the heart of our system. Secondly,
ministers will be able to take note of a new and powerful movement in trade liberalization
which truly sees us trading into the future: the aim of eliminating tariffs on information
technology products by the year 2000 on an M.F.N basis. These products account for more
that US $400 billion in annual global trade value - as much as agricultural trade. This
will be an achievement of great value for all of us - we all need the same technology.
As the first
major international institution to be created in the post-Cold War era, the WTO offers a
promise of the kind of global economic architecture we all need in the coming decades. Its
culture is firmly rooted in the tradition of consensus-building and cooperation among
sovereign countries. And the WTO embodies rights and obligations negotiated by consensus,
approved and ratified by each government and each Parliament, and they are enforceable,
not through the crude exercise of economic power, but through the rule of law. The
alternative would be a power-based system - who would want to chose this option?
But most
importantly, the WTO is an organization which brings all countries -- from all corners of
the world and from all levels of development -- together as equals. There is no weighted
voting, no exclusive clubs, no inner and outer circles. Developing countries representing
80% of our constituency sit as equals with industrialized countries to write the rules of
a shared trading system. This is why 28 candidates, including many major partners like
China and Russia, and countries of this region, consider membership of the WTO a high
priority. Even the smallest country can challenge the most powerful in defense of its
trade interests -- and not on the basis of economic power but on the basis of common and
enforceable rules. This is not a legal abstraction nor is it wishful thinking -- these are
the realities of the new system we have created together. In a very real sense, the WTO is
the visible embodiment of the most profound development of our time -- the deep
interdependence of all peoples and all nations.
IV.
This new
unity of developing and developed countries inside a single system will be credited as the
greatest achievement of the multilateral system. But this unity is still fragile: we
cannot allow it to be broken: This is why, in preparing the agenda of the first
Ministerial meeting in Singapore,we have recognized the particularly difficult task facing
developing countries in implementing the Uruguay Round commitments.We have also
acknowledged the challenges they face in contemplating the necessary work programme.
However no
one here, in this Conference held under the theme "Building for the future: creating
an investor-friendly environment" would be surprised to know that one of the main
issues of our work programme to be discussed by Ministers in Singapore is just what kind
of contribution the multilateral system could give to the promotion of investment, taking
into account the strong interrelation with trade and the enormous number of bilateral
agreements.
Up to June
1996 1160 bilateral investment treaties have been concluded (two-thirds in the 1990's).
These treaties involve 158 countries. This means that policy coherence in investment is a
critical consideration. Governments face a choice between continuing to deal with FDI
issues bilaterally or in small groups, or exploring options for a comprehensive framework
designed to ensure that investment and trade rules are compatible and mutually supportive.
There is little doubt that investors have a strong preference for the second option. This
should be a message which also comes out clearly from this conference.
A lack of
rule and policy coherence poses a danger to security and predictability, which are basic
goals of trade and investment agreements. Furthermore, only a comprehensive and global
framework can recognize the close linkages between trade and investment, assure the
compatibility of investment and trade rules, and - most of all - take into account in a
balanced way the interests of all members of the trading system, developed, developing and
least-developed alike. And only a multilateral negotiation in the WTO - when appropriate -
can provide such a framework.
This region
received last year only 1.2 per cent of global foreign direct investment, and only 3.7 per
cent of the total investment inflows to developing countries. This underlines the great
importance of investment for the future of this region, and the urgency of a renewed
effort. In the light of this situation, I think you would find it surprising if I did not
underline the importance of beginning to study the problem in the WTO.
A
clarification is needed: no one is suggesting in Geneva that there should be a negotiation
now, before an educational effort has been undertaken, nor that limits to the rights of
host countries should be established or privileges granted to the rights of investors. The
only issue under discussion is whether an educational effort in UNCTAD should be
accompanied by a complementary one in the WTO. In my responsibility as Director- General I
am convinced that it would be in the real interest of all developing countries, and of
this region, if Ministers in Singapore would launch an initiative in the field of
investment in the WTO as well.
V.
The
integration of developing countries as equal partners in the multilateral system is one of
the most important challenges in shaping the economic order of the 21st century. This is a
shared responsibility of developed and developing countries alike. There is no rational
alternative to this objective. The evolution of the global economy makes that clear.
Without unity among industrialized and developing countries the paths that we united at
the end of the Uruguay Round will inevitably begin to divide again. The industrialized
world would try to build its own rules to harness globalization and the developing world
would be split. Many developing countries would follow the path of the industrialized, and
the others would be left on the margins. I do not think this is a scenario anyone would
willingly choose.
Instead, we
need to work together as equal partners to ensure the full integration of countries in
this region, and all other developing and transition economies, into the global economy
and the rule-based multilateral trading system. In conjunction with this we need to
encourage, notably in this region, the growth of regional economic cooperation. The
alternative is a vicious circle where economic isolation feeds greater political
instability which in turn leads to greater economic isolation. The road to a lasting peace
in the Middle East begins, not ends, with economic integration and interdependence. Taking
this message to heart will help build a future where it is goods, services, and investment
that cross borders - not missiles and soldiers. |
