WTO news: what’s been happening in the WTO

WTO NEWS: 1999 PRESS RELEASES

Press/143
3 November 1999

Overview of developments in the international trading environment

Attached is the full text of WTO Director-General Mike Moore's statement today to the General Council on developments over the past year in the international trading environment.

Remarks by the Director-General

We go soon to Seattle to launch the new multilateral trade negotiations and set the WTO's work programme for the next few years. My report to you on the "Overview of Developments in the International Trading Environment" suggests that this is a good time for starting our work. The state of the world trading environment is generally sound; economic growth is strengthening and the outlook for the next few years is promising. Moreover, we have just been treated to a remarkable example of the value and strength of our open and rules-based multilateral trading system. ”

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During the financial disturbances of 1997-98 the good sense of governments and WTO rules kept markets open, providing a critical base for recovery. Seldom have the gains from trade been so evident. This is the background that takes us to Seattle, a background that provides ample reason for confidence in the benefits of a strong, open, rules-based multilateral trading system.

Compare this to the situation when we launched the Uruguay Round. Growth was sluggish and market-sharing arrangements were becoming the order of the day. Faith in the system was fading. Yet against this background, and admittedly with the help of world events, we managed to produce path-breaking agreements and to establish our Organization, one that is accountable to its member governments, which now have a fully fledged forum to address the trade concerns of their people, to whom they in turn are accountable.

This time the atmosphere is better and surely now we can build on this, and on the achievements of the Uruguay Round and subsequent negotiations, to further strengthen our system, particularly to ensure that its advantages and benefits accrue to all. That is my ambition for Seattle: that we establish a balanced work programme and that we launch negotiations that result in a balanced and fair outcome for all our Members.

Yet not all share in our confidence in the benefits of the multilateral trading system. There is unease about globalization. There are those who feel less secure and are worried and uncertain. Some see globalization as a threat. But globalization is a fact; we cannot retreat from it and nor should we want to – it holds benefits for us all and we need to take steps to ensure that the prosperity that flows from globalization is accessible to all. In Seattle we must continue to deal with the unease, for some of the criticisms are valid.

Economists agree on very little – but they all agree on one thing – perhaps the only thing that these two-handed people do agree on – the gains from trade. From this perspective it should be a matter of enormous concern to us that the least-developed countries together, forty-eight countries, hold a share of no more than one-half of one percent of world trade. Are these countries really benefiting from the system? I agree, there are a lot of causes, many beyond the scope of the WTO, but we in the WTO must do our part: let us resolve in Seattle that we will do what we can to better integrate the LDCs into the benefits of our system. For this, two steps are essential, and they should be high on our Seattle agenda, for immediate action:

Duty-free access for LDC products to markets. This will not cost a lot, and it will show that we are serious about dealing with the problems of inequality and exclusion; and

Technical cooperation. Capacity building is difficult; implementation of obligations is often hard. Expertise is required. In Singapore we took the first steps towards the Framework for establishing meaningful cooperation. We need to go further and to do so we need the financial resources. In Seattle let us be generous. I stress this in the context of our LDC Members but the need is equally urgent for many of our developing Members: the ongoing health of the multilateral trading system requires that we address this need for technical assistance.

But our agenda should go beyond this. Sound domestic policies, that are well understood by the public at large, and good governance are fundamental determinants of progress. Transparency is a key. In this the trading system can and should help. To this end decisions in Seattle to move to agreements on Transparency in Government Procurement and Trade Facilitation would be a modest start albeit with a profound message. So too would be a renewal of our determination to work with the Fund and the Bank on coherence of international policy-making: we have agreements with the Fund and the Bank and we have the "coherence mandate" – we now need to build on these to ensure that trade, financial and development policies are fully supportive of each other.

And we need to ensure that we are understood. A decision in Seattle to continue our efforts to improve the transparency of the WTO and to implement more regular outreach initiatives will help build understanding and support for our efforts. That trade and environmental policies can be mutually supportive is an obvious example but it is far from the only one - trade is good for the consumer and like the tide, it can raise all boats. But there are adjustment costs and there are those who perceive inequities in globalization. Clearly, appropriate social policies need to accompany liberalization; it is part of the accountability of governments to their people. In this manner we all benefit.

We will launch negotiations in Seattle – agriculture and services are already on the built-in agenda. Tariffication of quantitative restrictions in agriculture was sound because it exposed the high levels of protection on many products. Our task now is to begin to reduce these high tariffs and to deal with the issue of subsidies and support systems. This will be delicate because it involves diverse social priorities but we should remember that the comparative advantage of many developing countries lies in producing food. It is simply not fair to hamper their opportunity to export competitive products.

Who can deny the benefits to all of firmer rules and liberalization in services? Services comprises well over half of most of our economies; further liberalization will make our exports more competitive, create better jobs and advance the welfare of our consumers.

But is this enough? Will we extend market access negotiations to other products as well? I think in particular of tariff peaks and escalation and of the addition of value to raw materials – activity that has often led industrial development. And what of the rules, the security and predictability of our trading environment; should we strengthen them and perhaps extend them to new areas? These are matters on which we do not yet agree, and the time for engagement is now. In Seattle we need to set the path for trade relations for the future.

As I said at the start of my remarks, the Overview suggests that the moment is promising. We have witnessed a striking example of the benefits of our trading system; now is the right moment to build. And in building – by drawing all countries into our system, by strengthening the rules and by making more readily available the gains from trade – I urge you to remember that trade is not the end: it is a means to progress, a tried and trusted vehicle for advancement, prosperity and a safer, better world for us all.