WTO news: what’s been happening in the WTO

WTO NEWS: SPEECHES - DG MIKE MOORE

16 February 2000
The WTO is back on track
"Back On Track for Trade and Development"

Keynote address by Mike Moore Director-General, WTO UNCTAD X, Bangkok

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Mr. Chairman, my dear Dr. Supachai, Mr Secretary-General, Excellencies, distinguished delegates, friends:

Rubens Ricupero, can I at the outset express my gratitude for your friendship, leadership and advice. I congratulate you for running such a well-organized conference and our hosts, Thailand, for their splendid organization and hospitality. I am very pleased to be here to bring you a message of support and solidarity from a WTO which is back on track and in business. I can report progress from Geneva. Members and colleagues have shown a great spirit of co-operation and understanding since the start of the year. Our first General Council meeting on February 7 and 8 produced important positive decisions because participants showed a renewed determination to work together to make the rules-based trading system work fairer and better for all its Members, large and small, rich and poor. It must do so, and it can and will. History demands it because we know that the prosperity, peace and progress of all peoples are based on a common need. We cooperate or perish.

We live in a complex and paradoxical world. Depending on what you read or where you turn, you can be elated or depressed by information. To take three examples from recent press clippings: - Mozambique, at least until the present floods, was projected to be the most rapidly growing economy in 2000 with 10% real GDP growth, and Africa overall to grow by 4%, as against 2.7% in Asia/Pacific and 2% in eastern Europe. Yet overall, we read that Bill Gates's wealth alone is estimated to be equal to the combined GDP of all the least-developed countries. And Africa as a whole receives less capital per year than Singapore. It is clear that the new division in the world – the distinction between inclusion and marginalization – is between those who are inside and those who are outside the modern, global economy. This is true both within and among countries.

Two billion extra souls will share our crowded planet within the next 30 years. We will have to double food production within 20 years. We face a world of insurmountable opportunities. This tenth Conference of UNCTAD is a good time to discuss these opportunities.

Trade and trade policy must play their role as part of a wider development scenario. Trade on its own is not enough. We have Members in Geneva who are paying up to nine times more on debt than on health. We read that more people died of Aids last year in Africa than in all the civil wars. But trade is development: the winners today and the lessons of history show this to be true.

II

In the WTO, development-related issues are at the forefront of our new work programme. The negotiations in agriculture and services are of vital importance to the economic future of countries at all levels of development.

I would like to pay tribute to our representatives in Geneva who have started the negotiations on the mandated Built-in Agenda. This is underway now. And when I say we or our in this speech I mean WE – the General Council, the Chairpersons, my Deputies and the Secretariat – we the team.

In agriculture, improved market access and reduced competition from richer countries' subsidies are crucial for most developing countries, both to develop their present structure of trade and to diversify into products with potential for new development. Increased production possibilities in agriculture are also one key to resolving the problems of rural poverty which assail so many developing countries; and increased trade possibilities here are one very important way to promote development. These new opportunities, if seized to the full, will benefit the rural poor in the poorest countries throughout the world.

In Geneva we have also begun to discuss our mandated agenda on services. Services trade development and diversification can bring considerable gains to developing countries. Many have already benefited from this in areas such as tourism, financial services, telecommunications and computer services - above all in some ASEAN countries. Most of our Members recognize that further services liberalization is not a classic North-South issue or divide, but one which must build on the remarkable progress already made in the services sector by many developing countries, and embrace the vast opportunities offered by this growing sector.

Liberal, coherent and more stable policy conditions in services – and the attendant mobilization of private capital and expertise - are a precondition for efficiency enhancing reforms in main infrastructural sectors such as telecommunications, finance, insurance, and transport. Reforms in these areas are likely to produce economy-wide benefits and, in particular, help to promote those industries in which the countries concerned are genuinely competitive and can become better integrated into international markets. Liberalization of services trade is an essential ingredient for any successful economic development policy. This is why, for the first time in the history of the multilateral trading system, several developing countries have come forward during the past two years with unilateral bindings of liberalization commitments in financial services and telecommunications under the GATS.

Outside the mandated agenda, there are four priority areas on which the Members have agreed that the General Council Chairman and I should carry out further consultations.

We are working now on a package of measures to assist the least-developed countries. As we all know, LDCs account for less than half of one per cent of world trade, and get less than 1 per cent of foreign direct investment. Taken together, they are the most marginalized group of countries in world trade. They need both free access to markets - both developed and among their other developing partners - and, even more importantly, assistance to build up their institutional and human capacity, and their infrastructure, to produce and trade a diversified range of goods and services. This is a moral, as well as an economic, imperative. I was disappointed that we could not stitch this up at Seattle. The General Council has said to me to report positive results in Geneva before Easter.

One thing I should say is that the best response to LDCs' problems should be an integrated response by all donors and international agencies. We already have the Integrated Framework for Trade-Related Technical Assistance, or in short the IF programme. Let's be honest - at present it's more like the "IF only". If only we could get it together. If the IF was not there we would have to invent it. This framework represents an opportunity to do something really valuable for, and together with, least-developed countries. Making it work better is a major priority of mine this year. There has to be closer cooperation with UNCTAD and other organizations. Rubens, you and I must hold hands and personally drive this, with the Bank and other agencies, otherwise it will continue to limp forward.

Another priority is to improve and regularize the funding of the WTO's Technical Co-operation activities. I was shocked to discover that the WTO’s core budget for technical assistance is only half a million dollars, although we receive additional funds from generous donors. But we need a regular budget in able to plan two to three years ahead and respond to the increasing demands for technical assistance programmes, not just individual projects. We are undertaking a major review of technical cooperation – in its scope and quality – this year and are fully accountable to Members for what we do.

The issue that took most time before Seattle was implementation of the WTO Agreements. Transition problems with some WTO Agreements are only the most immediate aspect of the whole complex of implementation-related issues. None of us can be in any doubt about how important these issues are, especially - but not only - to developing countries. The WTO membership as a whole has shown a real willingness to work constructively together in order to do so. We will do so.

It has also been made clear that the wider implementation issues ought to be addressed in a concrete and positive way. You are all familiar with what this term implementation means. It includes a range of concerns from the difficulties some developing countries have had in putting Uruguay Round commitments into effect to the argument that some of these agreements or the way in which they are applied are inherently disadvantageous to developing countries. In the pre-Seattle negotiations we spent more time on this than on any other issues. This is an area as sensitive as it is important, and yet I firmly believe we can arrive at a balanced and acceptable way of approaching it. We were close to doing so in Seattle. We had on the table a set of detailed proposals combining immediate action with the establishment of a mechanism to review implementation issues. I see a collective willingness among WTO Members in Geneva to engage in a constructive, sensitive way on this area.

Lastly, Members, Ministers and the media have focused on the issue of the WTO internal procedures for consultation and decision-making. This became a high-profile issue before and at Seattle, where a number of developing countries, especially smaller ones, felt excluded or marginalized. The culture is changing. Originally the GATT had less than 30 Members. Now there are usually more than 30 in the so-called Green Room. There clearly is a problem to be resolved here, although I should also mention that many Members have cautioned against a simplistic or hasty approach. In particular, the consensus principle which is at the heart of the WTO system - and which is a fundamental democratic guarantee – is not negotiable. The membership has agreed that consultations should be held in which all would be able to express their views, and I have urged all Members who wish to do so to submit suggestions. We will approach transparency in a most transparent way. We will do a thorough job. We can lift our play. We will.

In the few months since I became Director-General, I have made it a personal priority to include all our members. My first visits as Director-General were to meetings of the G77 and the OAU, and I have put special emphasis on bringing our non-resident Members - those who do not have the resources to maintain a permanent mission in Geneva - more fully into the WTO's work. In October 1999 we held the first Geneva week for non-resident Members, and this will be a regular event in future. Establishing a relationship with the ACP group in Brussels, where many of our non-resident members are present, has also been an important element in this strategy. I have visited the ACP headquarters twice in my five months in the job.

Ironically, one immediate result of increased participation has also been increased dissatisfaction. As, for example, the small island states of the Caribbean are taking a more active part in the WTO they have found things about our ways of doing business that they don't like. And they have a point. No organization can remain unchanging and unresponsive to changing demands if it wants to stay relevant. And we are changing. We have 31 applicants waiting to come inside. Each has its special needs. Their Governments representing 1.5 billion people want to be part of the future.

This, then, is our immediate programme of work. It is already underway in Geneva. Representatives are working hard. We are travelling and seeking advice. There are also many contacts going on among Ministers and officials in capitals to advance it and build on it. Building confidence among WTO Members is a key immediate objective. We have already made significant progress towards doing so.

III

If we are serious about development in the WTO, we have to be serious about integrating trade into our development thinking and our development policies. I say this because it is right, and because over three quarters of the membership of the WTO are developing countries wanting us to respond. The Copenhagen Declaration of 1995 made the commitment to reduce the proportion of people living in extreme poverty by at least one half by 2015. This can be done. It is not a dream, nor a slogan.

So how do we ensure that trade works in favour of the poor? My first answer is to ensure that we have a framework of rules that provides stability and predictability to the environment within which trading relationships exist. These rules, as embodied in the WTO agreements, have clearly proved their value over the last three years in the midst of economic turmoil. They ensured that markets remained open, and that the economic difficulties of some nations of this world were not amplified by an upswing in protectionism by their trading partners. As many other speakers have noted, the economies of the five East Asian countries worst hit by the crisis - South Korea, the Philippines, Indonesia, Malaysia and Thailand, are projected to grow strongly in 2000. One of the reasons is because their exports are estimated to have grown by nearly 9 percent in 1999. This is an enormous credit to the leadership of this region. However, the system also held together, and the markets of the North stayed open despite enormous political pressure.

But clearly, maintaining markets open is not enough. If developing countries are to grow their way out of poverty, more work must be done in removing those barriers to their exports that still exist. This makes sense not only for developing countries, but also from the point of view of the richer countries. It makes no sense to extend billions on enhanced debt relief, if at the same time, the ability of poorer countries to achieve debt sustainability is impeded by a lack of access for their exports. Nor does it make sense to devote billions of aid money to education and infrastructure if the products generated by these investments cannot be marketed. And when poorer countries set off down the road of structural adjustment, it is only reasonable that they be entitled to reap the fruit of their efforts.

The challenge for all of us in these first years of the 21st century is to use trade, investment and the other tools available to us to promote economic growth, social development, poverty alleviation and productive investment in a way that can make a difference to the lives of the billions of people living in poverty throughout the world. A lot of energy has been misapplied lately, in my opinion, to attacking globalization, a term which covers just about everything. Globalization is not an option, not a theory, and still less a conspiracy, but part of economic progress. The challenge of globalization is not to accept or reject it - these are not available options. The challenge is to approach it with realism to see that, like all change, it has positive and negative aspects, and work to extend the positive aspects as widely as possible. Those who rail against developing countries having globalization forced upon them are doing great mischief and a great disservice to the cause of development. The real danger is the opposite - that the benefits of globalization may pass by many developing countries unless they can be more fully integrated into the global economy. The UNDP reports that the industrialized countries represent 15% of the world’s population but 88% of Internet users. South Asia with over 20% of all peoples has less than 1% of Internet users. Sub-Saharan Africa with 0.7% of world population has 0.1% of Internet connections.

IV

So, I am not simply here because of solidarity with UNCTAD – though that is real; or because I enjoy the company of my friend Rubens Ricupero – as I do; or because I am a friend of Dr Supachai – as I am. I am here to re-focus and reassert the relationship between our agencies. The relationship between UNCTAD and WTO is central to the trade and development question –  it ought to be a model and a basis for wider and more productive co-operation among all the other international economic institutions for the benefit of the people we all exist to serve. We serve the same Governments and the same taxpayers.

In particular, I would like us to focus more productively on developing applied research where the joint expertise of UNCTAD and the WTO – possibly with other agencies – could be targeted together on issues of trade and development. I am impressed by the work done by UNCTAD to assemble a group of papers by eminent development economists for this Conference, and I was sorry not to have heard the fascinating debate on Saturday. There are many potential fields for cooperation –  in services trade, commodities, manufactures and many other areas.

Technical co-operation and training is another important area of co-operation. I have already mentioned the urgent need to make the Integrated Framework work effectively as a means of trade-related assistance to least-developed countries.

We at WTO also need closer cooperation with UNCTAD and other organizations on policy development and advice, to ensure that we are all walking down the same road, with a real positive agenda that can help developing countries and their peoples to become fully integrated in the world economy.

The false economic choices of the past are over. Our institutions were born out of a hot war and matured in a cold war. But we have not yet – any of us adapted fully to a new age of integration. In the WTO we need to make some changes as well.

The Berlin Wall fell more than ten years ago, but sometimes it seems that the walls between institutions are more durable. Mr. Chairman, Rubens, I am committed to breaking those walls down and I want to work with people and organizations I respect. Our taxpayers demand that we should. The issues demand that we must. We need to recognize the real problems of our member Governments and of those who are locked out. We have to set high standards for ourselves and measure our performance because in the end we are all accountable to sovereign governments who are accountable to their peoples.

We have heard a good deal about a new international architecture. As a practical man - and possibly the only head of an international organization to have worked as a builder's labourer - I know that architecture can be very beautiful, but that underneath it all, it needs solid foundations. This is our task and our challenge.

One of the speakers said on Saturday that we can either be swamped by a rising tide, or set sail on it. That’s right. No sane person could say with complacency "I’m OK but your end of the boat is sinking". In terms of human development, of human values, of security and of peace, we are all in the same boat. We must set sail together. I pledge myself, my organization and our team to working with UNCTAD and all our brothers and sisters in the international community to ensure that this voyage of opportunity is not just for the first-class passengers, but for everyone.

Thank you.