Mike Moore's speeches
particularly pleased to be here with you today because I consider that schools of
management like yours are a true example of the direction which higher education should be
taking in our country if our youth is to compete with the youth of other countries of
Europe and the world. What you have achieved in the ten years since the school was founded
is more than worthy of my words of praise and encouragement for the future. And this gives
me all the more reason to be grateful and proud of the honorary degree that you have
kindly awarded me.
A university today is far more
than just a temple of knowledge, particularly in an industrial city such as Trieste. The
role that knowledge has acquired is crucial to the development of countries as well as of
the individual. As the British Prime Minister, Tony Blair, so eloquently recalled, ours is
"a generation that claims education, skills and technology as the instruments of
economic prosperity and personal fulfilment, not old battles between State and
universities carry an exceptionally heavy responsibility: in this world in which the
globalization of economic processes is gaining ground every day and in which technologies
are turning into one of the most important vehicles of global knowledge, you are faced
with the task of educating the rising generations, the protagonists of the 21st
century. While it is true that technologies as such cannot replace education or culture,
they are becoming an increasingly indispensable tool for enhancing and spreading
this knowledge is becoming, in our changing world, a production factor more important than
labour, capital and raw materials, it is also subject to the new rules of global
competition. Those who fail to adapt remain outside the process and become marginalized.
by largely removing limitations relating to time and space, the new digital technologies
greatly enhance access to information and knowledge. Distance learning, including at
university level, is spreading rapidly and creating ever closer ties among different
cultures and schools of thought. And since new technologies also affect the way in which
teaching is conducted, it has become essential to acquire a thorough understanding of how
best to apply such technologies, and to constantly update those applications. * * *
philosopher George Santayana once said that "those who cannot remember the past are
condemned to repeat it". And it is with this in mind that I will be speaking to you
today of an essential chapter in your education: the development of the world trading
system since the end of the Second World War. For indeed, I get the impression from
today's discussions that we could very well be forgetting the lessons of the past.
This year, we
celebrated in Geneva the 50th Anniversary of the world trading system in the
presence of many Heads of State and government whose different origins and backgrounds,
from Clinton to Mandela, from Castro to Blair, from Prodi to Cardoso, to name but a few,
bear witness to the universality of our message. In the words of these leaders, alongside
the elements of a vision for our common future was the constant reminder of the way in
which difficulties of the past had been overcome and could only be avoided in the future
through ever closer international cooperation based on rules and disciplines that were
fair and beneficial to all.
ago, the world economy was re-emerging from the vast ruins of the Second World War. The
challenges facing the world were of unprecedented magnitude and complexity: to recreate a
world order, restore a sense of international community and re-establish the foundations
for growth and prosperity in the future. Today, 50 years after the Bretton Woods
Agreements and the creation of the multilateral trading system whose management was
entrusted to a provisional agreement the GATT (General Agreement on Tariffs and
Trade) we are once again faced with a new world and a new series of challenges. The
trade barriers that once divided economies and peoples have been considerably reduced and
in many cases eliminated at the multilateral and regional levels. The nature and magnitude
of the ideological divisions that have characterized the last 50 years are tending to
change. Even the north-south divisions have narrowed owing, in particular, to the inherent
potential of the new borderless technologies. A great majority of developing countries
have turned towards market economies and increasing trade liberalization in the conviction
that this is the best way to achieve growth and modernization. This trend was confirmed a
few days ago in Geneva by all of the delegations of the WTO Member countries which,
without exception, energetically resisted all temptation to revert to protectionism and
confirmed their support for further liberalization of trade on the basis of the rules,
procedures and flexibility that form the foundation of our trading system.
of the World Trade Organization (WTO) in 1995 as the first international institution of
the Post-Cold War era was in itself a significant symbol of the emergence of this new
global system. While the challenge of the past 50 years consisted in managing a divided
world, the challenge of the next 50 years will consist in managing an increasingly
would be a grave error, however, to underestimate the forces working towards
disintegration rather than integration, towards divisions among nations, economies and
peoples rather than peaceful cooperation, towards the erection of barriers rather than
their elimination. * * *
multilateral trading system was launched in the context of the discussions which led to
the creation of the International Monetary Fund and the World Bank. It arose in response
to the events of the end of the 1920s and beginning of the 1930s which had such an
influence on the developments which led to the Second World War. The financial crisis of
1929 was in fact aggravated by the significant new trade barriers that were erected. The
United States began with the Smoot-Hawley Act of 1930, which increased the average
American tariff to 53 per cent. Many other countries followed suit. By the end of 1931, 26
countries had significantly increased their customs barriers and recreated a vast arsenal
of quantitative restrictions on both trade and capital movement. The collapse of the gold
standard encouraged competitive devaluation. International credits and investments,
together with trade flows, diminished drastically.
This was a
lesson that the creators of the multilateral trading system bore in mind in developing the
new rules of the international trading system. And it is a lesson that no-one should
forget today, particularly the young, because trade has an enormous political impact. The
experience of European construction has also shown that the liberalization of trade
barriers is a decisive tool in overcoming even the most acute historical divisions, while
the maintenance of barriers or the creation of new barriers favours the emergence of
economic and political nationalism, with all of the tragic consequences that they entail.
And it is
thanks to that effort to take account of past experience that the outstanding feature of
the WTO is the juridical nature of the system. I shall dwell on this aspect for three
reasons: first, the juridical nature of the system has had what I would call a
revolutionary impact on international economic relations in that it is through the use of
semi-automatic and compulsory procedures that all Member countries of the system are made
to respect the rules established on a consensual basis. Second, this aspect should be a
central element in your education. Third, this system is not very well known in our
multilateral system, decisions are taken on the basis of a consensus; every State has the
right to a vote and every vote is equal to all other votes. This method also applies to
the new dispute settlement procedures, which are at the very foundation of the system and
which are far more structured than those of the GATT system, involving more
clearly-defined time-frames. The new system for the settlement of disputes among States
has also made it practically impossible to block the adoption of decisions.
text which I have asked to have distributed contains a detailed description of how the
system operates. For reasons of time, I shall not go into much detail now.
the GATT system, panel decisions could only be adopted by consensus i.e. a single
objection could block the decision under the new system, decisions are adopted
automatically as long as there is no consensus to reject them i.e. if a country
wishes to block a panel decision, it must convince all of the other Members of the WTO,
including the country or countries which brought the case, of their views. The WTO dispute
settlement system is in some ways the first international economic court or tribunal that
the world has known; and yet it is still preferable for the Member countries involved to
discuss their problems and to try to resolve them among themselves before actually
resorting to a panel. The first phase of the procedure therefore provides for
consultations between the governments involved in the case. Should these consultations
fail to produce any positive results, the governments may ask me, in my capacity as
Director-General, to offer my mediation or to seek other means to settle the dispute. And
even when a case has been submitted to the more formal panel procedure, informal
consultations and mediation are still possible. The second phase of the procedure consists
in the panel itself. Panels, as I have said, resemble tribunals. They are made up of three
in some cases five experts from different countries that are chosen in
consultation with the parties to the dispute. These experts may be chosen from a permanent
list of qualified candidates or from other sources. They must serve in their individual
capacities, and may not receive instructions from their governments. This panel examines
the facts of the case and decides who is right and who is wrong, basing its findings on
the different provisions of the WTO Agreements cited in the case. The panel report is
transmitted to the Dispute Settlement Body, made up of representatives of the Member
countries, which may only reject it by consensus in other words, it is unlikely
that the conclusions of the panel will be rejected.
But how do
the panels operate? Before any meetings are held, each party submits its arguments to the
panel in writing. A first meeting then takes place, in which the country that brought the
case, the responding country and all countries which expressly notified their interest in
the case present their arguments. This is followed by a second meeting in which each
country is given the possibility to rebut, in writing and orally, the arguments of the
other countries. If the case involves questions of a scientific or technical nature, the
panel may seek the advice of experts or ask a group of experts to prepare a written
opinion for it to use. Once these phases have been completed, the panel prepares a
preliminary draft report which includes a brief description of the arguments put forward,
but not the legal arguments or the conclusions of the panel, so that the parties involved
may see how their arguments have been reproduced in the report.
after the establishment of the panel three months in case of emergency the
panel must submit its interim report. This interim report includes the arguments and the
conclusions of the panel which are transmitted to the parties for a period of reflection
not exceeding two weeks, during which the panel may hold further meetings with both
parties to the case. Upon expiry of the two-week period, the panel submits its final
report. Initially, this report is transmitted only to the parties to the case, and after a
period of three weeks, it is distributed to all of the Members of the WTO. If the panel
decides that the disputed trade measure violates one of the Agreements or a WTO
obligation, it recommends that the measure be brought into conformity with WTO
regulations. The panel may also suggest ways of doing so. The panel report becomes a
decision or recommendation of the Dispute Settlement Body following a period of 60 days
providing there is no consensus to reject its contents. The entire panel process should
not exceed one year.
does not necessarily conclude the dispute settlement process. Each party to the case may
in fact appeal the panel's ruling, and in some cases both parties do so. Appeals must be
strictly limited to questions of legal interpretation, and may not re-examine the facts
already presented or examined. Each appeal is heard by three members chosen from among the
seven members of the standing Appellate Body established by the Dispute Settlement Body
and representing the various tendencies of the WTO Member countries. The members of the
Appellate Body must be persons with recognized expertise in the trade system and
international law, and must be unaffiliated with any government. The Appellate Body may
uphold, modify or reverse the legal findings and conclusions of the panel. Normally,
Appellate procedures must not exceed 60 days, extendable, in exceptional cases only, to 90
days. The Dispute Settlement Body may accept or reject the decisions of the Appellate Body
within a maximum of 30 days. These decisions, as well, may only be rejected on the basis
of a consensus. They must be implemented within a period usually not exceeding 15 months.
If the losing party cannot or does not wish to amend the measure or measures in question,
it must enter into negotiations with the winning party with a view to developing mutually
acceptable compensation, for example tariff reductions in sectors of particular interest
to the countries that brought the dispute. If no satisfactory compensation has been agreed
within 20 days, the party that brought the dispute may request authorization from the
Dispute Settlement Body to impose trade sanctions commensurate with the injury suffered
against the country that has failed to comply. As you can see, however, the final decision
must be implemented, whatever the procedures used.
first three years of the WTO's existence, some 119 cases were submitted to the new
procedure, while there were only about 300 during the 47 years of existence of the GATT.
Moreover, an increasing number of cases are being brought by developing countries,
reflecting the increasing credibility of the system for those countries. An even more
important indication of the effectiveness of the new system is the tendency to settle
"out of court", i.e. before the panel issues a final decision. In other words,
the system functions as a tool for facilitating conciliation, first of all, and
encouraging the satisfactory settlement of disputes among States, rather than simply
issuing judgements in each case.
simply like to stress then, that the great challenge facing the World Trade Organization
is to maintain and extend a world trading system based on law, and not on force and
it is this aspect of the world trading system that is of most interest to the Member
countries of the Organization as well as the candidate countries. When the World Trade
Organization was created, in January 1995, it had 80 Members. It now has 132 Members, of
which 80 per cent are developing countries or countries in transition from communism to a
market economy. Added to that number are 32 candidate countries, including China and
Russia, all developing countries or transition economies. These figures provide
irrefutable proof of the soundness of the system. * * *
Now, let us
look ahead at the enormous challenges facing us at the global level, as well as the great
opportunities. If we are to be objective, we must begin by observing that we are still far
from having achieved a satisfactory balance in the development of the world economy.
Poverty, the threshold of which is normally placed at less than one dollar a day, still
affects vast regions of the world. It has a crippling effect on all aspects of the
existence of hundreds of millions of people. Their nutritional level, their health, their
infant mortality, their life expectancy and their access to education are in every respect
intolerable. And we must be sure always to remember these realities at every opportunity
and at every level, national and international.
But while the
problem is immense, over the past 50 years, and in particular over the past ten or 15
years, we have been able to observe signs of positive change, even if the serious problems
currently affecting the world economy are a source of great uncertainty and highlight the
need to improve the overall management of the world system.
differences among countries remain unacceptable, even if there has been a surge in world
economic growth thanks above all to the gradual liberalization of trade. The truly serious
problem lies in the distribution of resources, both at the national and international
levels, and this does not depend on the multilateral trading system which has in fact been
the essential factor in economic growth. From 1948 to 1997, trade in goods has increased
17-fold while world output increased six-fold. A comparison of growth in the developing
countries and growth in the advanced economies between 1985 and 1997 shows that in the
developing countries, on average, there has constantly been a more marked acceleration.
During the period 1990 to 1997, their average growth rate was 5.4 per cent, i.e. three
times that of the industrialized countries. As regards trade, however, it was the advanced
economies that benefited the most, putting paid to the argument that imports from the
developing countries led to loss of jobs.
But even more
impressive has been the extent and the rapidity of economic growth in many of the
developing countries. While the industrial revolution of the 19th century
concerned some 200 million people, the current economic globalization process concerns
billions of people at entirely different rates of development. The United Kingdom, the
first industrialized country, took 58 years to double its per capita income for the first
time; the United States took 47 years; Germany 43 years. Meanwhile, it took Korea only 11
years and Chile 10 years, while China has been doubling its per capita income every nine
years, only after opting for a market economy and growing trade liberalization.
developing countries representing approximately one third of the world's population, i.e.
about 1.5 billion, more than doubled their per capita income between 1980 and 1995. Even
in Africa, 19 countries, including economies in the Sub-Saharan region, have attained
growth levels of more than 4 per cent over the past three years after adopting structural
It would be a
serious mistake to underestimate the absolute priority of the struggle against inequality
and poverty; but it would also be a serious mistake not to stress the great progress made
in the choice of the market and increasing trade liberalization.
is why I wanted to be clear in highlighting these aspects which are often disregarded or
falsely presented in discussions on the world economy. * * *
rapid development of new technologies is adding a new and revolutionary dimension to
innovations in the development of information technology and telecommunications are
leading to the development of a borderless economy a single world economic area.
For the first time in our history, millions of persons in the developing countries will
have immediate and equal access to information and educational technology, the two most
important raw materials of our times. With the development of electronic trade, any
country or any individual will potentially be in a position to sell or buy goods or
services in any part of the world. The impact of this development could be revolutionary.
rapid technological progress is transforming the world even more radically than the
growing liberalization of trade and investment. And the impact of this revolution is not
limited to growth in productivity and economic growth, but will tend increasingly to forge
a new relationship between the advanced economies and the developing economies, a new
contract between governments and citizens and new links among peoples, links which
transcend culture, social class and nationality. * * *
It would be a
mistake, however, to underestimate the current problems of the world economy resulting
from malfunctions in the financial system and particularly the excessive volatility of
short-terms capital movements. It has been calculated that overall daily capital movements
are more than 100 times greater than the daily volume of world trade.
IMF forecasts show a 2 per cent downward revision in world economic growth figures as a
result of the financial crisis.
the growth in the volume of trade in 1998 is expected to drop to about half of the 1997
rate, that is it should not exceed 4 to 5 per cent.
In terms of
value, trade in goods is expected to decline somewhat during the second half of this year,
assuming the dollar and oil prices remain close to their July 1998 level.
against the current crisis unquestionably calls for a strategy to restore sustainable
economic growth as quickly as possible and put an end to the enormous social and human
cost of the disorder in the financial markets. In other words, reform efforts must begin
with policies and measures aimed at re-establishing order in financial flows. This is the
task that now faces the national financial authorities and international financial
the multilateral trading system, which is under the responsibility of the World Trade
Organization, we should recall that 25 per cent of world production is currently exported.
Fifty years ago, only 7 per cent of world production was exported. For the developing
countries, the current ratio of foreign trade to GDP is 38 per cent, which explains why
they are in an even greater need of trade liberalization than the advanced economies.
However, these figures also reflect how interdependent individual economies have become.
This interdependence is what we call "globalization", and many are those who
consider this process to be largely responsible for our problems today.
mistaken. Globalization is not a policy to be praised or condemned, but the consequence of
policies and above all of technical progress. More and more, it has become an essential
dimension in examining a number of problems both at the national and international levels.
While this new dimension is indeed assisted by trade liberalization, its main driving
force is the technical progress which has tended to do away with the obstacles of space
In Geneva, I
have tried over the past few days to organize discussions with the representatives of all
of the Member countries on the role that the multilateral trading system could play in
helping to overcome the crisis. I put forward three objectives on which our views
coincided. Firstly, the rejection of protectionism, which would inevitably lead to a
decline in growth and employment, and would serve the cause of that formidable enemy,
economic and political nationalism. Secondly, the reaffirmation of our determination to
conclude as quickly as possible the negotiations with the candidate countries, of which
there are now 32 including, as I mentioned, China and Russia. Finally, continuation of
preparations for future negotiations, beginning at the end of 1999, for further
liberalization of agriculture, services and parts of intellectual property, as well,
perhaps, as investments, the rules of competition, and almost certainly industrial
tariffs, including textiles. An ambitious and far-reaching programme, whose general
outlines were already accepted at the Ministerial Conference last May.
because the world trading system is based on the gradual reduction of trade barriers in
the framework of rules and procedures established on a consensual basis, it provides an
element of stability and progress today. For the world economy to progress, the other
sectors must also take greater account of the factors that contributed to the success of
the multilateral trading system: consensus, non-discrimination, rules and flexibility
respected by all. * * *
The time has
come for me to conclude my address. The new and the old will continue to coexist in our
daily lives for a long time to come. The new borderless economy is not a substitute for
all economic activities. Factories and farms will not disappear from one day to the next,
and software cannot replace the food we eat or the cars we drive.
We have only
just reached the threshold; but the transition is likely to accelerate rapidly, spurred on
in particular by the new technologies. Thus, the major task facing us is not to delay or
halt progress towards the future, but above all to improve the manageability, at the world
level, of such complex and vast changes. The advent of a new world and of a new economy,
with the inevitable risks involved as well as the great opportunities to be derived from a
development process involving billions of human beings, places us in the position of
having to invent the future.
This will be
chiefly up to you, the young generation. And while it represents a great challenge, it
will also provide you with the motivation and hope which society itself and the media are
doing all they can to stifle in today's world.