should like to start by thanking you for inviting me to your General
Assembly. It is indeed a pleasure for me to speak to you, especially
as a former banker, I have a close interest in the financial world.
Today, however, I will speak not about finance but trade.
WTO is now about far more than import export regulation and other
trade rules governing merchandise trade. It has become broader and
more far-reaching. Expansion of trade rules in the WTO into new areas
has made the multilateral trading system directly relevant to almost
all aspects of economic policy-making. The Services Agreement, for
instance, relates to a wide range of policies, including investment,
movement of persons as well as covering the whole range of services
sectors; from telecommunications to financial services to
transportation, distribution, energy and professional services. This
gives the WTO a strategic position both in terms of the international
economic and the domestic policy agenda of each country.
know that I do not need to tell a room of bankers about the importance
of open markets or the need for rules to allow markets to function
predictably and efficiently. I will therefore focus my remarks instead
on our most urgent priority - bringing the current Round of trade
negotiations, the Doha Development Agenda, to a timely and successful
me start by explaining how this goal will be supported by the “four
pillars” that I intend to strengthen during my tenure as
Director-General of the World Trade Organization.
first pillar is the legal framework which binds the multilateral
trading system together. The WTO is the only international
organization dealing with multilateral rules of trade between
countries. These rules ensure that trade flows as smoothly,
predictably and freely as possible. I intend to ensure that the
Secretariat continues to be as helpful as possible to WTO Members to
use this legal framework to their best mutual advantage.
second pillar is to assist developing and least developed countries
through technical assistance and capacity building to be better
equipped to participate in the multilateral trading system. The WTO
has taken on an unprecedented level of commitment in providing
technical assistance and capacity building to developing countries. It
is one of my priorities to ensure that our technical assistance and
capacity building activities are effective, well targeted and
coordinated with other agencies to get the best results.
for my third pillar, I will seek to promote greater coherence in
international economic policy-making. The reality of globalization is
an increasingly interdependent world. The WTO cannot possibly achieve
its goals working alone. The WTO, in keeping with its mandate, has to
work closely along with other international agencies.
but most importantly, I intend to strengthen the WTO as an
institution, so as to be able to serve its membership even better. My
approach as Director-General will be equitable, balanced and
inclusive. And I will support and encourage the work of Members in
every way and at every level I can.
you may know, at the Fourth Ministerial Conference in Doha last
November, WTO Members launched a comprehensive round of trade
negotiations - the Doha Development Agenda. The deadline for
completing these negotiations is 1 January 2005. This time next year,
Trade Ministers will meet for their Fifth Ministerial Conference in
Cancun, Mexico to take stock of progress and take key decisions about
the final phase of negotiations.
is not a great deal of time. Doha was a beginning. Our challenge is to
ensure that this beginning fulfils its promise. And it is a very
bountiful promise indeed. The World Bank's Global Economic Prospects
2002, for instance, estimates that abolishing all trade barriers could
boost global income over a ten year period by US$2.8 trillion.
agenda for the Doha negotiations is extensive. It covers Agriculture,
Services, Market Access for Non-Agricultural Products, Trade-Related
Aspects of Intellectual Property Rights, WTO Rules, Regional Trade
Agreements, Dispute Settlement, and Trade and Environment.
negotiating agenda also covers a range of “new issues” which were
among the most heavily negotiated subjects at Doha; these include
multilateral rules for Investment, Competition Policy, Transparency in
Government Procurement and Trade Facilitation. In each of these areas,
Members are undertaking a preliminary period of clarification. We must
ensure that all countries have an informed basis at the Fifth
Ministerial Conference in Cancún next year for taking decisions by
explicit consensus on modalities for future negotiations.
important elements of the work programme launched at Doha include for
example: Small Economies; Trade, Debt and Finance; Trade and Transfer
of Technology; Least-developed Countries; and Special and Differential
Treatment. We are also addressing a range of implementation issues
that are close to the hearts of developing countries.
far, WTO Members have been making steady progress. The setting-up
phase of the negotiations is over. The negotiating structure is in
place and work programmes have been established for the various
negotiating groups. Work on substance has started in all areas,
although the pace differs. The Geneva process, which is at the core of
the Round, is moving into a higher gear. The procedural phase of our
work is now over, and Members will urgently be getting down to real
business in the autumn.
do not have the time to speak comprehensively about all the
negotiating areas but let me touch on one sector which has direct
relevance to you — the financial services sector, which is covered
by the General Agreement on Trade in Services (GATS). The WTO’s
General Agreement on Trade Services was considered to be one of the
main achievements of the Uruguay Round. It is the first multilateral
agreement providing legally binding rules on liberalisation of
international trade in services. And it reflects the hugely important
role of services in domestic economies. In Switzerland, for example,
services account for around 72% of GDP.
financial services sector, in particular, has always been perceived as
a special sector in terms of its economic importance and political
sensitivity. This sector accounts for more than five percent of GNP in
most developed countries and in many developing countries. In
Switzerland, it accounts for around 14%. Being the backbone of all
other economic activity, the magnitude of benefits arising from
financial services liberalization can be very significant.
it would be wrong to infer that these gains can be realized simply by
opening up markets to foreign competition. Further liberalization —
if it is to bring gains for all — must be pursued within a sound
regulatory environment for the operation of financial institutions.
Successful financial reform often requires careful sequencing of
policies, and the appropriate sequence between the different areas
addressed by reform processes — domestic reform, trade
liberalization, and capital account liberalization — depends largely
on the particular circumstances of each country.
is no such thing as a “one-size-fits-all” model for financial
reform. However, the experience has shown that trade liberalization
and domestic reform in the area of financial services can and should
be mutually reinforcing. Adequate prudential regulation and
supervision, enhanced transparency and corporate governance,
strengthened competition policy, proper legal and accounting systems
are all preconditions to benefiting from liberalization.
113 WTO Members, including China, have binding commitments in the
financial services sector - more than in any other services sector
except tourism. That number of commitments speaks for itself and
testifies to the importance that countries attach to the financial
sector. I should highlight that many of these commitments were taken
in December 1997, in the midst of a major financial crisis in
South-East Asia. By taking the step towards liberalization, in such
difficult times, governments reaffirmed that greater openness of their
financial sectors within a rules-based system offered the only viable
and endurable path towards financial stability.
liberalization of financial services is expected from the current
Services negotiations, which commenced in January 2000. So far, the
negotiations have been making satisfactory progress. Both developed
and developing countries have submitted negotiating proposals on
financial services trade. These proposals raise general policy issues
on the classification of financial services, the most prevalent market
access barriers in the sector, and issues relating to prudential
would be certainly difficult to predict with any degree of accuracy
what the outcome of the negotiations will be. Nevertheless, tremendous
interest has been revealed in achieving higher levels of
liberalization in all financial services — banking, insurance and
securities — without jeopardizing the stability and integrity of
all types of policy interventions affecting the financial sector are
being negotiated in the WTO. The primary objective of the General
Agreement on Trade in Services (GATS) is trade liberalization, i.e.,
the removal of barriers affecting both domestic and foreign suppliers'
ability to establish a commercial presence or to provide services on a
cross-border basis. In terms of the financial sector, GATS does not
curtail the ability of governments to introduce prudential
regulations, both to protect financial services consumers or to ensure
the integrity and stability of the financial system. More importantly,
macroeconomic policy management in general, and monetary and exchange
rate policies in particular, fall completely outside the GATS realm.
the negotiations on Services have progressed to an important stage
with the submission of bilateral market access requests. Initial
offers are required by Members by the end of March 2003. From June
this year Members have started to exchange requests, and in March
2003, the submission of offers will signal the start of a more
intensive phase of negotiations.
encouraging start has been made but important challenges lie ahead in
the negotiations on financial services. On the one hand, there is a
need to keep improving access to foreign financial institutions
through rights of establishment and operation. On the other hand, it
is becoming increasingly crucial to ensure that the GATS is responsive
to the major technological changes witnessed in the last decade with
the advent of Internet and e-finance in particular.
liberalisation of financial services is and must be part of the wider
discussion about the promotion of international financial stability.
Ensuring the strength and stability of the financial sector is seen,
and rightly so, as a crucial pre-requisite for the achievement of
growth and development. Many countries, particularly developing
countries, need to ensure that the necessary institutions, regulatory
structures and legal frameworks are in place to accompany further
steps for liberalization.
cooperation with the efforts of various international fora, the WTO
system can contribute to international financial stability by securing
liberalization on a non-discriminatory basis; and by ensuring that
markets remain open and that the momentum for reform is not lost. I
have long been associated with finance and trade. Both activities are
mutually supportive. The dynamism and innovation of the financial
sector has helped fuel growth in world trade and this has in turn
opened new avenues for finance. Your support for the Round is
important and I know that I can count on it, as much as you can count
on my total input and my total dedication.