November 6th 2000
Transition economies and the WTOJoint Vienna Institute
It is a great pleasure to be here with you today. The Joint Vienna Institute does very good work. It is proof that, when the will is there, international organizations can work together successfully. Providing training on economic policy for officials from transition economies may not grab the headlines, but it is invaluable. And I am proud that the WTO is playing its part: we are chairing the board next year and we are also expanding our teaching contributions.
The title of this conference, Completing Transition, underlines how much has been achieved over the past decade. Creating a successful market economy in ex-communist countries is a daunting challenge. But it can be done. Just look at Estonia. Ten years ago, it was part of the Soviet Union. Now, it has a thriving Internet economy and is on the doorstep of the European Union. Or take Slovenia, where a bigger share of the population have access to the web than in France or Germany. Or consider Poland. Few expected it to be among the stars of the former Soviet bloc. And yet its economy has grown by over 5 per cent a year for the past seven years.
The World Trade Organization has an important role to play in nurturing such success and in helping others to emulate it. It provides a forum for governments to negotiate multilateral trade rules and a mechanism for holding them to those rules. The WTO helps governments to cut import duties, so that working families pay less for imports such as food and clothing, exporters pay less for foreign inputs, and economic growth increases. And it aids governments to keep their promises to keep trade free, which gives companies the confidence to invest abroad, spreading new technologies and bringing new jobs as they do. Our guiding principle is that discrimination in trade, as in so many other areas, is a bad thing.
Six transition economiesthe Czech Republic, Hungary, Poland, Romania, Slovakia, and Sloveniaare founding Members of the WTO. Since 1995, seven moreAlbania, Bulgaria, Estonia, Georgia, the Kyrgyz Republic, Latvia and Mongoliahave joined, bringing the total of transition-economy Members to 13. Croatia is due to become our 140th Member on November 30th. Lithuania, Armenia and Moldova are also close to joining, as is the biggest transition economy of all: China. And next year we hope to make significant progress on the accessions of transition countries such as Russia, Ukraine and Kazakstan.
All of these accessions and membership applications represent a powerful vote of confidence in the multilateral trading system. A few thousand protesters may demonstrate against the WTO, but 18 million people have joined the WTO this year. Whatever our critics say about us, whatever our flaws, these accessions underline that governments believe that freer trade and the rule of law are good for their citizens. It is a dramatic referendum in support of rules-based, trade liberalization and the global trading system.
We at the WTO will do everything to speed up applicants' accession, notably by providing technical assistance for acceding countries. I am personally committed to enlarging the WTO's membership so that we get ever closer to being a truly World Trade Organization. I am planning to go to Russia early next year, partly to give new momentum to its accession process.
All the same, the speed of acceding countries' progress depends largely on their willingness to open their markets to foreign trade and investment and to commit themselves to transparent and binding WTO rules. That is as it should be. We are not a talking shop, and WTO membership is not a political favour. The whole point of joining the WTO is to secure the benefits of freer, rules-based trade and transparent, law-based economic relations more generally. And once a country joins the WTO, its voice counts. We operate by consensus, so every Member has a veto.
Like the prospect of EU membership, WTO membership, or the prospect of it, can help lock in liberal economic reforms and a commitment to the rule of law. Joining the WTO is the surest way to prevent backsliding on reform, because our dispute-settlement procedures are binding on all our Members. And although WTO membership is not a panacea, it can also play a part in fostering much-needed stability in troubled regions such as the Balkans, the Caucasus and Central Asia. People who profit from trading with each other are less likely to take up arms against each other. I look forward to the day when all the countries in those regions are sitting around a table in Geneva rather than at daggers drawn.
Important negotiations on liberalizing trade in agriculture and services are currently underway at the WTO in Geneva. Together, these sectors account for over two-thirds of the world's economic output. And they are of particular importance to transition economies. Many transition economies are big agricultural producers, and all would benefit from cheaper and more bountiful food. Moreover, the liberalization and modernization of the service sector, which was woefully neglected in communist times, is vital for a successful transition to a thriving market economy. Cheaper telephone calls, better financial services and a faster spread of the Internet not only benefit consumers. They are also crucial inputs for business and manufacturing.
Both sets of negotiations are going well. Indeed, we have probably made as much progress this year as we would have done within the context of a wider round.
The aim of the farm-sector talks is to whittle away discriminatory support and protection in agriculture. We have a roadmap for the negotiations. Numerous negotiating proposals have been submitted from, among others, the Cairns group of agricultural exporting countries, Canada, the United States, the European Union, and a group of 11 developing countries.
The objective of the service-sector talks is to expand the service agreement's country and sectoral coverage and remove restrictions on market access and national treatment. These negotiations cover some of the key industries of the future, such as telecoms, computing, finance and electronic commerce. We have a roadmap for the first year of negotiations, which will concentrate on rule-making, especially in the areas of domestic regulation and safeguards.
The fact that services is now an uncontroversial subject is powerful evidence of the speed with which economic integration has moved over the past ten years. The WTO's services agreement, known as GATS, is a powerful integrating mechanism. No government is obliged to liberalize, or make commitments, on infrastructural services like finance and telecoms. But the efficiency gains for those countries which do so make the cost of protecting inefficient services very highbecause the GATS is about investment and technology transfer, among other things, and market-access commitments are a powerful attraction for foreign-direct investment.
So far this year, negotiations on market access in specific sectors have not really started. That will happen next year, when governments have got their negotiating objectives in order. But it is clear that there will be a great deal of interest in the financial sector: industry in the US, Europe and Japan is already active and there is great scope for the improvement of existing commitments, by extending them into additional financial sectors and by removing or reducing the limitations which governments now maintain.
I am glad that transition-economy Members are playing a positive and constructive role in these negotiations on agriculture and services, and in pushing for a wider trade round. Opening up to the rest of the world is above all about creating new opportunities for people to fulfil their potential. In that sense, economic and political freedom go hand in hand. The freedom to surf the Internet, the freedom to enjoy the best that the world has to offer, the freedom to spend your hard-won earnings as you see fit: these freedoms are fundamental. They cannot be separated from the freedom to vote, the freedom to speak your mind or the freedom to live your life in the way you want.
Our challenge is to spread these freedoms ever further. It is a huge task. But I believe we will succeed.