Wednesday 20 February 2002
Making globalization work
Speech to the International Confederation of Free Trade Unions. (ICFTU)
The WTO has been decisive over the past four months — launching the Doha Development Round, choosing a venue for our next Ministerial conference, obtaining a new budget, determining a Trade Negotiations Committee structure and selecting chairpersons for all the WTO Committees and Working Bodies, several years ahead of the process after the launching of the Uruguay Round. To continue this momentum, the WTO needs to fundamentally address its procedures and culture. Mediaeval. That's the way EU Commissioner Pascal Lamy described how the WTO functions, after the Seattle debacle. I told him that was flattery, we are Jurassic in managerial terms.
Ministers and Ambassadors from Developing and Developed countries have expressed disquiet about how we do our work. They are correct. Take one example: former WTO General Council Chairman Stuart Harbinson recently spent hundreds of hours negotiating a balanced ticket of chairpersons of working committees. We are asking ourselves whether there are more efficient ways of proceeding. Another example: we have spent more than 10,000 hours in consultation over the declassification of documents, at a cost of around SF 2 million. Almost the entire membership supports declassification. It's currently held up because two countries are not convinced there needs to be change. Members have rights and are entitled to use them; we are a consensus-based organization and must remain so. But I believe there is still considerable scope for improvement in the way we do things.
Even holding seminars in the WTO is controversial. But nonetheless, we are following up on our mandate from our members, embodied in Point 10 of the Doha Ministerial Declaration. This states that “…we are committed to making the WTO's operations more transparent, including through more effective and prompt dissemination of information, and to improve dialogue with the public”.
To this end, we are holding an important symposium in late April. Key development issues from the Doha Development Agenda will take center stage. But following through on our commitment on transparency and improving dialogue with wider society, there is also a very important session on the functioning and financing of the WTO.
At this symposium, it is my hope that the previous three chairmen of our General Council will be on hand to offer insights and ideas about how we can improve our internal and external relations and coherence. We must make the cliché about maximising transparency and efficiency a reality. Invitations have gone to senior and experienced Ministers like Minister Erwin from South Africa, Minister Maran from India, Bob Zoellick from the United States, Minister Biwott from Kenya and EU Commissioner Lamy. We also hope that Clayton Yeutter, a US statesman of great experience, may share some of his views, having lived through the Uruguay round.
We plan special workshops where both critics and friends will have time put aside to make their case. This includes the environmentalists, the ICFTU, the Chamber of Commerce, the Third World Network, other development NGOs like Oxfam, Parliamentarians, and hopefully Party Political Internationals such as the Socialist International, Democratic Union, Green Party representatives, Liberal International and The International Union, representing Christian Democrats. I believe these kinds of exchanges are all very healthy and can be a constructive opportunity to learn and improve upon our performance, the better to serve our Member Governments and the people.
We need to encourage better-focused and more constructive inputs from civil society. They should be given a voice, but not a vote. The WTO remains an Inter-governmental organization, because ultimately it is always our member Governments and Parliaments that must ratify any agreements we conclude.
But in return, we should seek from civil society and its representatives a formal code of conduct, and much greater transparency and accountability from them to us and to their membership. Given constructive and creative goodwill, this should not be difficult. I believe we should eventually establish formal forms and forums for consultation. I tell NGOs they will sit at the negotiating table in Geneva when they sit in the Cabinet Room in Downing Street, the White House, Suva and Brasilia. That said, we need all the inputs and specialist advice we can get, mainly at the national level, but also here in Geneva.
I hope I can be forgiven, given my own background, if I see a unique role for Parliamentarians, Trade Unions, and the Chambers of Commerce, which represent business. They are transparent, accountable and representative. By contrast, NGOs represent all interests, and range from the best people on the planet, who work with the poor and suffer alongside them for their principles, to pure narrow-interest lobby groups with sometimes shadowy funding.
I'd like to quote one of my heroes, Trade Union leader, Ernest Bevin, who in his time created the largest union in the world, as well as Britain's largest daily paper. He was, in my opinion Britain's greatest Foreign Secretary of the last century. I was reading Bullock's biography on Bevin over the weekend and was struck by these statements. Bevin said in 1951: “My foreign policy is to be able to go to Victoria Station and go anywhere I damn well please”. He described the special role of the Trade Unions thus: “The intellectuals were for ever breaking away to form new groups and the history of the Labour Party is littered with their abandoned initiatives. They suffer from an opposition mentality and still thought of politics as an indefinite perpetuation of University Labour Clubs in which nothing more serious was at stake than a resolution”.
In a letter Bevin sent to the intellectual Cole, he said: “You see the difference between intellectuals and the trade unions is this: you have no responsibility, you can fly off at a tangent as the wind takes you. We, however, must be consistent and we have a great amount of responsibility. We cannot wake up in the morning and get a brainwave, when father says turn, and half a million people turn automatically. That does not work”.
It doesn't work in the WTO either. Distrust of the motives of unions and some developed countries, have made developing countries suspicious that labour issues will be used as protectionist measures against their workers' jobs and futures. Personally, I wish we could have done more on the social dimension of globalisation at Doha. This is a personal view. But please understand the feelings and suspicions of the overwhelming majority of our Membership. I think the WTO should be of service to the UN Commission on the Social Dimensions of Globalisation and the Global Compact. I think it's a good idea to house the Commission at the ILO in Geneva. About 10 per cent of our Members agree with this sentiment; another 10 per cent would seek accommodation, but about 80 per cent are very doubting at best and most strongly oppose. They see labour issues as a backdoor approach to attack jobs in their own countries. This need not be so. The Commission should look at areas such as the rights of migrant workers, the movement of labour. Only 16 countries have signed the Human Rights Commission covenant on the rights of migrants.
So we must build trust, get results and remind ourselves that international solidarity and justice demands that the markets of the north open to the products from the south, especially in Agriculture and Textiles, which is politically sensitive to your membership in rich countries. But it's also a sensitive issue for the workers and Governments in the south.
We have learnt that freedom works, and as it grows, so do people’s living standards. Twenty years ago, Eastern Europe was still stifled by the iron fist of the communists. In South Africa, South America and most of Central America, colonels or command economies destroyed freedom, hope, growth, jobs – driving down environmental and labour outcomes and rights.
Many of these countries are free at last. But this freedom is fragile. And many of their leaders tell me that, without growth – in which trade and open markets play a key role – they fear for their nations’ future. This is not text-book theory, it’s fact; Transparency International, UNDP, World Bank facts and figures show that the more open the economy, the freer the people, the higher their living standards, the better their labour and environmental conditions. The more closed the economy, the more corrupt the practices. If these nascent democracies collapse, what would happen to workers' rights then?
The Doha Development Agenda agreed last year will fail without dramatic progress in market access. It will fail if we do not build capacity so that marginalized and capacity-constrained nations can meaningfully participate in complex new development negotiations and develop good governance in such areas as investment, government procurement, trade facilitation, competition and the environment.
However, from time to time we ought to celebrate the real progress we have made over the past few decades, which have seen the greatest advances in living standards on every indicator in most places in the history of our species.
What are the most important issues for people across the globe? Life expectancy, hunger and poverty reduction. Access to clean drinking water, democracy, a better living environment. And on almost every useful measurement of the human condition, we have seen the greatest advances in the history of our species during the last half century, according to data collected by the UNDP and other agencies.
- In 1900, average life expectancy was 30, today it is 67.
- On average, developing countries have increased their food intake from 2,463 to 2,663 calories per person over the past decade — an increase of 8%.
- In 1970, 35% of all people in developing countries were starving. In 1996, the figure had fallen to 18% and the UN expects the figure will have fallen to 12% by 2010.
- Between 1990-1999, adult illiteracy rates in low-income countries for males aged 15 and above decreased from 35%-29%; and for females aged 15 and above, the figure decreased from 56%-48%.
- While only 30% of people in the developing world had access to clean drinking water in 1970, today about 80% have.
- Wages and conditions have improved as economies grow.
- In the US, lead concentration in the air has dropped more than 97% since 1977. The US EPA estimates that about 22,000 deaths are avoided every year because of the dramatic decline in lead levels.
- Some of the Great Lakes were considered dead 30 years ago and rivers sometimes caught fire. Today, people can swim and fish in them.
This is not to denigrate those who protest and seek improvements, but to encourage them. Once the public is alerted to the possible dangers, then the political market adapts, politicians respond, civil society is engaged and outputs improve. That's the basic genius of democracy — politicians need to be elected or re-elected.
None of this is to suggest that we should be happy with the current state of the world. There is still all too much injustice. But, as a recent IMF paper points out, in trade-opening East Asian countries — the New Globalizers – the number of people in absolute poverty declined by over 120 million between 1993 and 1998. On the evidence to date, Globalisation has been good for an increasing number of people, including, of course, workers.
The problems lie in managing what is, by its nature, an ever-evolving process. Harvard Business School's Juan Enriquez, in As the Future Catches You, observes that 50 years ago, three-quarters of the flags, borders, anthems and moneys represented at the UN today, simply did not exist. And this ever-increasing number of stakeholders in the international arena, inevitably adds to the complexity of conducting multi-lateral relationships — as we learned to our cost in Seattle in 1999.
The issues facing Ministers at Doha were essentially the same as those they failed to resolve in 1999. The major lesson learned from Seattle was the need to strengthen the process of consensus-building that is at the heart of the WTO's culture. At Doha, we absorbed these lessons and successfully launched a new three-year Trade Round, with the Doha Development Agenda at its core.
In agriculture, developing countries stand to gain substantial commercial benefits under the negotiating mandate. Currently, rich countries pay out $1 billion a day to their farmers in agricultural subsidies; in annual terms, that is more than four times all development assistance going to poor nations. Negotiations will open markets, and reduce “with a view to phasing out, all forms of export subsidies” and trade-distorting domestic farm support.
In services, liberalization could mean gains of between 1.6% of GDP (for India) to 4.2 % of GDP (for Thailand) if tariff equivalents of protection were cut by one-third in all countries, according to the World Bank. Telecommunications, finance, transport and business services have many links to the rest of the economy and raise the productivity of many sectors. Negotiations will liberalize the entry of foreign services in as many domestic sectors as governments choose and could make it easier and safer to employ foreign workers.
Market access for industrial goods is another immediate priority for developing countries; two-thirds of the benefits would go to them. The negotiating mandate focuses on reducing or eliminating tariff peaks and escalation, in particular on products of export interest to developing countries, as well as on non-tariff barriers.
The commitment on the environment is focused on the relationship between existing WTO rules and the trade obligations in multi-lateral environmental agreements, and on the reduction or elimination of tariff and non-tariff barriers to environmental goods and services.
On the contentious issue of drugs patents and public health, a separate Ministerial Declaration states that the WTO's Agreement on Trade-Related Aspects of Intellectual Property, or TRIPS, does not and should not prevent members from taking measures to protect public health. It should be interpreted and implemented in a manner “supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all”.
Development is core to this trade round. But we should also be aware that an investment regime is a development and good governance issue; a transparent government procurement regime is a development and good governance issue; a trade competition regime is a development and good governance issue; a trade facilitation regime is a development and good governance issue. The Asia Pacific Economic Cooperation Forum estimates that trade facilitation programs could generate additional GDP growth of 0.25% in the Pacific region – almost double the gains that would be generated by tariff reduction. That is why I’m seized with such a sense of urgency. We do not have day to lose or a dollar to waste.
We were also very pleased at Doha to finally complete the accession formalities for China and Chinese Taipei. Since Seattle, about a quarter of the world's total population – i.e. some 1.5 billion people – have joined the WTO. On my watch we have also welcomed the entry of Lithuania and Moldova, Jordan, Oman, Georgia, Croatia and Albania. Another 28 countries are currently negotiating their terms of membership, perhaps most significantly Russia, which we hope may secure accession within the next 18 months. The WTO's multilateral trading system is now near-universal, covering more than 97% of total global trade.
So, we have made a good start on the WTO’s Doha Development Agenda – we have a new budget, a venue, a negotiating structure, chairpersons of negotiating bodies, in place within three months of the Doha launch. All of that took several years after the launch of the Uruguay round.
Next week, I will be attending a meeting of agency heads in Washington, hosted by Jim Wolfensohn of the World Bank, to advance the WTO secretariat's good work on the Integrated Framework, which brings together all the agencies to discuss trade-related technical assistance to LDCs.
On the 27th, also in Washington, there will be a meeting under the umbrella of the Inter-American Development Bank of all the Trade and, hopefully, Finance Ministers of the Americas and the Caribbean to discuss capacity-building and how resources can be most effectively deployed. In preparatory meetings with the IDB, we suggested that representatives of other regional banks and the secretariat of the New Partnership for African Development (NEPAD) also be invited as observers. This will save time because we think the “model” of cooperation, shaped to new needs, that could come out of the Washington meeting will be an appropriate one to take to other regions and development banks. We also hope to have a meeting in Geneva of all the regional banks and stakeholders in April.
This has been an outstanding period for the WTO, the most significant in our brief history. We have concluded, in Doha, a successful Ministerial Conference that has, as US Trade Representative Bob Zoellick noted “removed the stain of Seattle”.
The path to Doha was a rocky one. But I believe the road to Mexico will be successful because of the solid foundations we are laying now. I strongly believe that concluding a new Round is vitally important for jobs everywhere. According to the World Bank, complete liberalization of merchandise trade and elimination of subsidies could add US$1.5 trillion to developing country incomes. And reshaping the world's trading system and reducing barriers to trade in goods could reduce the number of poor in developing countries by 300 million by 2015 and boost global income by as much as $2.8 trillion over the next decade.
We are making solid progress: according to the IMF, over the past two decades, the growth of world trade has averaged 6% annually, twice as fast as world output.
My plea to you today is not to allow the negative forces fighting against Globalisation and market liberalisation to triumph. Now, as never before, is the time for you to show courage on behalf of your members. We have a profound responsibility to marshal our forces to encourage opportunity and build institutions so that freedoms continue to grow globally. Only then will we have our world without walls, where people can enjoy the better life held out by those pioneers who struggled and sacrificed for a different world.