“Is Multilateralism in Crisis?”
Speech by Micheline Calmy-Rey former president of the Swiss Confederation

Geneva 24 September 2012


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Dear Director General Pascal Lamy

Excellencies; Ladies and Gentlemen

It is a great honour and a real pleasure to be here today at the opening of the 2012 WTO Public Forum. An important fixture on the world calendar and on the “International Geneva” calendar in particular.

“La Geneve Internationale” as many of you know, is very dear to my heart. So you'll understand how happy I am today to respond to Pascal Lamy and WTO's invitation to meet the very diverse stakeholders, taking part to the Public Forum and who have a say on how the WTO functions and interacts with its environment.

Few years back I had the privilege to work with the WTO on their projects for better staff working conditions. And I am glad to see that a lot has already been achieved and that the new building is entering the final stages of its construction. Creating the optimum conditions for International Geneva remains very important for Geneva and for Switzerland.

Ladies and Gentlemen

My country Switzerland, Europe and the World are at a crossroads today. So I cannot think of a better topic to our meeting today than to address whether Multilateralism is in crisis. This is an interesting debate and I think many of us have their own ideas about it and on how we all can live together in a peaceful and prosperous world.

Technology, trade, globalization and social networking have made citizens of our world closer to each other more than ever before; yet we still need to find the best way to work and more importantly to address global problems together. What is certain today is that Multilateralism is failing on many fronts and is clearly unable to deliver in these very difficult times we are witnessing across the globe.

Millions of people around the world have to put up with extreme conditions of poverty, food shortage, conflicts and wars. New diseases are spreading with unprecedented effects and many of us are contributing on a daily basis to the destruction of the subtle balance that permits our earth to be sustainable.

The Financial and economic crisis are another big challenge to Multilateralism. This crisis is keeping extreme pressure on International Organizations, on Governments, on legislators, on business, on non-governmental organizations and on populations around the world. Since 2008, this crisis was a real eye opener to the world about the much needed global financial regulation, which is starting to be shaped; through the Basel Accords for example.  But other areas of global co-operation are also suffering from less Multilateralism rather than more Multilateralism. The climate negotiations are in crisis; greater food insecurity and rising food prices around the world are few other examples where the international community cannot ignore that the only path to address these issues is true co-operation and Multilateralism.


In my view, the crisis of Multilateralism also has ramifications to the work of the World Trade Organization where we are today.

The inability of the WTO Members to agree on the conclusion of the Doha Round is certainly a setback that is very difficult to understand particularly within the context of the current crisis.  The essence of the WTO negotiations is to deliver mutual trade opportunities for all its Members and by doing so creating a very strong impetus for economic growth and job creation across world economies.

I know many of you would agree with what I just said but as it is often repeated, the devil is in the details. Well, I think it is about time for Multilateralism and for the WTO to deliver on this low hanging fruit that is the Doha Round. It is not only common sense but is a necessity, given the difficult times many economies are facing.

Even if it is a tough sell for politicians today to elaborate on the virtues of opening up trade, I sincerely believe that creating mutual trade opportunities through the conclusion of the Doha Round would certainly be a boon for the extreme majority of WTO Members. Let alone the fact that by concluding the Round, WTO Members would simply translate into the Multilateral Trade Rules many of the new realities of how international trade operates today.

Let me explain, even if I am taking the risk of repeating something many of you probably know too well. I am referring to the fact that most of International trade is about creating value to goods produced and traded amongst diverse countries. I believe it is extremely hard to spot a product that is entirely made in one single country today.

In fact, 60% of the products that are traded globally are intermediate products. This means that today's trade is dominated by inputs to the final products. Again I am sure this is a piece of statistics that you probably know too well. But here I am more interested in the broad story behind this statistic. The story here is all about how far WTO Members are collectively participating to the creation of “value chains” around the globe, thus creating an extremely dense network of interests among themselves and within various international economic sectors. Given these immense transformations, we can confidently say that a country's imports and exports are both sides of the same coin of competiveness in international trade.

And if I may give an illustration, I would say that Switzerland's foreign trade is a living example of this. One of the successes of Swiss trading has been to invest in extremely value added products but also to be connected to the global value chains. Besides the fact that Swiss clocks and watches represent 47% of those traded globally; Medicinal and pharmaceutical products are the top Swiss exports but also top Swiss imports. Similar examples can be drawn from the imports and exports of manufactured or semi manufactured goods, such as electrical appliances or instruments for precise measurement or analysis. Switzerland is also the fourth world exporter of Coffee without being a country renowned for its grown coffee. Similarly it is the 8th Chocolate exporter.

In addition, Swiss trade with Asia, where most of the value chain dynamics are taking place, has been in steady growth through the last decade with 13% growth for exports and 11% for imports with an Asian origin. In 2011, almost 15% of our exports were directed towards what we can call emerging Asia (excluding Japan) compared to only 9% in 2000. This is by far the most dynamic segment in our Foreign Trade.


Ladies and Gentlemen

I am sure that similar examples abound in different members of the WTO. So in this context, it is hard to understand the lack of progress in the negotiations and even more the tendency towards protectionism. Limiting or restricting your imports is often a case of shooting yourself in the foot.

Having said that, I totally agree that during an economic crisis, it is very normal that politicians are confronted with tremendous social and economic pressures and they need to take action. Unfortunately, very often political action would tend to lean towards the more vocal and visible discontent and act towards protectionist paths. We have seen in the past that this kind of political action can lead not only to isolation and retaliation but can have more serious effects. The crisis of 1930's and subsequent world war two are powerful remainders.

Ladies and gentlemen

At this juncture, I would like to really commend the excellent work done by WTO to monitor protectionist pressures for a couple of years now. The monitoring reports produced by this institution have certainly helped us all to contain protectionism to reasonable levels so far. If I understand correctly international trade has been minimally impacted by the different measures taken by WTO members in the wake of the current crisis. But I think WTO should not weaken its guard, even stronger challenges lie ahead to monitor any new protectionist measures but also to dismantle the existing ones as soon as possible.

I believe that through the current crisis, and beyond the monitoring function, the WTO was able to demonstrate how a body of agreed international rules, in this occurrence the Multilateral Trading System, carries a lot of value for its members and can help them contain extreme protectionist pressures. I would say that the international community will need more of the same “rule based systems” to address the many urgent global issues such as international finance Governance, nuclear proliferation, conflict prevention, food security, Climate change and sustainable development in general.

These issues are just a few of the explosive mix of problems that the international community and multilateralism need to solve. None of these problems is simple but I think the situation is aggravated by the fact that international geo-politics are themselves in complete transformation.

Nobody can deny the extremely important role played by the international organizations created in the aftermath of World War II. Nobody would also deny that these organizations are no longer representative of the reality of the Global balance of power.  There is certainly a steady shift of power from West to East on the global stage. For example, the traditional West coalition has not been able to have its prominent role in shaping the agenda in Copenhagen or in Rio+20 or to protect civilians in Syria.

A reflection of this new geo-political reality is impacting the WTO Doha Round as well. The traditional Quad countries that were the deciding factor in the last Uruguay Round for instance have been joined by new forces from the Emerging powers. In addition, a more complex network of geographic and interest alliances have come into the picture and play their role in shaping the agenda and the progress in the negotiations.

I shall hasten to add that these changes and transformations have been taking place in the WTO for already a decade now so in a way, this organization and the Doha Round has been precursor in setting the scene for the new reality of the global balance of power. This explains to a large extent the difficulties in agreeing to conclude the Round.

These difficulties have crystalized the differences between Developed and Emerging economies over the degree of responsibility and solidarity in making commitments. Or if I use WTO jargon: the conception of “Special and Differential Treatment” by which flexibility is given to some members to take lesser commitments with regard to their level of development. This is a highly political discussion that is very symptomatic of Multilateralism in Crisis. It is very interesting to note the parallel between Special and Differential Treatment and the “Common but Differentiated Responsibility” in the Climate Change discussions. These are two illustrations of how Multilateralism needs to be closer to the reality of the balance of power. Failing to read and react to these realities in a consensual and timely fashion, the Multilateral System will remain in dire straits.

Ladies and Gentlemen

I believe that the redefinition of the role of the State and its obligation to accommodate the necessary collaboration with other actors on the global stage, have modified the decision making processes very profoundly. These transformations are very often coupled with the necessity to act rapidly. Therefore, many “super powers” are trying to go beyond the framework of the United Nations which has been so far, the international organ par excellence for conflict resolution and collective action.

This is why the G-20 was created to address challenges nascent from the economic and financial crises since 2008. While I can understand the logic behind the creation of these parallel forums, I regret however, their lack of legitimacy and I think these Forums should not take major decisions in lieu et place of more universal organizations. These universal organizations do not derive their legitimacy from the size or economic clout of States but from the collective will of all their constituting Members.

If for one thing, these changes have demonstrated the need for Multilateralism and collective action. A very slow process has started by which Multilateralism is taking precedence over predominant super powers. But it is too early to be triumphant about it; one of the key issues in today's tormented world is to know what future holds for an organization such as the United Nations. Would all of these changes lead to its strengthening or on the contrary, it would lead to the disappearance of the already feeble level of world co-operation achieved through the UN framework.

In this regard, global governance means different things for different people. For instance many Emerging powers consider Multilateral Governance as the gathering of strong Heads of state or Government, negotiating among themselves.

This conception of global governance is hardly in line with the interests of many countries, holding fewer instruments of power, such as Switzerland. This kind of power relations do not really correspond to our national interests. On the contrary it is of utmost importance that Multilateralism remains alive and kicking. It is true that the ways of Multilateralism are often tortuous, complex and time consuming but there should be no other alternative. Multilateralism guarantees legitimacy and can actually deliver if the collective will exists.

Multilateral Institutions such the United Nations and the WTO are unique in being a framework that offers all the nations of the world the possibility of joining together to address the whole range of international challenges to peace and security, as well as the protection of human rights and such goals as sustainable development for all. However, they are often criticised and accused of not delivering on the pressing global issues. Besides the unfairness of some criticism, it is usually forgotten that the United Nations or the WTO actions are the result of the collective action of their members.

I would adhere completely to the ideas of inclusiveness, shared responsibility and solidarity as the best way ahead for global governance. Only by shaping consensual but ambitious agendas and accepting that all actors have a role and responsibility in world affairs, Multilateralism can deliver.

I Thank you


> Speech by Micheline Calmy-Rey former president of the Swiss Federation