The University of International Business 
The Promise of the World Trade Organization
Address by

Ambassador Alan Wm. Wolff,

Deputy Director-General, WTO
Almaty, Kazakhstan

Dr Darkhan Akhmed-Zaki, President of the University of International Business,  Staff of the University of International Business, distinguished guests and ladies and gentlemen.  Good morning.  I welcome the opportunity to speak to the generation who will be making far-reaching changes in trade and who can and will transform the world trading system. 

This is a country in which one can almost see the future given the rate of change that is taking place here.  History has been accelerating here -- just think of the changes in recent decades.  The results have been very positive for Kazakhstan.  The University of International Business is just over 25 years old, and already thousands of its graduates are making their contribution to society at home and abroad. 

Before I begin, I want to thank Kazakhstan with its recent accession to the WTO for its positive contributions.  This includes the tireless work of Ambassador Zhanar Aitzhanova, Permanent Representative of Kazakhstan to the WTO and, of course, the planned hosting of the next WTO Ministerial, MC12 in Astana in June 2020. 

On behalf of the WTO Secretariat, let me also thank the University for being a valuable partner for the WTO for hosting the WTO Regional Trade Policy Course since last year for the Region of Central and Eastern European, Central Asian and the Caucasus (CEECAC), which can be a key player in the future of the Multilateral Trade System. 

Many of you will be in leadership positions, and some in equally important supporting roles in public service or in the private sector.  Wherever you serve around the globe, your contribution to your country and the world can count.  From whatever path you take over your careers, very often you will be in a position to help drive public policy.  To do so is both challenging and exciting.  It has motivated me for a lifetime and continues undiminished now.

Much in the world of trade will change going forward, largely due to technology.  Trade will move in different channels and consist of different products, in terms of goods, services and products of the mind.  Artificial intelligence (AI) will make dramatic changes in how we go about our work, how we travel and how we trade. Human ingenuity and talent, and a moral centre, will determine the success of the human race.  AI has its limits.  A very human question will be the nature of the values you bring to public service, to government, business and civil society.  These values are likely to have been instilled in you by your family in your early schooling, and by your professors at a more advanced stage of your education.  An understanding of values will also come from your readings, not just text books, but history and yes, even good fiction.  Reading enlightening works are like looking at a good painting or excellent photographs.  They give the viewer a greater ability to see things differently, more clearly than before.

Technological change is not new.  When the wheel was invented, some people lost their jobs.  What is different today is the speed of change driven by technological advances, and the tendency that they will only accelerate.  I am told that every Kazakh is to know the names of seven grandfathers.  Think also of the world that they inhabited and what it was like. 

 My father, when very young, watched as horses gave way to cars and gas lighting to electricity and lived to see humans go into space an.  Our two generations spanned the time of travel to the moon.  I have seen giant container ships carrying massive cargoes inexpensively across oceans, the beginnings of the internet and introduction and growth of electronic commerce.

Even greater progress will be made in your generation.  One major change that is foreseen is a time when artificial intelligence found in computers will equal and then begin to exceed human intelligence.  Technologists call this event "singularity" and estimate that it will be reached in the year 2045.  They tell us that we are contributing to the creation of the AI on a daily basis, through our activities on social networks and search engines which continuously build and analyse mountains of data.  

You are fortunate as students to enter your careers at a time of revolutionary change.

Technology has been integrated into our lives at innumerable levels and is having a tremendous impact on the way nations interact – cutting the costs of doing business between individuals, and small medium and large enterprises across borders, enabling the establishment of global value chains with suppliers in many nations, and opening up a global marketplace.  Even at this moment each of you may engage in international trade simply  by using your smartphone.  You can buy and order goods virtually from anywhere in the world.  And similarly, you will be able to sell your intellectual services to businesses abroad. There is no doubt; the world you live in will continue to change.  You are only at the start of this process of transformation – which people are calling the Fourth Industrial Revolution.

In this context it is essential that the WTO adapt to future changes in the world trade.  There is no reason to believe that any international system of governance can continue to keep pace or even follow closely on the heels of change in the world around us.  There is always going to be a lag.  Beyond any doubt - a system of rules requires periodic updating to remain fully relevant.  Evolution of the rules is essential and irresistible, based upon core principles, such as those contained in the Atlantic Charter crafted in 1941, when Winston Churchill and Franklin Roosevelt met in Newfoundland to consider the world which they wanted to emerge from what the West knows a World War II and what the USSR regarded as The Great Patriotic War.  This is one of the principles that they enunciated: "to further the enjoyment by all states, great or small of access, on equal terms, to the world trade needed for their economic prosperity".  When you pass by the Panfilov Division Memorial a short distance from here, remember that those soldiers fought and sacrificed their lives not just to save Moscow but to create a better world to pass on to their children and subsequent generations.  Those who followed, the leaders and their peoples, believed in a more open international system that would create far better economic conditions and lay the foundations for peace.  Their gift to us needs to be cherished, maintained and improved.

Now at least a quarter century has passed since the WTO was created and most of the current rules were negotiated.  The world economy has grown and evolved.  Trade patterns have shifted, and trade measures have changed dramatically.  This is a difficult time for suggesting liberalizing trade initiatives given the rise of populism and dissatisfaction on the part of many with what they see as the imbalance of the benefits as compared with the costs of international trade.  However, the rate of change in the world economy is only going to increase.  It will take strong positive leadership on the part of many to be equal to the coming challenges.

Where do matters stand today?

First, the starting point is that all WTO Members profess that they agree on the importance of the multilateral trading system.  Sustainable trade relations require a foundation in rules and commitments that are complied with. Wherever one looks, wherever there is society, there are rules.  The alternative is chaos.

In order for trade to flow, there needs to be a high degree of certainty.  Businesses, even those consisting of one person or just a few, require the rules to be clear and predictable in order to attempt to ship a good or provide a service across a border.  For major international companies, uncertainty slows or freezes investment.  The early signs of slowing cross-border investment have already appeared.  For all of us, consumers, distributors and producers alike, in short for most of the world’s inhabitants who engage in trade, uncertainty diminishes economic activity, and that affects all.

The presence of law does not suggest that there will be no conflicts.  To the contrary, law exists because there will always be differences that are not automatically reconcilable.  Few can be unaware that there has been a large increase in new trade restrictive measures applied over the last six months.

However, to keep this in perspective, nearly all world trade, which for merchandise alone exceeds $11 trillion, continues to flow every bit as freely as it did previously.  This is due to the WTO rules holding for most trade. 

The trading system has halved tariffs since 1995, it cuts red tape and it increases certainty and stability.  These are the elements that businesses need to thrive and create jobs. Without the rules of the world trading system, tariffs, bureaucracy and uncertainty would multiply. To return to the world before the multilateral trading system would see trade flows fall by 60%. That would mean a far larger decline in global economic activity than occurred during the financial crisis a decade ago.   

In fact, the rules have been improved in the last few years with the coverage of the information technology agreement being expanded, the Trade Facilitation Agreement coming into effect, and WTO Members agreeing to ban agricultural export subsidies.  The effect of those agreements is to move trade even more freely with fewer distortions. 

Secondly, Members are using the WTO as a forum for trade issues of concern to them.  Members continue to be active participants in the standing committees of the WTO.  They notify proposed standards, receive comments and are able to take them into account in formulating final regulations.  They review sanitary and phytosanitary measures to give greater assurance that necessary requirements are also as non-trade restrictive as possible.  They make negotiating proposals on a wide variety of subjects in order to improve the rules further.  They are increasingly more open in stating their concerns and interests (although there is room for even more openness).

Ways forward are being actively sought to improve the conditions of agricultural trade, with respect to domestic subsidies, market access, export restrictions and food security.  At the Buenos Aires Ministerial Meeting last December, WTO Members recommitted to achieve disciplines on fishery subsidies, to avoid depletion of the oceans fish stocks.   Members have set a deadline of reaching agreement in less than two years from now, at the next WTO Ministerial Meeting. 

Kazakhstan plays a leadership role by hosting the next WTO Ministerial Conference - that is, bringing a cross section of WTO membership to this part of the world for the first time.  It took 20 years for Kazakhstan to become a Member.  The accession process accompanied the country's transformation from a Soviet outpost to a modern, knowledge-based economy.  An accession like that of Kazakhstan makes the system stronger.

Third, the value of the system is attested to by those seeking to accede to its rights and obligations.

Since 1995, when the WTO came into being, 36 countries have completed their accessions to the WTO.  Twenty-two countries are in the process of acceding to the WTO.  They are of different size and economic conditions, but all have the ability to use WTO membership and accession to pursue their domestic reforms and their integration into the global economy.  They all share a common vision — to be part of the WTO whose rules govern the conduct of over 98% of global trade.

All of this reinforces the fact that there is still a demand for the system and the Organization itself.  Acceding countries are on the leading edge of evolution of the world trading system as they negotiate their entry into the system.

The future of the world trading system.

The accession process and current conversations among Members can lead to WTO 2.0, in which a number of important changes are made in the current WTO rules and institutions.  That there is more to be done is demonstrated by the vigorous debate in the United Kingdom as to the gap between a single market and trade on the basis of the WTO rules and commitments.  This is amply demonstrated by the concern that over border trade between Northern Ireland and the Republic of Ireland in the event of a “hard Brexit”. 

In your generation's hands will be the creation of WTO 3.0.  It could bring to a higher plane the way countries regard the role of trade and the rules which govern it. 

A more open world trading system has been a goal since the time of the silk road.  In the west, in 1609, Hugo Grotius in his treatise Mare Liberum (or The Freedom of the Seas), Grotius held that the "most specific and unimpeachable axiom of the Law of Nations, called a primary rule or first principle, the spirit of which is self-evident and immutable" is that "every nation is free to travel to every other nation, and to trade with it."  

What might be considered for inclusion in WTO 3.0: that membership in the system is universal; that the default condition of national borders and domestic economies is openness and closing a border or impeding foreign economic participation would require a strong justification; that with respect to trade there is a duty to provide fairness not just among nations but within them; that the disadvantaged will be raised up; that the land, air and waters of the planet will be treated as an inheritance to be passed on.

I have a strong hope for the future here in Kazakhstan where a nation is being built, an ancient land is being reborn.  Here the silk road and trade are in the blood of this country.  President Nazarbayev has said “I tell young people here that they should be citizens of the world and for them there should be only one nationality – humankind.”  That message is more important now more than ever.  It is needed to a greater extent to promote cooperation and progress toward improvements in the arrangements governing international trade. 

The youth of Athens, on reaching maturity, were required to take an oath.  They were to leave their city, their world, in a better condition than they had received it. They pledged that the rule of law, by consent of the systems' members, would continually be improved, and adhered to.

That is what the current generation must strive for.  It may be accomplished by you.

The future is not written yet. You and your generation have been given the privilege and responsibility of holding the pen.

I am optimistic that the WTO can and will be maintained and improved, despite the near-term challenges that need to be met and overcome.  And perhaps a number of you will take on the next challenges, as there will always be more to deal with. 

The future is in your hands.

Thank you.