12 December 1995
Statement of Ambassador Dr. Mounir Zahran, Chairman of the GATT 1947 contracting parties
to the closing session,
Geneva, 12 December 1995
Today and at the end of this last session of the CONTRACTING PARTIES we witness the end of a chapter in the history of international commercial relations. It has been almost half a century since the General Agreement on Tariffs and Trade came into being. As we now move away from the GATT into the WTO, all partners have undertaken to comply with a strengthened rule-based system. ...
It is therefore a good opportunity for us to look back on our achievements and for me to briefly reflect on the past and have together thought sharing. I know very well that not everything that we and our predecessors have desired has been accomplished. But this is, I believe, the time to stress our achievements and successes on which we can build our future efforts to advance the multilateral trading system. And I strongly believe that there is a great deal that we can all be proud of.
The period since 1947 has been marked by far reaching negotiating activity. Emerging from the devastations of the second World War and from the protectionist policies that ruptured the world trading system during the inter-war period, the GATT was a milestone in the evolution towards a new world trading system. Eight rounds of multilateral negotiations were directed towards a dual goal; first, the creation of a rule-based system designed to reduce the uncertainty surrounding transactions across national frontiers; and second, the reduction or elimination of tariffs and non-tariff barriers to imports that hindered the growth of international trade. Together, these actions stimulated trade-related investment, increased economic efficiency, created higher-paying jobs, and benefited consumers through lowering the prices.
In other words, we have all supported these negotiations with the objective of reaching better conditions for both producers and consumers in order to greatly improve the opportunities for countries to achieve faster economic growth and therefore to help them to embark on social development including raising the standard of living of their populations and to deal with problems of unemployment and poverty, which was the main concern of the Social Summit. The fact that we have gone through eight rounds of multilateral trade negotiations is the best proof of our recognition of the importance of lower trade barriers, I mean freer trade and the need to transform the world trading system into a rule-based one guided by the principles of non-discrimination and transparency.
It is worthwhile noting that when it was signed in 1947, the General Agreement had only 23 members. As we moved along, we were determined to expand the GATT membership to ensure that the benefits of the trading system could accrue to a larger number of countries. Since a larger constituency creates a larger market for the existing and new members, from which both sides clearly benefitted. By the end of last year, when I was Chairman of the GATT Council of Representatives, as we were just about to close the GATT chapter, the total number of GATT contracting parties reached 128. This clearly indicates a strong desire to reach universality as more and more countries sought to share in the benefits that the multilateral trading system provides.
During the first six rounds of negotiations under GATT, the main focus was on the reduction of tariffs. Among the developed countries, the average tariff on industrial products was reduced from more than 40 per cent in 1947, to around 10 per cent after the implementation of the Kennedy Round. Once the tariff cuts negotiated in the Uruguay Round are fully implemented, the average will be below 5 per cent. This reduction in tariffs is clearly a great achievement. In addition, more and more countries - including a large number of developing countries - have deepened and widened the coverage of their tariff bindings.
Along with the expansion of the negotiations beyond tariff reduction, there was also an expansion beyond the original focus on industrial goods. The early rounds of negotiations did not address other areas of trade such as agriculture and services even though they constituted a significant share in world trade. "Sensitive" products such as textiles and clothing were also excluded. It was not, therefore, surprising that interest grew to find ways and means of addressing these excluded sectors, until they were successfully covered by the Uruguay Round. It is only fitting that the last round of negotiations under the GATT was the most ambitious and most successful international economic negotiation since Bretton Woods.
The results of our aspirations for a better world trading system have produced tangible results. When we look at statistics concerning the growth of world trade and world output we immediately see the contribution we have made through our efforts to improve the world trading system. As the Director-General already noted in virtually every year of the post-war period the growth of world merchandise trade has exceeded the growth of world merchandise output. Between 1950 and 1994, the average annual rate of growth of world GDP was just under 4 per cent in real terms. In contrast, the average annual rate of growth of world merchandise trade - at more than 6 per cent, also in real terms - was considerably faster. During those 45 years, world merchandise output increased 5.5 folds while the world merchandise trade multiplied by 14 fold.
These figures provide convincing evidence of the enormous opportunities provided by international trade and of the central contribution of the GATT to postwar prosperity. The economic growth of many countries has been increasingly stimulated by the growth of their trade, a fact made possible by the improved conditions for trade that we have realized through the various rounds of negotiations.
It may be that the bright future will require further liberal initiatives. I am thinking, for example, of the need to consider further reductions in the tariffs on agricultural trade and to consider expanding the range of commitments in the area of services. We are all aware of suggestions that new initiatives may be contemplated and studied in such areas as investment and competition policies. It is also important that our membership continues to expand to include countries that have stayed away from the GATT/WTO system. Among those negotiating their eventual WTO membership are China, Russia, numerous Former-Soviet Republics, African, Arab countries and others for which WTO membership offers not only important trade benefits, but also an opportunity to increase the credibility of the major economic structural reforms they are undertaking. This move will ensure our call for the universality of the multilateral trading system so the new organization would deserve its name.
At the same time, it is necessary to keep in mind the challenges we face and the limitations of our endeavours. We can create conditions that are conducive to economic growth and to the growth of world trade. But the actual growth of trade and output will also depend on other developments that we cannot influence in this forum. This means that our success is closely linked to the successes of national policies and to a healthy contribution of other factors that are crucial to economic growth, such as education and high levels of savings and investment. What we can do is to ensure that existing WTO commitments are fully and effectively implemented, bearing in mind the special and differential treatment for the less developed countries and the enforcement of the decisions adopted by the Ministers at Marrakesh particularly with regard to the least developed countries and Net Food Importing Developing Countries. Against this background the new WTO system will be continuously dynamic keeping pace with the globalization of the world economy.
To maintain the effectiveness and the credibility of the system it is imperative that we all implement and respect the commitments of the Uruguay Round Agreements. This applies to the commitments to make the best possible efforts to expand export benefits to the least - developed countries. I would like also to stress that since the WTO only provides a framework for trade development, we need, in order to derive the maximum benefit out of it, to ensure the effective functioning of the WTO Dispute Settlement Mechanism. In this respect, it is imperative that each member refrain from resorting to unilateral actions and from employing trade distorting protective measures in an abusive or arbitrary manner. Each party to the WTO is committed to ensure that domestic legislation corresponds to the rules and requirements set out in the Uruguay Round Agreements.
I would like also to underline the importance of the examination process of regional trading arrangements. The link here with the credibility of the strengthened multilateral trading system is obvious. And I hope that the consultations going on right now will improve this process .
By fulfilling those obligations, we can be confident that we will be making our contribution to the economic betterment of the present and future generations. And by so doing, we will be re-affirming our faith in the wisdom of the fundamental principles of the GATT system and their continuing relevance to economic relations in the twenty-first century.