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18 September 1996

Director-General's speech to EU Trade Minister in Dublin

Attached is the text of the address delivered by Mr. Renato Ruggiero, Director-General, World Trade Organization, to European Union trade ministers in Dublin today (18 September 1996).

“First of all let me thank Enda Kenny and his colleagues in the Irish Presidency most warmly for inviting me to meet with you this evening. Dublin is a special place for me. Many years ago it gave me my first experience of living in another part of Europe...”

At that time, to go from Naples to Dublin was an exotic adventure. Today, young people travel around Europe with the assurance that they are at home. The fact that we see nothing extraordinary in this brings to life what Europe has achieved in less than forty years to break down barriers not only between economies but - most importantly - between people.

“Opening up trade was the key to bringing the peoples of Europe closer together in peace and helping them prosper. It is more and more doing the same job in the wider world. The enormous potential of open trade within agreed rules to contribute to human welfare is a basic conviction that underlies everything I will say to you tonight, and I believe it should underlie all of our efforts in the WTO as we look to Singapore and beyond.

“As trade ministers of the European Union, you have in your charge the wellspring of Europe's economic and political success. I hope you will all agree that if it is to continue to run strong and clear it must be allowed to run freely. The European trade experience gives you a unique chance and a unique responsibility; to take the lead in ensuring that the principles that have worked so well within Europe are also allowed to work well outside it. It must be allowed to flow strongly within the broad channels of the WTO's rules to irrigate not only Europe's growth but that of the world as a whole.

“Your meeting in Singapore in December will be an event of world political significance. The days when trade could be dismissed as an affair of technicians are well and truly gone. The reality of global economic integration touches lives around the world, and brings with it an intense debate about its effects on jobs, on incomes, on social standards and on the environment.

“This is why the Ministerial Meeting must send a strong political message. It must be a message which emphasizes the opportunities in the new global economy but does not ignore the challenges; and it must be a message of ambition and confidence for the multilateral system as it approaches its 50th anniversary. I hope that the message will point the way towards using this anniversary to reaffirm the importance of the system and reassert its dynamism.

“It should be a message which recognizes the power of the multilateral system as a formidable engine for growth in trade, investment and employment. It alone cannot solve the problems of distribution, but it is essential in ensuring that there is something to distribute.

“The message should be one of unity among industrial and developing countries, and one of determination to help the least-developed countries come in from the margins through bold and specific measures.

“It should be a message about universality - the WTO must become a World Trade Organization in fact as well as name. The 30 accession candidates must be brought in as soon as possible, in a way which strengthens the multilateral system.

“It should also be a message about the vital relationship between the multilateral system and regional trade liberalization. A great new wave of regional initiatives, some spanning continents and oceans, impels us to look closely at the systemic implications of regionalism in order to reinforce the m.f.n. principle and ensure that regional and multilateral systems converge around it.

“Finally, we have to send a message about our objective in the multilateral trading system. It is not enough to move forward; we also have to see where we are going if we are not to lose our way. Can this objective be anything other than to work towards a universal, free and open trading system based on agreed and enforceable rules that will embrace, not suppress, the network of regional and bilateral trade agreements?

“I believe that a far-sighted and confident political message along the lines I have outlined will go a long way towards keeping the WTO moving in the right direction. Of course it must be balanced with responses to the immediate questions we face, in implementing existing commitments and in setting out the WTO's work programme.

“It is rightly seen as essential by WTO members that the Ministerial send a clear message about the central importance of full and timely implementation of the Uruguay Round commitments. I want to focus on several aspects which show that, while implementation presents a generally encouraging picture overall, there are areas which need attention.

“First the major success story - dispute settlement. Since its inception, the WTO has received 53 formal complaints, and a significant number of cases have been settled at the consultation stage. Two panels (the Gasoline case and the Japan Alcohol case) have completed their work. Currently, we have six active panels on a variety of issues. Both developed and developing countries are actively using the system to settle their trade disputes; this is a marked change compared to the past, when the system was mostly used by developed countries. Ministers in Singapore can be justly proud of what has been created in this system, and with the way it is working.

“On the other hand, an area where more needs to be done is notifications under the Uruguay Round agreements. This is a particular problem for developing countries, and one which calls for further attention to appropriate technical assistance measures. But it is not only a developing-country problem, and I hope all governments will treat it with the seriousness its fundamental importance deserves.

“Then there is the situation in textiles. I suggest that it is not possible to talk seriously about furthering a relationship of mutual confidence with developing countries unless the industrial countries are ready to act courageously in this sector. There is considerable anxiety among textile exporting developing countries - who also include some of the least-developed - that the major importers are not always living up to the spirit of the Uruguay Round agreement, whatever their observance of its letter. The developing countries are not seeking to rewrite the rules, but they are concerned to have a second integration phase that is more commercially meaningful, and they are anxious about what the end-loading of the commitments will mean in terms of the pressures importing countries face when they finally come to be implemented.

“I think there is a case to answer here, and it is in the interests of Europe - including its textile producers - to be more forthcoming.

“Another significant point is unfinished business. This means the services sector in particular. Two further agreements have been made since the end of the Uruguay Round, even if the coverage of the major one, on financial services, is not yet complete. Improving on this, and concluding the immensely important negotiation on telecoms, must be a top priority for 1997. Achieving this will be a leap forward for the trading system comparable in value to several sectors of the Uruguay Round put together.

“Here again European commitment and activism will be indispensable. I congratulate my good friend Leon Brittan on the key rôle he has played so far in moving these negotiations forward, and I hope his continuing efforts will be well supported. These are truly sectors where we are trading into the future, and the future will not be kind to those who fail to keep up.

“Lastly, implementation also includes the work of the Committee on Trade and Environment. I believe that at Singapore Ministers will be in a position to judge that a good start has been made on integrating environmental concerns into trade policy analysis in the WTO, and that trade and the trading system have a significant contribution to make to the promotion of sustainable development. The result in Singapore may not go as far as some of you would have wanted, but I hope that the EU will play a leading and constructive rôle in consolidating the progress we have made as the basis for further work after Singapore.

“Let me now turn to the third essential part of the Singapore message: the message of dynamism and opportunity we will send through the WTO's Work Programme.

“By far the greatest part of the Work Programme is already agreed, in the “Built-in Agenda” of commitments already undertaken and negotiations already scheduled. Our task for Singapore in respect of the Work Programme is in fact neither ambitious nor difficult, since it consists largely of agreeing on the means of implementing the Built-in Agenda commitments. If we cannot even do that, we risk seeing the multilateral system left behind by the advance of the global economy and of those bilateral and regional arrangements which are already responding to its challenges. It is difficult to accept that what is possible in regional fora (such as consideration of investment issues) should not be possible in the multilateral system.

“I want to cover briefly the five issues where the proposals that have been made do not currently come under one of the existing WTO bodies. These are the subjects on which I am personally carrying out informal consultations. Before Singapore we have to come as close as possible to a consensus, and this means building on every possible element of common ground.

“First, investment. There are some 1,160 bilateral agreements on investment, 31 regional instruments, and eight regional trade agreements that contain provisions on investment; if the current Members of the WTO were to be linked together by bilateral treaties, about 7,500 treaties would be needed.

“In recent times foreign direct investment has been growing much more rapidly than trade. Moreover, sales of foreign affiliates of multinational corporations are estimated to exceed the value of world trade in goods and services (the latter was $6,100 billion in 1995). Whatever their level of development, all countries have an interest in promoting a stable and attractive investment climate. The multilateral system, with its broad membership and its well-established rules and procedures, can make a contribution to improving this climate, every bit as important as its stimulus to trade.

“However, it is no secret that the proposal to begin work on investment in the WTO is not universally accepted. Some countries oppose any suggestion of a negotiation, while others object even to the creation of a WTO Working Group to study the issue. These countries point to the mandate UNCTAD has received to examine trade and investment questions. Their concerns clearly need to be taken into account. However, at the same time, the OECD continues to work on its MAI negotiations, in which some more advanced developing countries are taking an interest.

“The danger I see is that, without some clear direction from Singapore, the multilateral system could be stuck on the sidelines while some of the most important future policy influences on the world economy are being worked out. The risk of a confusion of competing rules and jurisdictions would be serious; and so would the situation of those poorer countries who at the moment receive practically no foreign direct investment and who look to the multilateral system to help level the playing field.

“On competition, as on government procurement, I have the impression that there are still many significant difficulties.

“Concerning the proposal on WTO Rules, there is a need for clarification; it is not yet clear whether it is a highly political debate that is sought or one which focuses the discussion on a few specific rules.

“Lastly I come to the most thorny subject, labour standards. I am going, perhaps, to surprise you by saying that I see real progress towards understanding in this area compared with where we were a few months ago. Specifically, I see the emergence of four areas of common ground:

• The respect of core labour standards has been agreed by all Members in the Universal Declaration on Human Rights;

• All delegations have recognized the primary rôle of the ILO in international labour issues;

• The competitive advantage of low-wage countries has not been called into question; and

• No-one has opposed statements by major proponents of the issue that trade sanctions are not envisaged.

“However, I would be shirking my responsibility if I pretended to you that it will be easy to agree even a statement based on these four points. Some delegations argue that a reference to these principles could be used by others as a justification for unilateral measures. Others are asking why, if we are not envisaging trade sanctions and not questioning competitive advantage, we should bring this issue to an organization which deals with trade problems on a contractual basis. And I must tell you that a sizeable number of delegations strongly oppose any follow-up in the WTO.

“There remains, in short, a problem of clarity which those who want to see this issue discussed in the WTO cannot afford to ignore. The strong suspicion remains among many WTO Members that this is a concern not so much to limit labour abuses as to limit competition from low-cost imports.

“I have to call your attention to the great importance of acting in a way that will prove beyond any doubt that in raising this issue there is no major objective other than improving core labour standards and the situation of children and other vulnerable sectors of the working population.

“This would require a comprehensive, positive effort to improve the situation of children and other vulnerable sectors of the working population, especially opening up opportunities through education. Clearly such a programme must start by making the fullest possible use of the institutions and programmes which already exist and are already dedicated to these issues. The ILO is first among these, of course. Through programmes such as its International Programme for the Elimination of Child Labour it offers ways of providing incentives and assistance to address specific problems. I am sure that we have not reached the limit of these possibilities, nor of what can be done through other organizations, like the World Bank and UNICEF, and through bilateral efforts.

“There can only be one reason for raising this issue, and that is concern for the human beings involved. Only an approach which is unequivocally grounded in this concern and privileges positive ways of addressing it can therefore hope to attract widespread support. Just pushing for discussion of the core labour standards issue in the WTO is unlikely to bridge the gap, and unless this gap is bridged we risk opening up others.

“The challenge that the proponents of a WTO approach face is to convince their partners that fundamentally we are all on the same side: the side of children and vulnerable people. If they fail to do so the result - whatever the specific outcome - will be a tremendous failure.

“Lastly, let me say a few words about the prospects for further liberalization of trade. This subject includes at least four specific points.

• The first, which is based on the Marrakesh Declaration, is to do more for the market access possibilities of the least-developed countries. Since the G7 Summit in Lyon I have been trying to promote the objective of complete, bound duty-free access for LLDC products and the elimination of import quotas on them;

• The second is the initiative on Information Technology and related areas;

• The third point involves discussion of an early preparation of the negotiations on agriculture and services to which we are already committed;

• And last but not least there is the question of adding to these future negotiations a further liberalizing effort for industrial goods.

“Before moving on I would like to add that in addition to creating new market access opportunities we have to help the least-developed countries enhance their human and institutional capacity to take advantage of them. Improving the effectiveness and the coordination of technical assistance is a priority I hope ministers will support fully. I am doing all I can to increase the impact of our programmes, in cooperation with other agencies and through exploring the use of new technology - but there are resource limits, and it is difficult to accept that we have to rely only on the generosity of a very few donors.

“I hope I have contributed some points to stimulate your discussion. I cannot emphasize enough the importance of Europe taking a clear position in favour of a strong, balanced and forward-looking result from Singapore - and taking it soon. The complexity and importance of the issues I have touched on leaves no room for doubt that we must use the remaining weeks before 9 December to reach the most complete consensus possible. You should not expect to be able to raise and resolve major political issues at the conference, with all the pressures it will involve.

“The fact that Singapore does not involve the sort of major commitments we face at the end of a negotiation does not make our task easier. In the absence of such a negotiating environment it is not easy to make out the concrete elements of give and take on all sides which produce agreements. We are dealing more with political positions, and questions of atmosphere and perception. In such a situation, where the way to eventual consensus may be less clear, it becomes all the more important not to push particular positions too far.”