all, I would like to pay tribute to the Korean private sector for the crucial rôle it has
played over the past decades in the remarkable economic growth of your country. There is
no need for me to tell a Korean business audience about the benefits of trade.
In 1996, your country was the 12th largest world exporter, accounting for about 2.5
per cent of world merchandise exports. Korea is one of the major beneficiaries of the
multilateral trading system, which has been your country's partner in economic success.
The multilateral system is your system, and I want today to bring you some good news about
this great global asset.
It is no exaggeration to say
that the system is at a turning point - a very positive one, built on the consecutive
successes of the Singapore Ministerial Conference, the agreement on liberalizing basic
telecommunications services and the recent agreement on Information Technology products.
Never before has the multilateral trading system been seen to be more relevant and
effective, and more essential to growth and stability worldwide.
growing rôle in the global economy is reflected in the movement to widen its coverage as
well as to deepen it. Today the WTO's membership stands at 130, eighty per cent of which
are developing countries or economies in transition. And of the 28 countries currently
negotiating accession - including China, Russia, Saudi Arabia, the Baltic states, and
Vietnam - all are developing countries or economies in transition. This is a positive
referendum on the value of the multilateral trading system. With these countries inside
the system -- and I have every reason to think they will be -- the multilateral system
will be truly universal for the first time in its fifty-year history.
these achievements are only the beginning of the WTO's success story. They are backed up
by a truly impressive agenda which is surging forward to extend liberalization and the
rule of law into new sectors.
value of this success story to Korea and to the world goes beyond the trading
opportunities it opens up, valuable though they are. It confirms the fact, now more and
more widely recognized, that the world has in the WTO a key to the globalized economy.
Trade liberalization through the multilateral system has done much to foster global
economic integration - the central economic fact of our time - and now the strengthened
rules and disciplines of the WTO system provide governments and the private sector with a
firm international framework within which to make the most of its opportunities and take
up its responsibilities.
Let me deal
with these points a little more fully, starting with the economic significance of the
recent successes and future prospects.
I would like
at the outset to stress the importance of the active and positive rôle I hope Korea will
continue to play. This is important in all sectors but perhaps nowhere more than in
services, which provide 65 per cent of Korea's GDP. Korea is indeed becoming an important
participant in world services trade. In 1995, it ranked 10th in world imports and 14th in
world exports of commercial services.
Government's continuing contribution to the liberalization of telecom services will
benefit business and all other consumers. It is worth noting that, in general, firms spend
more on telecommunications than on oil. The recent agreement on basic telecomms is a good
illustration of where the multilateral system must travel in the future. Not only does the
agreement accelerate liberalization in a key economic sector -- leading to faster price
cuts, greater efficiency, and more innovation -- it also creates a global regulatory
framework for the telecommunications industry broadening rule-making horizons into areas
like competition policy, investment, and standards and regulations.
The boom in
the telecommunications equipment market also underlines the importance of the other major
liberalizing deal completed on 26 March - the agreement to phase out tariffs on
information technology products. Free trade in IT products will benefit everyday life of
consumers and companies.
countries (Korea among them) have agreed to phase out all tariffs on computers, software,
telecoms products and semiconductors. They account for 92.5% of world trade in IT
products, but the benefits of this agreement extend well beyond the 40 and will indeed
reach practically every country on earth.
agreement, together with the telecoms agreement, is of major importance for the whole
telecommunications industry. World trade in IT products is valued at nearly US$600
billion, larger than trade in agriculture. But its importance cannot be measured in
numbers alone. Both agreements hold the potential to unlock enormous gains in development
and growth which would benefit all countries, developed and developing alike. For Korean
industries, this means that by the year 2000 you will be in a position to export IT
products free of any barriers to most major markets, and to some developing countries by
the year 2005.
opportunities for Korean companies are enormous, not only as services providers but as
suppliers of equipment. For example, the World Bank has estimated that Asia will need to
spend more than US$60 million in the next five years on telecommunications systems. And
Korea is the fifth leading exporter of Information Technology products, with exports worth
US$33 billion in 1995.
to the agenda ahead of us, we face the challenge of reaching an agreement to liberalize
financial services by the end of the year. Negotiations have resumed last week in Geneva,
and I know how keenly aware you as businessmen are of their importance. If telecoms are
the nervous system of global business, financial services are its arteries. I hope you
will put all your weight behind a global deal which will help your company's
competitiveness at home and abroad. We at the WTO are looking forward to the results of
the Presidential Commission on Financial Reforms which is operating in Korea. It is to be
hoped that the reforms will also be bound at the multilateral level.
negotiations are not just economically important in themselves, they bring the trading
system towards the agenda of the twenty-first Century. More and more, information will be
the key raw material of the global economy, and access to it the key to development and
growth. The WTO is now showing that it can help create open, predictable and
non-discriminatory conditions of access for trade in these new services and technologies
in the same way as the GATT did for trade in goods.
In an ever
more interdependent world, it is no longer possible to overlook the impact on
international trade of Investment and Competition polices. Trade and investment are
increasingly inseparable as modes of delivering goods and services to foreign markets and
as vehicles for the international integration of productive activities. At the same time,
the benefits of international trade and investment flows will not be realizable in the
absence of functioning competitive markets within countries.
decision reflects a recognition of the need to take an integrated approach to trade and
investment, as well as to associated competition policy issues, in a way that ensures the
mutual compatibility and coherence of international rules governing them and takes into
account in a balanced way the interests of all members of the international community.
review of the achievements of the WTO would be complete without mentioning the Dispute
Settlement system, in many ways the central pillar of the multilateral trading system and
the WTO's most individual contribution to the stability of the global economy. The new WTO
system is at once stronger, more automatic and more credible than its GATT predecessor.
This is reflected in the increased diversity of countries using it and in the tendency to
resolve cases "out of court" before they get to the final decision - 19 out of
71 cases so far. The system is working as intended - as a means above all for conciliation
and for encouraging resolution of disputes, rather than just for making judgements. By
reducing the scope for unilateral actions, it is also an important guarantee of fair trade
for middle-sized exporting nations such as Korea.
successes also help provide the answers to a number of important questions about the
evolution of the trading system.
relationship between regionalism and multilateralism: the primacy of the multilateral
system is becoming apparent as an economic and political reality. With the success of the
Ministerial Conference, the agreements on telecomms and the ITA, the agenda of the
multilateral system - and its achievements - have now taken a clear lead over regional
question of whether the future lies with sectoral negotiations or with all-encompassing
rounds has also been answered - it is clear that both are possible, and either may be
appropriate depending on the circumstances. The success in telecoms has shown that
sectoral negotiations are a real option, but it is also likely that the negotiating
rendez-vous for subjects such as services and agriculture at the end of the decade will
exert a gravitational pull on other sectors in the direction of wider negotiations.
about a possible division between North and South, between developed and developing
countries, has been greatly reduced, firstly by the active and crucial participation of
many developing countries at the Singapore Ministerial, and secondly by their contribution
to the negotiations on telecoms and the ITA. In these sectors, countries at all levels of
development have been on the same side of the table.
add up to a single conclusion which is of profound importance for the future of
international economic relations; that in the WTO we have a new and highly effective
instrument with which to handle the challenges of the global economy.
people now deny that globalization is a growing reality; over the last fifty years (and
especially over the last decade) the world economy has been integrating at breathtaking
pace: for example, in the last four decades, world trade increased 15-fold while global
production increased only six times. Globalization is being driven by revolutions in
technology, economics and public policy. This process of technological revolution and
global liberalization is leading to the emergence of a new kind of economy - the
borderless economy - in which information is increasingly the critical resource and the
basis for competition.
represents a huge opportunity for countries at all levels of development. All the evidence
shows that trade liberalization has been a powerful engine for economic growth; but it is
also spreading the tools of economic, technological and social development more widely. A
third of the world's leading exporters and importers are now developing countries;
developing countries now account for around a quarter of world trade compared to less than
20 per cent a decade ago; and foreign investment in developing countries has tripled in
the past five years. But globalization is also a major growth stimulus for developed
economies. As developing countries export more, they import more.
it is our responsibility - governments, international organizations and the private sector
alike - to deal with the reality of globalization in a co-operative and constructive way.
We are confronted with the task of building a new global architecture. The challenge is
not simply to design institutions to manage frictions, but to find ways to harness our
collective powers to address broader global problems in a coherent and constructive way.
High on any priority list must be the situation of the least-developed countries, where I
hope Korea will be able to take an active and positive rôle.
success of the multilateral system and the increasing globalization of the world economy
make all the more important the need for all countries to maintain trade openness and
firmly resist any domestic pressures aimed at going back to old practices of
protectionism. It has been shown on many occasions that trade restrictions are not the
right answer to domestic problems such as trade deficits. We must all help the public in
all countries understand that measures which may unduly restrict trade will also restrict
their own prospects for employment and growth, and may also affect the multilateral
trading system which has been fundamental in economic success.
economic success story means that all the world pays attention to what happens here; OECD
countries because Korea is a new member of their grouping; developing countries because
Korea sets an example of dynamism and growth.
Korea added responsibilities in terms of keeping firmly to the principles of liberal and
open trade within the multilateral system. Sometimes the legal facts alone do not
adequately reflect the complexities of a trading situation.
understand that Korea has recently experienced slowing growth rates and a severe current
account deficit. But if we look at the situation more broadly it is clear that the
economic fundamentals remain strong. Savings rates are still high, and growth is still
running at a rate that is the envy of all major trading partners. The current account
deficit is less than 5 per cent of GDP.
background it is worth underlining that consumer goods account for only some 11 per cent
of Korea's imports, and that Korean exports in this sector are three times as large.
elements are important first of all to build a message of confidence in Korea's ability to
come through the present difficulties and continue its exemplary economic progress.
they serve to emphasize what you already know: that success increases responsibilities. As
the seventh largest world trader (counting the EU as one), Korea is among the greatest
beneficiaries of the opportunities the multilateral system provides. Your public opinion
and those who influence it have every reason, therefore, to take a lead in upholding the
values of this system.
multilateral system provides an agreed framework of enforceable rules for the global
WTO is rules-based. Almost uniquely in the history of international relations, the WTO is
based on a set of rules - or contractual obligations - governing trade and economic
policy. This greatly reduces the uncertainty surrounding transactions across national
frontiers, which in turn promotes trade-related investment, job creation and economic
growth. More importantly, the system helps ensure that the economic relations among
nations are based on the rule of law, not the rule of power.
WTO is based on the principle of non-discrimination. By definition it is a system which is
inclusive and open - a force for integration - rather than exclusive and preferential.
principles are as valid to electronic trade as they are to commodity trade. More than
ever, the new global economy needs the multilateral system as an instrument for global
economic rule-making as well as global liberalization. Where once trade policy was about
regulating commercial relations among national economies, it is now about establishing the
ground rules of a transnational economy in areas that were once exclusively domestic.
Next year the
multilateral trading system will mark its fiftieth anniversary. I hope that, with the
support of governments and the private sector as well, this will be an occasion not only
for looking back with satisfaction on the achievements of the past but also for preparing
the ground for the successes of tomorrow.
events of the past six months there can be no room for doubt that the system administered
by the WTO is a key element of the global economy. The challenge we face in looking to the
next fifty years is to ensure that it continues to evolve along with that economy, and
that in doing so it helps us to reap the greatest possible dividend of prosperity and