10 January, 2000
"Revisiting the multilateral trading system"
The Partnership Summit 2000, New Delhi
Director-General Mike Moore's keynote address to the Confederation of Indian Industry at the "Partnership Summit 2000", New Delhi.
I am particularly pleased to be here with you today. India is more than a country. It is a civilization. India has always been a moral superpower, it is a political superpower, the world's largest democracy, and will be an economic superpower. I wish to congratulate the Confederation of Indian Industry for organizing this summit.
No one thinks globalization can be stopped or should be. But there are dangers and fears that need to be addressed. Celebrating a non-result in Seattle is as useful as suggesting Europe ought not to enlarge or China engage.
There is anxiety because there is unfairness, not everyone is getting a fair opportunity. Alas they never have, this has been true of the other great economic and social upheavals. As we shifted from hunter-gatherers to an agricultural, feudal and then industrial society, we are now moving into a post-industrial society, the information age. Now as then these great upheavals cause social dislocations. Be they Kings or Popes in the past or politicians now, leaders are blamed for not preserving the present. Yesterday always looks better.
Any great change in history causes resentment and breeds fear and causes anxiety. You could mount a case, indeed some of our critics do, that the motorcar is lethal, pollutes, kills and divides communities. But it's not about banning the motorcar, we cannot uninvent the combustion engine! It's about road rules, road rage and better managing and sharing more equally the costs and advantages.
This is true of the impact of globalization, technological change and the WTO and its sister organizations.
Now that the dust has started to settle after the turmoil of Seattle, perhaps we should revisit what the multilateral trading system means to us and to the people of the 134 other countries who are part of the WTO, and the 1.5 billion people who want to join, who did not dominate the headlines as did the 30,000 outside, some of whom claimed in the name of grass roots democracy their intention to deny over 100 democratically chosen ministers their right to speak and negotiate.
We ought to get back to core principles and values, restate our case. We all realize that no nation can now enjoy clean water, air, manage an airline, even organize a tax system or hope to contain or cure AIDS or cancer without the cooperation of others. Thus we must seek democratic internationalism and cooperation if we are to prosper and enjoy balanced development on our crowded planet.
When the Berlin wall came down, when Nelson Mandela was freed, and when freedom has flourished elsewhere, the world celebrated. We celebrated the universal values of political and economic freedom. No one shouted, cursed and swore about the evils of globalization then.
Every mother with a sick child wants the best the world has to offer from science, no one wants the old technology when they go to the dentist. They don't complain then about global or universal values. These are not western , European or even American values. They are owned by all God's children. Freedom is everybody's right.
And yet, at a time when the world is more integrated than ever, where technology brings us all within reach of each other around the world and offers unprecedented opportunities for communication, increased cooperation and solidarity, there is a growing sense of unease at the impact of this globalized world on people's lives.
Why have a round? Because the OECD has concluded that a new round of tariff liberalization would boost world economic output by 3 per cent or over 1.2 trillion dollars and that developing countries would benefit most. India's GDP would grow by 9.6 %, China's by 5.5 %, sub-saharan Africa's by 3.7 %. Injustice frozen helps no one, especially the poorest. Implementation issues must be addressed. Whos brave enough to tell the textile makers in Bangladesh or the farmers in Uruguay that the status quo is enough? The status quo is yesterday's compromise.
In Geneva and in Seattle, we have worked for a year and more to prepare the ground for new negotiations. Unfortunately, we were not able to bridge all our differences. I am disappointed that we did not reach an agreement to launch a new development round of trade negotiations, although it was clear that a new round was supported by a very large number of WTO Members. We will launch a new round. The only question is when?
When governments have the political willpower and when the costs of not engaging get too high.
I have some empathy with some of those who protest in the streets of Seattle, Delhi or Auckland about change and the WTO. People around the world are right when they say they want a safer, cleaner more healthy planet. They are correct when they call for an end to poverty, more social justice, better living standards. But they are wrong to blame the WTO for all the world's problems. They are especially wrong when they say we are not a democratic house. We are owned by Governments who represent hundreds of millions of voters. The Indian Ambassador is appointed by your Government, your government is answerable to Parliament. Parliament and congresses and governments must ratify our agreements. Thats how it should be. That's why your title-subject for this summit is profound. Managing the global economy, NOT ignoring it. Not leaving it just to the market and business. How do we manage? History tells us democracy and freedom is not just a moral imperative. It makes better economic sense. Gets the best results.
Countries are part of the WTO because they decide to be. Because they know it is their shared interest to be part of a rules-based trading system. And developing countries need a secure and stable world trading system as much as anyone else. Perhaps even more. They need more openness, not less. Stronger rules, not weaker ones. As much as anyone, they need new trade negotiations to expand their markets, open up their own economies, and to undertake reforms. The future of the global economy lies with them. They are the customers of the future, the living standards of the wealthy nations will rely on purchasing power of the poorer nations in the new century.
The trading system, in its 50 years of existence, has already made a crucial contribution to fostering growth and development. I recall reading President Kennedy's speech when the Kennedy Round was launched: he said a new round would help developing countries like Japan. Japan? And that was just a generation ago! This system is not perfect. Certainly it can be improved, and it will always be possible to make it better. In fact the WTO is intended precisely to be not just a static set of agreements, but a permanent framework for trade negotiations among its members. These improvements will come if Ministers can agree on a further work programme. That requires flexibility. It requires being in a position to consider proposals from others and explore the possibilities for reaching agreement in order to secure what matters to you. Issues were just not ripe at Seattle. And perhaps too many of us wanted to write in detail too much in the Ministerial document, issues, that were normally part of a formal negotiation. Issues that could only be resolved in the quiet of a formal negotiation. I can understand why this was tried. Nobody wanted to wait for a 7 year round. Thus, the more detail pre-Seattle would have saved time later. Perhaps we tripped over the trees and could not see the forest.
As the OECD reports, India stands to gain much from a balanced round. India already has a very successful history of progressive trade liberalization. Since 1991, through the initiation and implementation of a major reform programme, you have experienced dramatic increase in growth in the 1990s, flows of inward foreign investment have increased, as has international trade.
I know that a lot more effort will be required to build on this success and continue to press ahead with reform. The increased openness and integration with the world economy of India's trade regime have been important factors in your healthy economic growth of the last decade. And analysts have already been predicting the future of India's economic development as a new "tiger economy". You have one of the largest pools of trained technical labour in the world, you have acquired leading expertise in many areas of advanced technology: satellites, computer software, deep-sea oil drilling. Your booming software industry, whose success has translated through a surge of exports, with its recognized potential for further spectacular increase, is a striking testimony to the dynamism of Indian industry and the paths that open up to the Indian economy. Continued opening of the trade regime could translate into even higher growth rates and better jobs. I know that these reforms are not always easy to enact. Difficult political decisions are required which take courage and vision. It's not easy. No one ever loves the dentist or the Minister of Finance. But India has shown already its commitment to a stable, liberal, rules-based multilateral trading system befitting the world's greatest democracy.
Many developing countries are experiencing difficulty implementing certain WTO commitments, or see imbalances from their point of view in existing agreements which they want addressed before taking on new obligations. Everyone agreed that was a key objective of a new round and it still is, without firm commitments on implementation, there can be no development round. Just as important, they need greater access for their exports. These issues are as pressing for the smallest and most vulnerable among the developing countries as they are for large economies like India.
Other countries are dependent on agricultural exports - and they want the kind of access which they feel has been denied them in previous rounds. Still others want new rule-making in areas like investment, competition policy, transparency in government procurement, and trade facilitation. There is also the new and immensely promising sector of electronic commerce, where a multilateral approach can maximise opportunities for all. Then there are those who believe an examination of the relationship between trade and social issues needs to be started if we are to ensure the nations of the North keep their markets open because they also face political pressures. Their constituents are uneasy, in the wealthy countries the far right and far left hold hands in the streets, in anger and anxiety about losing control of their lives. Good people hold up placards saying "food for people, not exports". Whatever that means. I know what it means to net-food importing countries. Good people who give money at church on Sunday to assist poor people in lands they will never visit, on Monday sign petitions to stop their workers exporting their products.
The concerns of the least-developed also must not be left behind. The least-developed countries are not threatened by globalization. They are threatened by "de-globalization", falling outside of the world economy and slipping ever further behind. This is not the fault of the trading system. Trade is not the only answer. The problem is NOT trade, if anything it's not enough trade, not enough customers, not enough jobs. Governments themselves have responsibilities to make the case, to provide honest and fair domestic policies. Alas, some governments are paying up to nine times more on debt repayment than on health. The heavy hand of history has its thumb on the windpipe of many of our Member Governments.
The new century poses enormous challenges. Within 25 years over 3 billion people will be added to the global population. Urban populations will treble over the next 30 years. By the year 2020, two-thirds of Africa's population will live in cities. Over the next 30 years food production will have to double. The World Bank reports that 2 billion people will suffer from chronic water shortages within 30 years. Half the world's population lives on under US$2 per day.
Who is brave enough to say that our political structures, that the international institutions you own such as the WTO, the UN, the IMF, the World Bank, are equipped to serve the people and their Governments to meet these challenges?
Clichés about coherence between the institutions must become a working reality. We must adapt.
Our challenge is to bring together the diversity of interests of a very broad membership around one central objective: ensuring that international trade can prosper in predictable, sound and fair conditions, so that all can benefit from its achievements. Trade liberalization is not an end in itself. The WTO is not about opening markets for the sake of it. It's about providing opportunities so that trade can get a chance to expand in fair and reliable conditions and contribute to growth, it's about ensuring that consumers can have the choice of buying the product they want at the right price. At the end of the day, it's ultimately about contributing to economic growth and development in a way that benefits all the people, fostering employment and better living standards. On its own, it's not enough. Development policies and a development trade round must go further than this.
To me it's a simple proposition. The first half of this century was marked by force and coercion. Our new century ought to be one marked by persuasion and cooperation. Of States settling their differences through that great equaliser, the law. Of a binding disputes mechanism, to settle differences, of engagement and interdependence. A quarter of global output now crosses national borders - and this share is even higher for developing countries, almost 40 per cent of their GDP.
I come from a small country. I see interdependence, and treaties and the great global institutions as guarantors of our sovereignty and safety. I recall a splendid comment of Julius Nyerere, of Tanzania, who claimed that as each village's wealth once depended on its neighbour's ability to purchase, this is now true of nations. Our parents learnt from the great depression, made deeper and more lethal by rising trade barriers from which came the twin tyrannies of our age, fascism and marxism, thus war; hot and cold. Economists and historians have costed the hot wars. We know of the casualties. We are still carrying the cost of the cold war.
Yet they had vision.
They swore it would not happen again, and they created an international architecture which included the UN, IMF, World Bank, and the GATT, now the WTO, to achieve that peaceful purpose and noble vision. In the mains it's worked. Far from perfect. But the world would be a less safe place without them. The WTO is NOT the GATT. We now have more countries in the much criticized "green rooms" than we had as original members. We endure a culture in Geneva based on an old organization of 30 Members when we now have over 130. And 20plus more want to join.
That's why we must change how the WTO operates, we are driven by our Members. Owned by them. So I will be calling Members Governments for advice, even giving some, to increase transparency and efficiency.
This century offers us the opportunity to achieve much. The last 50 years have seen Empires shrink, democracy rise, freedoms grow, and living standards lift in most continents and countries. Not all. I'm full of confidence because I have an abiding, unshakable confidence in the people who, given freedom, will do the right thing by their families and nations. Too much is at stake for us to falter, be timid or to fail.
We have been asked to address the issues of managing globalization, we could do a lot worse than heeding the words of the great Mahatma Gandhi who warned of the SEVEN deadly sins in today's world:
Wealth without work
Enjoyment without conscience
Knowledge without character
Business without morality
Science without humanity
Religion without sacrifice and
Politics without principles.