Ruggiero's speeches, 1995-99
It is a pleasure to be here today. This roundtable is an important
opportunity for all of us to discuss how trade can help reduce poverty
in the world's least-developed countries. It is particularly
well-timed, with the UN conference on LDCs coming up in Brussels in
May and with the prospect of the launch of a new WTO round in Qatar in
November. Thanks are due to Clare Short for her leadership in holding
this conference and for making the case for trade as a central factor
common objective is halving the proportion of people living in extreme
poverty by 2015. That is the most important of the International
Development Targets agreed by the governments of the world at a series
of UN conferences in the 1990s and reaffirmed in DFID's recent White
Paper on International Development. It is a challenging target, and
rightly so. Such extreme poverty is morally offensive in a world where
so many are so rich and where the ingredients of successful
development are not a mystery. But that is precisely why I believe the
targets are achievable if governments put in place the right policies,
nationally and internationally.
main way the WTO can contribute to achieving the International
Development Targets is by launching a new round this year. After all,
our core business is trade, which is so important to development
targets. By liberalising trade, we can make a huge contribution to
multilateral trading system has probably done more to boost living
standards and lift people out of poverty over the past 50 years than
any other government intervention. The 17-fold rise in world trade
since 1950 has gone hand-in-hand with a six-fold rise in world output.
This has benefited both developed and developing countries: in both,
living standards have risen three-fold. Life expectancy in developing
countries has risen from 41 to 62 years, infant mortality has more
than halved, while the adult literacy rate is up from 40% to 70%.
countries that have done spectacularly well over the past
half-century, such as Japan, South Korea, Taiwan and Singapore, have
all been trade-oriented. The WTO Secretariat's special study on trade
and poverty released last year confirmed that although, in general,
living standards in developing countries are not catching up with
those in developed countries, the poor countries that are catching up
with rich ones are those that are open to trade; and the more open
they are, the faster they are converging. Jeffrey Sachs and Andrew
Warner of Harvard University have found that developing countries with
open economies grew over six times faster in the 1970s and 1980s than
those with closed economies. And David Dollar and Aart Kray of the
World Bank, using data from 80 countries over four decades, confirm
that openness boosts economic growth and that the incomes of the poor
rise in line with overall growth. The message is clear: freeing trade
boosts economic growth, and so helps to alleviate poverty.
governments increasingly recognise this. Their economic policies have
changed dramatically since the mid-1980s. The name of the game in
trade policy has been liberalisation. Countries have realised that
trade and investment, not aid, are the engines of economic growth.
Average tariffs have been halved, and many non-tariff barriers swept
away. Many of those reforms were bound, partially or fully, in the
Uruguay Round. Although the degree of trade protection is still high
in many developing countries, gross distortions in trade regimes have
been greatly reduced.
many developing countries, pro-market reforms have encouraged faster
growth, diversification of exports, and more effective participation
in the multilateral trading system. Excluding countries at war or in
transition from communism, export growth in developing countries has
risen from 4.3% a year in the 1980s to 6.4% in the 1990s. Growth in
GDP per person has risen from 0.4% a year to 1.5% a year.
the least-developed countries are doing a bit better, though not as
well as other developing countries. Excluding countries at war or in
transition from communism, export growth in LDCs has risen from 2.9% a
year in the 1980s to 3.2% in the 1990s. And whereas GDP per person
fell by 0.6% a year in the 1980s, it rose by 0.8% a year in the 1990s.
Clearly, though, we need to do better.
order to do better, we need to launch a new WTO round this year. I
know that many developing countries have argued that we cannot launch
a new round until the perceived injustices of previous rounds have
been dealt with. I understand their concerns. But dwelling on the
perceived injustices of the past does nothing to prevent even greater
injustices in future. Many developing-country governments are coming
round to that view. They increasingly understand that the greatest
threat to their economies is not globalisation, but marginalization. A
new round is the surest way to prevent the further marginalization of
LDCs from the world economy and to deal with the problems that they
may have with existing WTO agreements and the way the WTO is run.
well as the in-built agenda of agriculture and services, the new round
must have implementation issues at its heart. And it should also
encompass industrial tariffs, anti-dumping, and other issues that are
important to developing countries.
economic case for a new WTO round is compelling. Cutting barriers to
trade in agriculture, manufacturing and services by a third would
boost the world economy by $613 billion, according to a new study by
Robert Stern of the University of Michigan and others. That is
equivalent to adding an economy the size of Canada to the world
economy. Doing away with all trade barriers would boost the world
economy by nearly $1.9 trillion: the equivalent of adding two more
Chinas to the world economy.
course, these are only estimates. Reasonable people can quibble about
the exact size of the gains from a new round. But the basic message
from study after study is clear: a new round brings huge benefits to
all parts of the globe. For instance, a study by the Tinbergen
Institute estimates that developing countries would gain $155 billion
a year from further trade liberalisation. That is over three times the
$43 billion they get annually in overseas aid.
is not politically correct these days to say it. But everyone needs
the US, EU and Japanese economies to grow and to be importing as well
as exporting. A slow down not only boosts protectionism sentiment,
where we need it least, and weakens the position of those who seek
more GDP, but also has an immediate impact on developing country
have already made some progress over the past year in improving market
access for least-developed countries. I am proud to say that my
country, New Zealand, and also Norway, have agreed to offer full
access to all LDC exports. The European Union's Everything but Arms
proposal, is a valuable contribution. The US has made progressive
moves, as has Japan. It is a signal to LDCs that they are listening to
their concerns. I urge other rich countries and richer developing
countries to do more to help LDCs reap greater benefits from the world
as I thank countries for these moves, I must also report that many
small and vulnerable countries such as the Caribbean, lose out. They
say it is taking from the poor to give to the poorer. That is why we
need to approach these issues in the wider, balance context of a new
round. In the absence of a round, good people will take initiatives.
It is to be encouraged. But there are always exceptions.
have also increased technical assistance to LDCs. With our limited
budget and trade focus, the WTO can only contribute so much to export
capacity building in LDCs. But our technical-cooperation programme is
an unsung success that helps developing countries take greater
advantage of trading opportunities at a tiny cost.
potential success is the so-called Integrated Framework, a good plan
for inter-agency co-operation on trade-related technical assistance to
the least-developed countries. The IF puts the country being assisted
at the centre of the decision-making process with respect to the
activities of the six international agencies. It is an important step
towards mainstreaming trade so that it is at the heart of countries'
development strategies. The IF had laid dormant for years. Now it has
been reinvented. After four years of dithering, we are in a position
where several countries will start to benefit from it, hopefully by
the time the UN conference on LDCs meets in May. This will be a
"first" among international agencies and with its success it
could then be a model of co-operation that would have utility for
developing countries and the smallest and most vulnerable of us.
WTO has also held its second Geneva Week for non-resident members and
observers. This consisted of briefings on work in progress, and gave
non-residents an opportunity to participate in the formal work of the
Organization. We are also using the Internet to keep our smaller and
poorer members better informed. We have set up Internet reference
centres in 78 countries. We organized a meeting of African trade
ministers and officials to encourage them to play a fuller role at the
WTO. The Libreville conference was attended by 42 ministers from 51
African countries, and also brought together representatives from 30
international and regional organizations, as well as the private
sector. We hope to hold seminars and workshops for Caribbean Ministers
and Officials, and hopefully later on for the Central American
Governments as well - finance forthcoming.
of this is good. But it goes without saying that neither the WTO
alone, nor indeed trade itself, are enough to tackle poverty in LDCs.
To take an extreme example, a new WTO round will do little for the
Democratic Republic of Congo while it is torn apart by war. Nor will
the benefits of trade be felt by the people at large if governments
spend the funds on weapons or deposit them in distant bank accounts.
If leaders spend more on war than education, more on the police than
health, then good governance is as important as market access. But
even so, we must plug on with liberalising trade in the hope that
countries will sort out their other problems and thus be in a position
to reap the benefits of trade, as well as in the belief that trade can
help to promote peace, stability and good governance. After all, when
people grow richer by exchanging goods with each other, they are less
likely to fight each other or to jeopardise their trade by causing
havoc. And when governments adhere to WTO rules that prescribe
transparency and predictability, there is less scope for corruption.
sum up, I urge you all to fight hard for a new WTO round, not only to
help LDCs alleviate poverty, but also to benefit your own countries.