Mr. Fung,
Minister,
Excellencies,
Ladies and Gentlemen,
In 1919, a handful of entrepreneurs decided to create an organization
that would represent business everywhere. They were determined to bring
hope to a world still devastated by the First World War, which had just
ended. They resolved to replace fear and suspicion with a new spirit of
friendly international cooperation among business people. They founded
the International Chamber of Commerce and called themselves “the
merchants of peace”.
In the 1920s the ICC focused on reparations and war debts. At that time the world had few working international structures and no world system of rules to govern trade relations. A decade later, it struggled through the years of depression to hold back the tide of protectionism and economic nationalism. The ICC saw the creation of the multilateral trading system with the birth of the GATT, the predecessor of the WTO, and contributed to its strengthening to the current day.
And today, as we celebrate the International
Chamber's 90th anniversary, the ICC has again demonstrated its
commitment to a more open multilateral trading system with the launch of
the ICC Research Foundation. I would like to compliment Victor Fung and
Marcus Wallenberg for taking this initiative that will undoubtedly
contribute to a better understanding of the benefits of a more open and
regulated multilateral trading system. Stimulating intellectual
leadership and a broader understanding of what works best in support of
the public interest will certainly add to a more balanced and considered
debate on the benefits of trade opening.
This is all the more important, given the state of the world economy
today. Like many of you, I have just returned from the annual World
Economic Forum meeting in Davos. Much of what I heard there from
political, business and union leaders can be summarized by the words
“pessimism” and “fear”.
Fear of massive job losses. Fear of lack of credit even for relatively
safe operations, such as those to finance trade transactions. Fear of a
sharp decrease in trade which is stalling an important engine for
growth, especially for many developing countries.
The world growth projections today are at 0 per cent, with developed
countries posting a negative growth of -2 per cent and developing
countries a positive one of around 5 per cent. The positive growth comes
from emerging countries which are highly dependent on trade. With the
forecast that global export volumes will contract by -2 per cent in
2009, many emerging economies have sounded the alarm bell.
Trade has become another casualty of the recession provoked by the
severe financial crisis caused by lack of regulation, supervision and
excess. In these times of serious economic crisis, our biggest challenge
today is to ensure trade is part of the solution and not part of the
problem.
In this period of uncertainty and fear, calls for a stronger role for
governments and regulators to intervene resonate well. But for this to
be successful, all actors have to agree on common targets and enemies,
and work together. Global cooperation within and across countries is
therefore of the essence. At times of global economic crisis, enemy
number one is isolationism.
We still remember the 1930 Smoot and Hawley Act sharply raising US
tariffs on more than 20,000 products. We also remember that many other
countries retaliated, raising their tariffs on US goods. The Great
Depression followed. Whether it is with tariffs or with new, more
sophisticated faces of Smoot and Hawley, today we run the risk of
sliding down a slippery slope of tit-for-tat measures. It was Mahatma
Gandhi who said “an eye for an eye makes the whole world blind”.
Ladies and gentlemen, paraphrasing Gandhi today we could say that “if it
is a job for a job, then we will have massive unemployment”.
To help WTO members have a better and real-time idea of global trends in
international trade and trade policy developments, we have set up a
radar tracking trade and trade-related measures taken in the context of
the current crisis. Up until last Monday the radar picture showed that
most WTO members appear to have successfully kept domestic protectionist
pressures under control. In the meantime, a new spot has appeared with
the “Buy America” provision in the draft US stimulus package to be
considered by the US Senate this week.
Protection, yes; isolationism, no. Governments must provide answers to
the social unrest which is brewing behind the massive job losses. This
is the time to activate social safety nets, not only in rich countries
because there are also poor in rich societies. But also, and in
particular, in the poorer countries who do not have the means to weather
the storm. The stimulus packages that have been adopted need to provide
answers to those who are being left behind in this crisis.
And it is in this context that we all risk seeing trade and the WTO
lumped together with the elements of the Washington consensus which many
believe to have failed. With de-regulation and privatisations. And it is
now that we risk throwing the baby out with the bath water.
This is why now more than ever it is time to stress the value of trade
as a multiplier of growth and the value of the multilateral trading
system, with its 60 years of global regulation, as an insurance policy
against protectionism. I would humbly ask that these issues be included
on the to-do list for the ICC Research Foundation that we are launching
today.
This is the time to invest in the WTO and strengthen the global
rules-based system which has so carefully been constructed over the last
60 years. A conclusion of the Doha Development Round of negotiations is
therefore all the more relevant and urgent.
Many of the trade ministers who I met in Davos last week mentioned that
trade is an integral part of the stimulus packages that are being
adopted. In my view it is in fact an essential part of the recovery
package.
Let's be frank: this crisis will take much more than a Doha deal to
restore the path of growth. But a successful outcome of the Doha
Development Round can be part of the solution to the economic downturn.
It will also send the political signal that at harsh and difficult
times, governments are capable of working together to provide the kind
of global answer which is so desperately needed.
This is why WTO members should pick up from where they left off in 2008
and enter the negotiating arena with renewed commitment. I am encouraged
to find support in this respect from many political leaders around the
world and I count on them to show the way forward.
We have accomplished around 80 per cent of our set targets in the Doha
Round. But with the necessary political guidance, the willingness to
compromise and realistic expectations, I am convinced that we can
conclude these negotiations rapidly.
It goes without saying that this cannot be done without the support and
active involvement of the business community. The ICC has been exemplary
in this respect and I count on you and your members to continue to be
supporters of more open trade and stronger multilateral rules. I realize
full well that these are very tough times for the business community,
but I urge all of you to show restraint when the crisis bites and to
continue to champion the ICC's core mission.
Let me end by wishing the ICC success in the newly established Research
Foundation. I am convinced that in 10 years from now, when the ICC
celebrates its 100th anniversary and the WTO has only vague memories of
the once so difficult Doha round, history will prove us right. That our
conviction and dedication to a more open and equitable world trading
system is our contribution to a more peaceful and prosperous planet.
Thank you for your attention.
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