Mike Moore's speeches
conference in Washington, two weeks ago, I heard some fascinating commentaries on how far
the trading system's horizons have expanded since the Tokyo Round. Just twenty years ago
the challenge was to bring subsidies, antidumping, or technical standards fully into the
rules of the system. Today the trading system is called on from one side or another to
take account of environmental policy, financial instability, labour standards, ethical
issues, development policy, competition law, culture, technology, investment,
marginalization, security, health - an ever-lengthening list of issues which can be
associated in one way or another with trade.
This underlines the degree of
interdependence we have reached in our world. Clearly, the implications of trade
liberalization go much beyond trade and economics. By lowering barriers among nations,
economies and people, it helps create interdependence and solidarity. Trade liberalization
is not just a recipe for growth, but also for security and peace, as history has shown us.
Likewise, globalization is about much more than trade or capital flows. It is about a
world linked together by information, knowledge, and ideas as well. Economic and
technological integration is reinforcing the global web of interdependence which gives us
a shared interest in our civilization and our planet, as well as our prosperity. To talk
only about managing a global economy is to miss the point that we are really dealing with
a new kind of global system with an ever more important human dimension.
I want to
make three basic points about how we approach and manage this new system. Firstly, that we
should be careful that the concept of "policing" does not lead us to think that
solutions can be imposed, or just transferred from one situation to another. Each global
issue has to find its own best path - environmental, ethical, social, health,
financial and all the other aspects of an integrating world must be dealt with first and
foremost in their own terms and according to their own specific needs. We cannot pretend
that one policy sector can provide all the answers in another, and certainly not that the
trading system can provide a sort of universal response. Seeking a single answer to a
widely-varying set of problems would be as unrealistic in international as it is in
instead - and this second point flows naturally from the first - is to work
patiently and carefully to build international consensus in each of these areas. The
history of the multilateral trading system - which is fifty years old this
year - shows us that there are no short cuts. The exercise of power is unlikely to
produce equitable or durable solutions unless it is tempered by the rule of law. Only by
encouraging the organic growth of consensus in all the areas that concern us will we find
genuine answers to these concerns for the long term.
clear implication of the previous points is that we need a global architecture which will
provide a framework for building and strengthening global consensus in an integrating
world which will fill the gap between politics, still based on national constituencies and
needs, and economics and technologies more and more borderless and based on global
three points in mind, I would like to consider more closely what globalization means and
how the trading system can help us to respond to its challenges and opportunities.
there are real and justified concerns about many aspects of the world we live in. It is
equally clear that people are apprehensive about the speed of change, and that it is
sometimes easier to blame all the insecurities and anxieties this can induce on
globalization. Globalization can then become shorthand for everything we might not like
about the world as it is. The risk attached to demonizing globalization is not just that
it obscures and distorts the real, complex, issues - it can also lead us down false
and possibly dangerous political paths and actually obstruct the search for durable
answers. We all hear many criticisms of globalization, but I have never heard a rational
alternative to the search for peaceful global development.
Of course the
world we live in is still unacceptable in many respects. Far too many people lack proper
access to food, water, health care, education or justice. The benefits of development are
not evenly shared, and marginalization remains a real threat for too many. To deny these
realities is not an option. But it is equally not an option to deny the reality of
globalization, or the reality of the great opportunities it opens up to find answers to
our shared global problems.
of globalization is the reality of interdependence, an interdependence that, as I said at
the outset, extends far beyond trade or strictly economic criteria. But trade remains a
key element in sustaining and spreading the benefits of interdependence.
By way of
example, let me first outline its contribution to generating growth. Over the past 50
years, trade has been a powerful engine for growth. In 1950 its ratio to global GDP was 7
%. Now it represents 23 %, and a third of the 25 largest trading countries are now
developing countries. Between 1948 and 1997, merchandise trade increased 14 times, while
world production increased 5 ½ times. In the same period world GDP increased by 1.9 % per
year at constant prices and taking account of overall population growth. Seen in an
historical context, this figure is extremely high.
particular, over the past 10 to 15 years, when developing countries have more and more
embraced trade liberalizing policies, the benefits have been clear. The share of
developing countries in world trade overall has increased from 20 to 25 %. For the
manufactured sector it has doubled from 10 to 20 %, and on current trends could exceed
50 % by the year 2020. Furthermore, in this same period of time, 10 developing
countries with a combined population of 1.5 billion people have doubled their income per
And while the
gap between countries is in some cases widening, it is also true that from 1990 to 1996,
developing countries recorded an average growth of 5.4 %, three times more than
advanced economies. In this same period of time, exports from the industrialized countries
to the developing countries grew each year by an average of 10.1 %, while exports
from developing countries to the industrialized world grew an average of 7.3 %. This
is the virtuous circle of globalization.
trading system is helping to bring the world together through its rôle in liberating the
new borderless technologies which are shrinking the constraints of time and space. An
intercontinental telephone call between Europe and the United States now costs only 1.5
per cent of what it cost 60 years ago. Forecasts indicate that within the next few
years the actual cost could decrease by a further two thirds. The cost of computers has
also fallen by almost 100 per cent since 1960, and every year the coverage of the Internet
doubles so that by the year 2000 10 per cent of the world's population may be linked up.
In 1997, trade transactions through the Internet amounted to $8 billion and should
rise to a figure between $200 and $300 billion in the year 2002. Many experts believe
that electronic trade will become the principal catalyst for global economic growth in the
technological revolution will open up horizons that were totally unthinkable until a few
years ago. The liberalization of telecommunications and information technology products at
the global level will make it possible for people in all parts of the world to have access
to information and education. Together with the World Bank, the Organization I represent
is connecting the poorest countries in the world through a computer network for which we
are providing the computers and professional training. Through an Internet site we have
opened, we are now able to provide in real time all the information and documents they
could have in Geneva. Within a few years, every village in the world could have a mobile
telephone. This can make the difference between life and death, and it also implies the
end of physical marginalization.
has a generation had so many resources for human development. Let us work together to open
new horizons for all nations and peoples to promote education, to improve health care, to
advance agricultural development in the poorest regions of the world: in one word, to
enhance human development throughout the world. This is an explicit aim of the World Trade
So, as both
the Brundtland Commission and the Rio Earth Summit recognized, economic growth is one of
the most powerful allies of sustainable development. But this positive impact of
globalization in no way reduces the need to find appropriate solutions to specific
problems. There is a rational and durable approach to the lengthening list of
environmental, social and ethical challenges that now transcend borders, jurisdictions and
cultures. It lies in building a global consensus in these areas, reaching enforceable
global agreements, and building the kind of global institutions needed to manage them.
Let me give
one example of the kind of progress we need. The Committee on Trade and Environment, in
its report to the WTO's 1996 Ministerial meeting in Singapore, encouraged the
international community to tackle shared environmental problems through shared solutions.
The approximately 185 Multilateral Environmental Agreements, 20 of which include trade
measures, represent the best means of tackling global environmental problems. In recent
years, the ozone layer depletion has shown encouraging signs of being repaired, thanks to
the remarkable achievements of the Montreal Protocol. CITES has done much to help
endangered species - though much more remains to be done. The Basel Convention has limited
internal flows of toxic wastes. And, of course, the most ambitious and far-reaching global
environmental agreement yet was reached in Kyoto last December, when some 150 governments
from around the world set legally binding targets and timetables for stabilizing and
reducing greenhouse gas emissions. The point is that each of these agreements targets the
environmental problem they aim to solve with an environmental answer. And they exemplify
the scope for transgovernmental solutions to specific transborder issues.
I give this
example to emphasize two points: first that multilateral approaches in the environmental
field are working. And that nothing in the WTO stands in the way of the international
community pursuing shared goals in other international agreements.
This is not
for a moment to underestimate the real and complex challenge of ensuring that these global
approaches are harmonious and mutually supportive. Establishing a framework to define the
relationship between Multilateral Environment Agreements and the WTO - all the time
ensuring that the trade and environmental agendas advance in tandem - must be a priority.
And clearly policy coordination between national trade and environment policies will play
an important role in reducing inconsistencies, and in ensuring that WTO members are able
to respect the commitments they have made in the WTO and Multilateral Environment
Agreements. The same applies at the international level.
system will continue to grow in global relevance as trade policy continues to move beyond
simple border tariffs, to involve deeper issues inside national boundaries like investment
policy, competition policy, and why not, electronic commerce. But this is not an argument
for turning the WTO into an environmental watchdog, human rights body, or a development
agency. Such a policy would, firstly, harm the trading system itself, with all the
collateral effects this would have for a sustainable global economy; and secondly, it
would fail to solve any of the other problems since an environmental problem needs an
environmental answer, not a trade one.
I do not
claim that the multilateral trading system that we have built in the last 50 years is
a perfect one. But it is a system based on some features unique in international
institutions. The first is its fundamental principle of non-discrimination: this means
that the advantages that two or more trading partners negotiate among themselves are
extended automatically to all others. If we are living a world in which there is not a
high level of reciprocal protection between advanced and developing economies, it is
because the trade liberalization negotiated among industrial countries has been extended
automatically to developing countries over many years.
We have now
131 Members, 80 per cent of which are developing countries or economies in transition
from centrally-planned to market economies. And 32 candidates, including major trading
partners like China and Russia, all developing countries or economies in transition. And
yet we do not offer grants or loans, but just a framework to negotiate the lowering of
trade barriers inside binding rules with the appropriate flexibilities for developing
countries. It is a sign that the system which we manage is quite attractive in itself.
We decide by
consensus, and our decisions are approved by each government and ratified by each national
parliament. Could you find a more transparent and democratic system in the international
Last but not
least, our objective is a revolutionary one in the present international society: the
creation of a universal trading system which is rule-based, not power-based. The most
unique feature of our Organization is the dispute settlement procedure, an automatic and
binding system to help countries to solve their disputes on the basis of the agreed rules.
During the last three years, since the creation of the WTO, the dispute settlement
procedure has worked remarkably well. It has enabled small developing countries to bring
cases against major trading powers and win; and it has assisted governments to resolve a
great number of disputes - about a quarter of the cases initiated - before they
get to a formal judgement.
The WTO is
not - and has no intention of becoming - a supranational body with unilateral powers. It
is not a world policeman that can force compliance upon unwilling governments. In fact, it
would be a profound mistake to assume that the challenges of our global age can be met by
imposing our policies or values on others. Whose environmental standards, cultural
traditions, political systems represent a universal norm? When is it right to impose our
values and standards on other countries and peoples? And do we really want to invest the
WTO - or any other international organization - with power to define our environmental,
social and ethical values?
pretend that reaching multilateral agreements on many environmental, labour, or ethical
issues will be easy. But nor should we pretend that there is a short cut through the WTO -
or a magic bullet called trade sanctions. Unilateralism or trade sanctions will not
convince any country of the validity of the values which another asserts. This approach is
a sign of weakness not strength. It reflect a basic lack of confidence that one's rights
or values can be freely shared by others.
definition, the global challenges we all face call for shared and cooperative solutions.
They demand consensus. And this means using multilateral negotiations to construct
multilateral agreements - which will require determination, skill, and patience. What we
need is builders, not policemen.
This is also
the lesson of history. In the last 50 years, our main challenge has been to manage a
divided world; East and West, North and South. Since then we have made impressive
progress. Now our biggest challenge is to manage an ever more integrated world, a task at
least as difficult as the previous one. This is why, as I said a few days ago to Prince
Sadruddin, I believe that the real issue of this exciting conference should be how to
improve global architecture for global needs.
system forms an important part of this new international system. But it is only a
beginning. The blurring of policies, as well as borders, clearly underlines the need for
progress on the broadest possible front. It underlines, in other words, the need for a
global architecture to oversee a new kind of global system. The WTO's experience over
fifty years encourages us that it is possible to build such a system on consensus and
mutual respect, on the rule of law rather than the rule of power. Seizing this opportunity
will not only contribute to global prosperity and stability - it will contribute towards
building a sustainable global community as