At the end of
one of the most informed debates on the multilateral trading system and its 50th
anniversary, it is for me a great responsibility and an extraordinary opportunity to make
some concluding remarks.
It is very rare to
hear history recounted by so many of those who played a key rôle in it, and perhaps even
more rare to have them all gathered here at the same time. Each one of them has
shared with us their thoughts on many remarkable events in the world trading system.
The six US
Trade Representatives here today have been referred to as the "trade
warriors". But this is only a limited description of their
accomplishments. No doubt in every trade negotiation there is a fight and so you
need warriors. The fight, however, is about building bridges, opening markets,
increasing freedom of choice and expanding opportunities.
This is why I
prefer to call them pioneers of the global economy. Men and women, Democrats and
Republicans, who have established new frontiers of economic interdependence and in so
doing have made the world a more stable and ultimately safer place.
has been even more significant for me because of the presence of Henry Kissinger, a giant
in the realm of international relations and a peace builder whose achievements must rank
with the most oustanding in this century.
gratitude to the Brookings Institution and Michael Armacost personally for hosting this
impressive event. Their generosity is matched only by the breadth of vision which
has made this institution such a respected contributor to the public policy debate.
entirely fitting, therefore, that this is a speech about vision. A very specific
vision, however, and one which has become a reality - something rare enough in
international affairs. That reality is the multilateral trading system which is now
centred on the World Trade Organization, and whose fiftieth anniversary we are marking
behind the system owed much to American inspiration. It is a vision which remains as
fresh and as relevant to the realities of our present - and the challenges of our future -
as it was at the outset. For fifty years it has fostered economic growth as well as
international stability. Now, in a world of uncertainties, this vision and the
system that has been built on it are a priceless global asset. In celebrating it
with you here today, I would like first to look back, so that we can then see ahead more
clearly to the significance of the system for the global economy of tomorrow.
The world we
see around us - a world of growing economic integration, widening circles of development,
and unprecedented prosperity - is in many ways the fulfilment of an idea which arose out
of the destruction of the Second World War.
inequalities and poverty are still present on an unacceptably wide scale. But 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 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, there have been signs that the tide is
turning. 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 head.
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.
All of the
world's major economies now follow, in their various way, the principles of the
market. Billions of people are becoming increasingly involved in the process of
globalization. And yet the basic idea behind multilateralism remains as valid to
this global age as it was to the post-war era - that world prosperity and world peace can
best be built on a foundation of open and non-discriminatory trade.
This idea was
central in the minds of the architects of the post-war order for two broad reasons.
One was their conviction that protectionism had been an unmitigated disaster for the world
economy. All had lived through the economic chaos of the 1930s - when turning
defensively inwards led directly to the breakdown of international trade, the Great
Depression, and ultimately to world war. All were agreed that the only route to
economic reconstruction and recovery lay with open markets and liberalized trade,
underwritten by a system of negotiated and enforceable rules.
guiding idea was political - the belief that free trade and its role in promoting economic
prosperity was an essential element in international stability and security. Trade, in a
rules-based system, would promote economic interdependence among nations, making another
global war improbable. The principle of non-discrimination would prevent the kind of
exclusionary deals and blocs which had done so much to fuel inter-war rivalries and
protection. Behind all this was a fundamental belief that economic freedom among
nations was an essential prerequisite to political and other freedoms.
of the multilateral trading system in the last 50 years and in the three years after the
creation of the WTO is evident. Nonetheless, there are also many signs of the
pressing need to renew the case for free trade within a multilateral framework.
fundamental strength of the system was, and remains, its rule-based nature. Like the
GATT before it, the WTO rests on contractually binding commitments negotiated and
undertaken freely by governments and ratified through their domestic legislative processes
- including the US Congress. It is thus a transparent and profoundly democratic
the success of the system testifies to the enduring power of its basic principle -
non-discrimination. GATT's most obvious goal was to reduce barriers to trade - a
goal which was pursued through eight successive Rounds of negotiations which have brought
industrial tariffs down from an average of around 40 per cent to under 4 per cent.
But a second and equally important goal was to provide a non-discriminatory set of rules -
resting on the twin pillars of National Treatment and Most Favoured Nation - to help
manage the interaction among distinct and different national economies. It was this
core principle of non-discrimination which did much to reduce power politics in trade
relations, by guaranteeing members equal access to the security of the rules irrespective
of their size and level of development.
strength has been the system's commitment to consensus in decision-making. Its
existence depended, not on power or coercion, but ultimately on the willingness of members
to sustain it. Yet far from weakening the system or slowing it down, this principle
of consensus has proved a remarkably cohesive force over the years, providing a unique and
invaluable foundation for international cooperation in trade matters.
Over the past twelve months alone, we have launched an important initiative to integrate
the Least-Developed Countries into the mainstream of the world trading system. We
have reached an historic pact on telecommunications representing more than 90 per cent of
the global market. We have agreed to remove tariffs on information technology
products, one of the fastest growing sectors of the world economy. And we have
reached an equally sweeping agreement involving 102 countries to liberalize global
financial services, bringing trade in banking, insurance and securities into the realm of
multilateral rules for the first time. Taken together, these achievements amount to
the equivalent of a major trade Round.
The value of
these agreements is underwritten by a dispute settlement process which is the only one of
years of existence this system's enhanced effectiveness has shown in a greatly increased
use by Members. The United States has been the major user, and - I would like to
emphasize - a strong upholder of the dispute settlement system. But the success of
the dispute settlement procedures is not only a matter of reaching judgements - it has
acquired a strong deterrent value, helping to encourage "out-of-court"
settlements in about a quarter of cases so far.
Of course the
limit of the system is that it can only operate on the basis of trade-rules which have
been approved by governments and ratified by Parliaments. This is why there is a
strong need for progress by the international community to establish coodinated rules in
the other fields like the Environment. An environmental problem needs an
environmental answer, not a trade answer, even if the two policy areas should be ever more
horizon of this century we see an impressive number of existing commitments in the WTO's
agenda, including negotiations in agriculture, services and aspects of intellectual
property. In addition, decisions must soon be taken about investment and
competition. Other suggestions, like new negotiations for reducing industrial
tariffs have already been presented by some countries. With momentum again mounting
toward the removal of remaining trade barriers, no one can undervalue the fact that the
main role of the WTO remains the promotion of further liberalization.
fundamental economic and political interests have not changed in this age of
globalization. Just the opposite. More than ever before, the world's
prosperity - and America's - rests on maintaining an open international economy based on
commonly agreed rules. The contribution of trade to US growth has increased
significantly over the years - it has been estimated, for example, that exports have
generated a third of all economic growth over the past decade. A decade ago, exports
supported seven million American jobs. The Commerce Department estimates that by the
year 2000 this figure will have more than doubled, to sixteen million.
changed are the challenges which the system now faces. One challenge in the time
ahead will be to manage global integration when national economic systems still remain
very different. As tariff barriers are stripped away, the trade policy focus is
shifting inside the border - to regulatory and structural differences in areas like
investment, competition or environmental policy which can have significant impact on
market access, and on international trade and investment flows.
in information technologies and telecommunications are creating the potential for
borderless trade in key sectors - raising important questions about how to regulate or
manage an economy operating in cyberspace. The case of electronic commerce, now on
the WTO table, is evident.
I need not
remind anyone here today that these technologies are opening unprecedented opportunities
to reach a new global frontier in the 21st century. We can see opening before us the
possibility that billions of people in the developing world can for the first time share
equal access to information and knowledge, the two most vital raw materials of the
information age. The shrinking of time and space which is the consequence of the
impressive development of telecommunications and information technologies will reduce
significantly the physical marginalization of an increasing number of people. For
example, new horizons could be opened in health care by the development of
telemedicine. What is certain is that the pace of development will leapfrog.
Because of rapid technological progress we are now entering a completely different new
economy calls in turn for a truly global system of trade rules. In addition to our 132
members, there is a "waiting list" of 31 applicants for membership in the WTO,
another feature that makes this organization unique among the international agencies.
WTO is not like joining a political forum or an organization which can provide loans or
grants; it means hard negotiation with existing members and very often major changes
in national policies in order to be able to sign on to binding commitments across the
whole trade spectrum. But countries which join the WTO gain security and
predictability in their trade relations, and gain the assurance of equal access to the
dispute settlement system.
important of all, by opening their economies these countries accelerate their development,
while their partners know that unilateral economic reforms are henceforth bound into an
international legal framework.
This is one
important reason why the accession process is such a high priority for the WTO. The
31 candidates are all developing or transition economies. They include giants such
as China and Russia; ex-Soviet republics in the Baltic and Central Asia; and
also some of the smallest island states. The fact that such a diversity of
economies, including the former bastions of central planning, have made WTO membership a
key objective leaves no room for doubt about the system's relevance and appeal.
must complete these negotiations as soon as possible. The process of global economic
integration will not wait for us, and it is everyone's interest to have it take place
within the coverage of the WTO's rules. The urgency is that much greater when we
consider that with the new century we are already committed to major new negotiations in
key sectors. But, equally, enlargement of the WTO must strengthen the system, not
dilute it - and it must be done under sound commercial conditions.
increasing interdependence of the world economy underlines the necessity of having
appropriate architecture to manage issues and policies which are becoming more
interlinked. Finance, trade, development, environment, social issues are only some
of those growing interrelations. This is also an important lesson from the financial
turmoil in Asia. The rôle of the trading system in delivering a solution to this
financial crisis has been and will continue to be critical. There can be no
solution without the positive contribution of the rule-based multilateral system: a
system which has proved itself a bastion against protectionist pressures.
Let me state
unequivocally: this is no time for protectionism.
moment, we need the collective efforts of all the key players in the global economy if we
are to solve this problem effectively. Europe, North and South America and Asia
itself must all participate in the process of restoring stability and confidence in the
affected region. China and Japan, too, must show the regional leadership that is
expected of them.
multilateral system with its binding commitments to open markets and progressive
liberalization can provide the trade framework necessary to meet the challenge of
resolving the crisis and preventing its recurrence.
celebrate today is a system of consensus-based rules that could embrace all of the world's
economies. One that is helping to break down barriers, not just between economies,
but between peoples. One that is weaving together a web of economic interdependence
which gives us a shared interest in our mutual prosperity. And one that is helping
to equalize the human condition through the spread of technology and knowledge, building a
global vision as well as a global economy.
challenge of the cold war era was to manage a world divided, our challenge in the
post-cold war era is to manage a world of deepening interdependence.
This is also
why trade's relevance has always gone beyond trade itself. One of the most striking
examples in the last 50 years has been the role of trade liberalization in helping to
transform the historic rivalry between France and Germany into a powerful bond that has
united the two countries at the heart of European construction.
celebrations of the 50th anniversary are also taking place in a time of rapid expansion of
regional trading systems. More than 90 preferential regional agreements are
currently in place, and over three quarters of them entered into force in the last four
years. More than a third of these agreements involve the European Community.
contribution to the promotion of liberalization cannot be called into question. And
yet the logic of regionalism makes less economic sense in an era of globalization.
and distribution become increasingly global and as economies become more integrated and
more driven by borderless technologies, it is in no one's economic interest to have a
fragmented system with fragmented rules and even a fragmented dispute settlement system.
State and Government have already agreed to free trade in the Pacific, free trade in the
Americas, free trade in Europe and between Europe and the Mediterranean. Now there
is the prospect of creating new free trade areas between Europe and the nations of
sub-Saharan Africa, the Caribbean and the Pacific and there is the possibility of free
trade across the Atlantic. These numerous initiatives are planned to come into full
effect within the next twenty years.
What, then, is to hold us back from the logical next step of global free trade?
In the next
few years, as we approach the target dates set for completing the various regional
arrangements, we have to better define what kind of a future we want. Do we want a
world which is based on non-discrimination, which is rules-based and global in
coverage? Or do we want a very different world, fragmented into a few huge regional
trading areas, with different rules and which are based - by definition - on
discrimination among trading partners?
implications of this choice go far beyond the trade system.
To avoid a
dangerous ambiguity about the future of the world economy and to maintain a mutually
supportive relationship between present and future regional areas and the multilateral
system, we need to clarify our own vision.
time than the 50th Anniversary of the multilateral trading system to reinforce beyond any
doubt that our ultimate goal remains the establishment of a rule-based global system of
free trade as the main element of a strategy for global development and security in the