Statement circulated by H.E. Mr. Goh Chok Tong,
The Multilateral Trading System: Challenges
 This is an important occasion to toast the
success as well as ponder over the future of the multilateral trading system.
 Together with the Bretton Woods
Institutions, the GATT has provided the foundation for post-war global prosperity. Through
a non-discriminatory system of rules governing international trade, it has underpinned the
robust post-war growth in trade and output. Without the multilateral trading system, the
world would not be as prosperous as it is today, nor as peaceful.
 The benefits of multilateral trade cannot
be evenly spread by decree. Each country has to compete for its share of the benefits
through its own hard work, efficiency and competitiveness. Competition is tough, but every
country can find some areas where they can do well.
 Developing countries have shown this to be
true. Over the past decade, their share of world trade has increased from 20 per cent to
25 per cent, while their share of trade in manufactured goods has doubled from 10 per cent
to 20 per cent.
 The remarkable success of the GATT,
however, is rather recent history. The beggar-thy-neighbour policies that were
pursued during the inter-war period brought disaster to world trade and the global economy
and contributed to the 2nd World War. The most-favoured-nation principle is
very much a post-war phenomenon. It is not yet securely entrenched.
Asian financial crisis
 For all its success, the multilateral
trading system faces great challenges ahead. The on-going Asian financial crisis is its
first major test. This crisis wiped out large amounts of public and private wealth in the
affected countries. A more serious concern is its systemic implications. The economic
development of the NICs, or the so-called tiger economies, seems to have gone
awry. Liberalization in trade, capital flows, and investment may no longer be viewed as
the right model for growth but the root cause for their financial collapse. This would be
the wrong conclusion, but the perception may nevertheless grow in prevalence.
 Even of greater danger are possible errors
in the policy responses of the developed economies. The affected Asian countries will
recover through cheap exports because of their depreciated currencies. This will lead to
strong political pressure in the major markets to protect their affected industries. There
may be rampant use of safeguards and anti-dumping actions to protect domestic industries
against competition from the recovering Asian economies. Recent workers agitation in
Europe may be a precursor to these market closing activities.
Coping with regionalism
 If the multilateral trading system fails to
support the recovery of the troubled Asian economies, it would reinforce demands for
bilateral and regional arrangements. This was demonstrated by the vigorous pursuit of
regional arrangements in the late 80s due to fear of the collapse of the Uruguay Round.
Currently, more than 100 bilateral or regional agreements are in place. Such agreements,
in pure logic, go against MFN. That countries choose to pursue regionalism when the
multilateral trading system is thriving is a cause for concern. Regionalism cannot provide
the same efficiency as equal access under a multilateral trading system. The proliferation
of regional trading arrangements could fragment the world economy into competitive trading
blocs. They could in time create economic rifts, and be an underlying cause for global
tension and possibly conflicts. I dread the day when the global economy is divided into
mega trading blocs like the Free Trade Area of the Americas, the enlarged Single European
Market, a Greater Asia Prosperity Sphere, and a New Africa Economic Bloc.
 It is essential that regional initiatives
reinforce rather than detract from the multilateral trading system. Managing relations
between regional and multilateral trade liberalization, and ensuring that regional
integration agreements open up further trade liberalization under the multilateral trading
system, will be a challenge to the WTO.
 Another key challenge that the
multilateral trading system faces is the marginalization of the least developed countries.
Many small and least developed countries play only a marginal role in international trade
fora. They face considerable difficulties in participating in policy formulation as well
as implementation of GATT/WTO obligations. This lack of effective participation also
extends to the increasing number of countries that are awaiting to accede to the WTO, the
most important being China and Russia. Hence, ways should be found for the early entry of
these new members, particularly those that have major trade share.
 Lastly, advances in telecommunication
technology will pose a challenge to the traditional notion of national borders. The advent
of the IT Age and cyberspace trade calls into question existing definitions of trade
across borders that form the bedrock of the WTO. It would also have implications for the
trade-related aspects of intellectual property rights protection. The WTO will have to
adapt its rules to the changing technological environment.
 The existing multilateral trading system
will undergo severe tests and challenges. Let us hope that history and the past
achievements of freer trade will guide us to the right decisions for the future. The GATT
and an open multilateral trading system have enabled nations to compete peacefully without
the need to resort to wars in order to carve out trading empires to keep out economic
rivals. The WTO must now carry this responsibility. It can do so successfully if it is
clear on what it can and should achieve in pursuing its fundamental objective of
multilateral trade liberalization. Singapore would like to see on WTO's 21st
century agenda a new round of trade negotiations. The 50th anniversary of the
multilateral trading system is a fitting opportunity to seed the idea for such a new round
to build on the past success of the system.