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ECOSOC High-Level Segment, Geneva
5 July 1999
David Hartridge, Director in charge, WTO

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Mr. President, Mr. Secretary General, your Excellencies, ladies and gentlemen.

May I thank you first of all for inviting the World Trade Organization to make a contribution to this policy dialogue on some of the most important issues confronting Governments today. May I also say that in the absence of our Director-General – which will soon be remedied - it is a great honour for me to represent the WTO in such illustrious company. I intend to be brief, so I shall limit myself essentially to the main issue now facing WTO Members, which is their preparations for the launching of a new trade round at the Seattle Ministerial Conference in December and the debate about the scope of the negotiating agenda, but of course I shall also address the relevance of this work to your own concerns today.

At the end of November the WTO is holding its third Ministerial Conference – the first Ministerial meeting ever to be held in the United States by the GATT or the WTO. That alone would make it a significant meeting, but Seattle has a major functional purpose: WTO Members will there launch a new round of trade negotiations, for which intensive preparatory work is now being done in Geneva. To a large extent the agenda for this round is already determined: negotiations on agriculture and trade in services are mandated by agreements reached in the Uruguay Round, and in addition there are to be reviews of some of the key provisions in other Uruguay Round agreements.

These are the only subjects on which there is a commitment to negotiate, and they add up to a substantial round in themselves, but there are many proposals as to additional subjects which might be added to the agenda and, as everybody knows, a vigorous debate is taking place on the question. The most difficult issue before WTO Members in the run-up to Seattle will be whether to include certain so-called "new issues" in the scope of the round. Four subjects on which work programmes were agreed at the Singapore Ministerial in 1996 – investment, competition policy, transparency in government procurement and trade facilitation – are among the potential candidates for negotiation, but there is no agreement yet to include them. The future of the WTO's work on trade and the environment is another potentially contentious issue. We have a constitutional commitment to sustainable development, and there are some thoughtful proposals on the table, so we may hope to find a constructive way forward, but there is no consensus to negotiate about it.

There are of course good arguments on both sides of the question. Many experts believe that significant liberalization, especially in sensitive areas such as agriculture and certain key services where liberalization would be very beneficial, can only be achieved in the context of a big agenda offering trade-offs and benefits to the widest possible range of participants. On the other hand, there is a growing consensus that the new round should be short, not another seven-year marathon like the Uruguay Round, if it is to provide the stimulus to growth which the world economy needs and which is the main incentive for governments and business to invest resources in it. Three years – which is the period most people support – would probably not be enough for another massive mould-breaking agenda like that of the Uruguay Round. But the Uruguay Round created a whole new structure, and that is not in question now: we are in the phase of extending and consolidating the Uruguay Round achievement. However, these are essentially practical or organizational considerations: the real issue is whether the major new subjects are ripe for negotiation in the WTO, and what benefits such negotiation would bring. This is where the debate will focus.

Nevertheless, anybody who remembers the intense difficulty of the preparatory phase of the Uruguay Round, in the mid eighties, can only be struck by the enormous progress that has been made since then, and by the comparative ease of the current debates. There is indeed a lively debate about the scope of the new round, in which we find countries at all stages of development on different sides of the argument, and that is perfectly normal: but there is no dispute about the commitment to negotiate, or about the value of open markets and rules based trade. The validity of the multilateral system is not in question, and that could not have been said in 1986.

The preparations for the Seattle meeting are progressing quite well. So far the absence of a Director-General has not affected them, because we are not at the stage where an input at his level is essential. In the current stage of the work, Members are submitting and debating written proposals on subjects for decision by Ministers. Some fifty proposals have been made so far. The next phase will be work on the drafting of a declaration to be agreed by Ministers at Seattle, and that will start in earnest in September.

Developing countries have identified a number of problems relating to the implementation of existing commitments, including some of those in the Uruguay Round agreements. The problems which are being raised include high levels of protection and support of agriculture in industrialized countries; continued high tariffs, tariff peaks and tariff escalation in the field of industrial tariffs; and lack of meaningful liberalization in textiles and clothing. It is being strongly argued that existing commitments should be fully implemented before we start negotiating new ones, and that the implementation of existing commitments should not be "paid for" in negotiations. But in some cases there is no contradiction between implementation and negotiation. Substantive problems like the tariff issues I have mentioned are only likely to be resolved in global negotiations and there is in fact very strong support for the proposal that negotiations on industrial tariffs should accompany those on agriculture and services.

You would not wish me to discuss the potential agenda for the round in detail today. I want to turn now to the question of its relevance for your own concerns today – and of course, it is highly relevant. Trade negotiations are not conducted for their own sake or even for the sake of those who produce or trade in goods and services. Ultimately, their value, and the value of all our work at the WTO, is to be judged in terms of their effects on human welfare. The first part of the theme of this high level session is the role of employment and work in poverty eradication. The WTO's contribution to the eradication of poverty can only be indirect, but it is vital. We claim, and I have no doubt of the justice of the claim, that the members of the GATT, and now the WTO, have made a major contribution to the eradication of poverty through their work over the last fifty years in removing barriers to trade and establishing a legal basis for international trade relations. In those terms the argument is really over. As far as I know nobody is seriously proposing an alternative to a trading system based on rules, open markets and the acceptance by governments of freely negotiated limitations on their power to interfere with trade flows. The long list of countries negotiating accession to the WTO is one confirmation of this. Trade will flow, whether multilateral rules exist or not, but without them it would be trade managed by those with the power to manage it, and this is the antithesis of liberalization.

But though the argument may have been won as far as the economists and the makers of trade policy are concerned, it clearly has not been won on the level of popular understanding and support. It is a strange paradox that at the moment of its greatest success, four years after the conclusion of the Uruguay Round and fifty years after the foundation of the GATT, the multilateral trading system became subject for the first time to outspoken and even violent hostility. We are told to expect larger demonstrations of scepticism and hostility at Seattle. Even though the opposition is often incoherent and self contradictory, and even though we must be suspicious of those who surrender too easily to the sheer pleasure of righteous indignation, we cannot ignore the fact that there are real concerns about the impact of globalization, concerns felt by many good people – the kind of people you would prefer to have on your side in any argument.

As I have just said, the trading system does not exist for its own sake, and its relationship to issues of broader social concern matters greatly to many of our Member governments, because it matters to their populations. The most obvious example is the question of trade and labour standards, on which opinions among WTO Members are strongly polarised, reflecting equally strong views among their constituents.

But whatever the view one takes of policy choices like these, we have to insist on the central point – trade liberalization has fostered economic growth and this has brought enormous benefits to the people of the world, especially to the poor. Of course it has costs – liberalization entails competition and competition can be harsh – but to suggest that poor people and poor countries would be better off if there were less trade and less foreign investment, which seems to be the implication of some of the polemics that we hear, is obvious nonsense. The story of the collapse of trade and the devastating unemployment which followed it in the 1930's is so well known that it has become a cliché, but we have no need to go that far back in time. The financial crisis of 1997 and the severe contraction of economic activity, including trade, which followed it have demonstrated once more that economic distress falls first and hardest on the poor, and that loss of jobs is its main symptom.

Further liberalization will promote employment and it will help to end the marginalization of the poorest countries in the world. Trade policy is not the answer to all the problems of these countries, nor to the problem of poverty, but good trade policy can help and bad trade policy – especially that which seeks to isolate economies - can be disastrous.

Since 1995, notwithstanding the enormous stresses of the financial crisis, WTO Members have maintained their commitment to open markets. Perhaps they now need to do more to explain these policies to a sceptical public, if support for a new trade round is to be maintained through the difficulties that will inevitably arise over the course of the negotiations. As President Clinton once rightly said, globalization is not a policy but a process – part of the description of the world we live in. We might as well complain about the weather – though of course we all do that too. But like the weather, globalization can do great incidental damage: wise governments take steps to prevent foreseeable damage, and to repair damage that cannot be prevented.