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Geneva, 12 April 1999

"Beyond the Multilateral Trading System"

Address to the 20th Seminar on International Security, Politics and Economics Institut pour les Hautes Etudes Internationales

Thank you for your kind welcome. It is particularly appropriate for me to be delivering my last public speech as WTO Director-General to this prestigious institution - an institution which has not only been a good neighbour, but a very good friend and collaborator for many years.

Four years ago I was asked to head the newly created World Trade Organization – the first new international institution of the post-Cold War era. It was a great privilege, and I can truthfully say this has been the most challenging and rewarding chapter of my career. As I approach the end of my term, I want to take the opportunity to reflect on the WTO's relevance to the emerging international system. What are its larger implications? And what role can we play, along with other international institutions, in developing a coherent approach to globalization?

Not too long ago the idea of a global system of governance would have seemed utopian – no less utopian than the fall of the Berlin Wall without a war or the creation of single European currency. Cold-War rivalries, ideological conflicts, North-South differences – all created an international system that was defined by its divisions, not by its shared interests.

The trend in today's international system is very different. All around us, and across many issues, we feel more and more the need for global cooperation, multilateral agreements, and the international rule of law. The WTO's emergence as a leading rule-maker in the global economy is a powerful example of this trend – but it is not alone. From human rights, to climate change, to capital flows – our globalizing world demands global solutions. And these solutions must increasingly be based on shared agreements and rules.

If the Cold War system was shaped by the clash of ideology, this new system is being shaped by the convergence of trade, capital, technology, information, ideas. If the challenge of the old order was to manage a divided world, the challenge of the new order is to manage an interdependent one.

Ethnic conflicts, destructive nationalisms, violations of basic human rights – these tragedies have certainly not disappeared from our world, as Kosovo, Sierra Leone, or Rwanda brutally remind us. But they are even more unacceptable today because they clash so starkly with the underlying spirit and assumptions of our global age. In 1999 we find ourselves between two realities: Between the logic of global cooperation – the need for a global system - and the counter-pressures of nationalism, isolationism, separatism. Between the divisions and horrors of the 20th century, and the global promise of the century that lies ahead.

I will argue today that our progress in resolving these new tensions will hinge on our ability not just to build a coherent global architecture, but to build a new political constituency for globalization, backed by a new vision of internationalism.

This emerging global system is very new, but the vision behind it dates back 50 years. The postwar architects were guided by a central idea - that a durable international peace could only be built on the foundations of interdependence. In their vision, economic freedom – free markets, free trade, the free movement of goods, capital and ideas – was a prerequisite for political and social freedoms around the world. Trade would lead to shared prosperity, a shared commitment to stability, and help to prevent the resurgence of economic nationalism and protectionism which had done so much to fuel conflict. Underpinning all this was a belief that the rule of law - not the rule of power – was the only rational basis for civilised discourse among nations.

Fifty years on, our globalizing world of falling barriers, rising trade, borderless technologies, and widening circles of interdependence is in many ways fulfilling that postwar vision. Trade has expanded fourteen-fold since 1950 while production has grown six-fold. A quarter of the world's output is now traded – compared to just seven per cent in 1950. Over a trillion dollars moves around the planet every day.

But this new world is about much more that trade or capital flows. We are increasingly linked together by travel, communications, culture, and ideas, as well as by trade, services and investment. Television, mobile phones, and the Internet are erasing the barriers, not just between economies, but between people - allowing us to see and understand how interconnected we are. Globalization is transforming international relations, not just our economies. And this new system requires us all to adapt.

The WTO was created in 1995 to be a pillar of this globalizing world. Our goal was an ambitious one – to build a universal trading system bringing together all economies under one institutional roof and one set of rules, while preserving special and differential treatment for developing countries. So far the WTO has moved substantially towards these ambitions. We now have 134 members, four-fifths of which are developing or transition economies. An additional 32 candidates are negotiating to join, including the former cold warriors Russia and China. The goal of having China - and a good number of other accession candidates – as full members of our organization this year remains a vital one for the future of our system.

We have brought some of the most advanced sectors of the world economy into the system, with sweeping agreements in information technologies, telecommunications and financial services – underlining the reality that multilateralism, rather than regionalism, offers the most viable answer to globalized trade. We have improved our relations with other international institutions, in particular with UNCTAD, the IMF, the World Bank, and the United Nations. We have opened up many of our own procedures to make this system more transparent. Most important, we have established a binding dispute settlement mechanism which is not only used by a growing numbers of countries – large and small – but is respected by them as well.

Together with our two successful Ministerial Conferences; the 50th anniversary celebration involving world leaders from all regions and backgrounds; a High Level Meeting to help integrate the least-developed countries into the trading system; a new Internet link between these countries and WTO headquarters in Geneva; our recent High-Level Symposia on Trade and the Environment and Trade and Development to build a new relationship with civil society – these and other initiatives underline how far the trading system has adapted to the reality of globalization.

But while the new WTO is an essential part of the answer to globalization, it is not sufficient. More and more, we are facing issues and concerns which go beyond the parameters of trade. More and more, globalization is raising a whole new set of questions about how to manage interdependence. Can we have an open world economy without a stable financial system? How to protect endangered species and promote sustainable development? Should trade be linked to labour standards and human rights? Can we preserve cultural identities in age of borderless communications? And what about poverty eradication, reducing inequalities, and promoting the rights of women?

These and other questions underline how integration is blurring the lines between domestic and global concerns. All appear inter-linked – many facets of a single issue – to our publics. Each one will get louder and more insistent in an age when the images of ethnic cleansing, starving children, or burning rainforests come into our homes every evening via television. They will rightly demand answers.

My point is that we are moving into a very different world from the one which existed before the fall of the Berlin Wall. In fact we already find ourselves in the 3rd millennium. It is a world shaped by globalism, technology and cyberspace, and where we can no longer rely on our old policy tools and our old approaches. Events are passing us by. Today we need to respond to the challenges before us with the same vision and imagination that inspired the post-war architects 50 years ago. I would like to suggest what I believe are some of the fundamental prerequisites:

First, we must move towards a more collective leadership – one that reflects the reality of a multipolar world, and especially the emergence of new developing-country powers. This does not mean that the G-7/G-8 is suddenly any less important. It means simply that the advanced economies alone are no longer enough to provide international leadership. The new G-22 – even if it is only at the level of finance ministers – is already indicative of the kind of broader international leadership we need.

Collective leadership also means that the nature of leadership must change: In an interdependent world, leadership is the art of cooperation and consensus. It is about defining common goals and interests, rather than a common enemy.

Second, we need to look at the policy challenges we face as pieces of an interconnected puzzle. We can no longer treat human rights, the environment, development, trade, health, or finance as separate sectoral issues, to be addressed through separate policies and institutions. Both nationally and internationally, we need to give more thought to how we coordinate our policy goals, harmonize an expanding web of international agreements, and commit ourselves to agreed common actions. As we enter a new century, we need a new vision of security – human security – which reflects the reality that financial crises or environmental degradation are equally threatening to the global peace – and demand an equally collective response.

Third, we need a new forum for the management of these complex issues: One that is truly representative of the new global realities. One which brings world leaders together to tackle an expanded policy agenda and the new challenges of globalization. I believe the time has come – at the end of the second millennium and the beginning of the third - to promote this initiative at future meetings of world leaders. The Millennium Summit, recently decided upon by the General Assembly of the United Nations, could be the appropriate occasion to improve the global architecture we need for managing globalization.

Last but not least, we need a clear mandate from the world's leaders to promote a common global strategy and common global actions. A common strategy – among international institutions, national administrations, civil society – for strengthening the international rule of law, eradicating poverty and reducing world-wide inequalities within a set period of time. A common strategy to achieve a sustainable environment – in developing and developed countries alike. A common strategy to eliminate the greatest part of global trade barriers – at least reflecting on a multilateral level, what governments have already agreed in regional arrangements. This strategy must be focused on people and values - more than governments - harnessing interdependence and globalization to address today's challenges. An annual report to the world's leaders should indicate the progress we have made towards meeting these common goals.

The choice we face is certainly not between this new global system and national sovereignty. On the contrary, greater global cooperation, strong international organizations, and consensus-based multilateral rules only extend sovereignty beyond borders. In today's interdependent world it is only by remaining isolated – by turning away from international cooperation – that countries surrender their sovereignty.

I began by saying that we find ourselves in a new international system – one called globalization And this new international system requires a new way of looking at the world – new approaches, new institutions, a new mental landscape.

Our globalizing world must be more than a catchword or a vague expression of shared sentiment. We need first to identify new global values which can be shared by our global community in these changing times. We need to make a real collective commitment to working together, and show a willingness to respect the concerns and interests of others. We need a realistic appraisal of what can be achieved together - based on workable proposals and multilateral approaches. And we need a new vision of internationalism – backed by a new political determination to defend it.

We cannot expect international cooperation, but then resist interference in our domestic affairs. We cannot assert the international rule of law, only if it mirrors our rules and our laws. We cannot create international institutions, only to deny them the resources or authority they need to work.

As this century draws to a close, we are no longer threatened by a Cold War nuclear confrontation. The new global threat is hunger, poverty, ignorance, inequalities, unemployment, human rights violations, the prospect of environmental collapse. And yet we also live at a time when mankind has reached a level of material, technological, and human progress unmatched in history – when we are all moving into a new world of unprecedented opportunities opened up by the end of the Cold War and the revolutionary power of new technologies.

The fusion of computers and telecommunications is linking the world's people together, improving access to health care and education regardless of geography and distance. The reach of satellites and mobile phones - into even the most remote villages - is not only reducing physical marginalization, but can make the difference between life and death. With electronic commerce we are opening up the opportunity for every nation and every person to be part of a world market for their services, their products, their ideas.

There are many criticisms of this globalizing world and the voices of concern often seem to prevail over messages of opportunity. But no one offers a rational alternative to the main challenge of our time which is to improve the management of this interdependent world – not refuse it. Let us have no doubt about the nature of the debate. The choice is between working together to solve our global problems, or rebuilding walls – going back to a world more divided, not more united, where in place of greater freedom and solidarity, we would find nationalism and racism flourishing. Is this the alternative world we want?

Our generation has witnessed three extraordinary events which have shown how utopias can become dreams and dreams can become realities. We have seen the fall of the Berlin Wall – and the end of Soviet domination in Central and Eastern Europe - without a war. We have seen Western Europe transformed from a devastated and divided continent into a unified community of nations through trade, economic, monetary, and increasingly political integration. We are now seeing the rise of a world trading system – rules-based, not power-based – at a time when the call for an improved system of international governance is more and more insistent.

Let us not be afraid to dream again as we build a global system for the third millennium. Thank you.