IntroductionThank
you first of all for inviting me to share some thoughts
on the future opportunities and challenges facing the
world trading system. My special thanks to the
International Chamber of Commerce for launching this
initiative - an initiative which appears more and more
timely with each passing day. The world we
live in is being influenced by the private sector as
never before – in the technologies you develop, in
the alliances you are building across borders, and in the
global scope of your markets. Just as the
private sector has played an important part in
constructing this global economy, so too will you be
looked upon to help address the challenges we face.
I
do not need to remind you that we are at a very serious
moment in the world economy. The continuing
financial crisis is having a real effect on people's
lives. Growth in many developing nations will
contract this year and millions have lost their
jobs. Tens of millions more around the world have
seen the value of their assets deteriorate sharply.
In these circumstances, it is impossible to talk about
the future challenges of the WTO without explaining the
important role the global trading system must play in the
current crisis. Trade did not cause these problems,
nor can it offer the whole solution. But
maintaining the effectiveness and momentum of the
rules-based trading system can contribute not only to
stopping the crisis from widening and deepening, but to
returning the world to the path of sustainable growth.
THE
INTERDEPENDENT ECONOMY
What
makes the global situation so immediate and so serious is
the degree of our interdependence. A quarter of
global output is now exported – compared to just
seven per cent in 1950. And in the developing world
the share of GDP dependent on trade is even higher, at 38
per cent, demonstrating first the success of trade
liberalization for these countries, and second that
keeping world markets open is of a particular interest to
them. At the same time, financial capital moves
around the world far faster and in volumes many times
greater than ever before - for the United States alone in
1996, capital flows amounted to almost US$ 10 trillion,
or five times as large as US goods and services
trade. All of this is made possible by
technological change, particularly in the areas of
communications and computers – change which is
creating the closest thing yet to a single,
"borderless" world economy.
The
reality is that our interdependence is about more than
trade or capital flows. As distances shrink and
barriers fall, we are increasingly dependent on each
other's economic security, on our shared development,
environment, health, and stability. More and more
there is a globalization of our hopes and concerns.
In recent years we have seen how growth in the developing
world can radiate its very substantial benefits in the
advanced economies. We are now seeing that the
reverse is also true - how declining growth in important
parts of the developing world can have major
repercussions for the whole of the world economy.
HOW
THE TRADING SYSTEM CAN HELP
I
do not pretend that the Multilateral Trading System can
provide all the answers to our present
difficulties. But it would be equally wrong to
underestimate or ignore the very significant contribution
that our system, based on mutually agreed rules - with
multilateral procedures and flexibilities to cope with
specific economic difficulties - can give to the
world economy. The trade system is like the
circulatory system of the human body. If the blood
does not flow, then no amount of macroeconomic medicine
will cure the patient.
There
are three essential messages that the world trading
community must send in the days ahead:
First,
that protectionism, particularly under the present
circumstances, would be a tragic mistake.
With so much of our economies dependent on one another,
no country has an interest in closing off markets or
weakening its ties with the rest of the world. No
country, especially in the developing world, has an
interest in building walls against technology and
productive investment flows from outside: the very
flows that have been responsible for the unprecedented
rise of the emerging economies, and which will be
indispensable to their recovery.
Those
who suggest that foreign investment poses a threat to
development have it backwards. It is the absence of
investment which is now the greatest threat to
development in the emerging markets. The reality is
that global trade, investment and technology flows are
increasingly three aspects of the same phenomenon.
Cut off one, and you risk cutting off the others.
It is also these flows that give us a shared interest in
each other's success. They are the fragile ties
that help bind us together.
Protectionism
in today's interdependent world is a self-defeating
strategy. Worse, it is a contagious and divisive
instrument that will not solve anyone's problems.
It will only make the present problems of the
international community much, much worse - by preventing
adjustment, reducing the free flow of goods and services,
and, as a consequence, diminishing growth and
employment. The first message that the
international community has to send is that we share an
awareness that only by keeping markets open – by
maintaining free-flowing trade – can we improve the
chances of an early recovery.
The
second message is that every economy has a role to play
– both those inside the trading system and those on
the doorstep. This means that we have to redouble our
efforts to advance current negotiations with the 32
candidates who want to join the WTO, and to reaffirm our
strong determination to conclude these negotiations in
the shortest period of time. These candidates are
highly significant. They include giants such as
China, Russia and Ukraine; ex-Soviet republics in
the Baltic and Central Asia; Saudi Arabia and
Chinese Taipei; and many other important players for the
world trading system.
As
global trade becomes ever-more interdependent we cannot
sustain for long a world divided into two categories
– on the one hand, 133 economies which are inside a
system of rights and obligations, and on the other hand,
a significant number of economies which are outside those
same rights and obligations. This is a recipe for
imbalance, for instability and for uncertainty. And
because the process of global economic integration will
not wait for us, these imbalances will only become more
pronounced in the time ahead. We need vision and
creativity on both sides – and from the applicant
countries a necessary degree of flexibility. But
our objective must be clear: To finalize these
negotiations expeditiously in order to send a powerful
signal of confidence to the world economy. A
confident symbol of our ability to maintain and even
advance free trade in a rules based system.
Which
brings me to the third message. In the current
circumstances it is absolutely vital that we demonstrate
our resolve to move ahead. We agreed in May, at the
Second Ministerial Conference, on a balanced work
programme that takes into account the needs and
aspirations of the Members, in terms of implementation
and future negotiations. As we prepare for our
Third Ministerial Conference next year, which will be
held in the United States, we must show the world that we
intend to keep our work programme firmly on track.
THE
TRADE AGENDA – AND BEYOND
What
does this programme include? As we approach the
year 2000, there are already 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 further negotiations for reducing
industrial tariffs, have already been presented by some
countries. And electronic commerce and other
technology-related issues are well in progress in the WTO
system. They will be of fundamental importance to
narrowing the gap between the advanced and emerging
economies.
Currently
there is a debate about whether this agenda should move
forward sectorally and rapidly - or as part of a much
broader negotiating Round. Under the present
circumstances, it is extremely important that we find a
strategy that embraces the advantages of both
approaches. In other words, a broad enough
negotiating package – reflecting the shared
interests of developing and developed countries alike
– but one that can also deliver early momentum and
an early harvest. In any event, the horizon
of the next negotiations is very different from the
horizon of the Uruguay Round. And there are many
reasons to believe that the negotiations can be much
shorter.
This
is already an ambitious agenda. But even more is
expected of the trade system. More than ever
before, the trade system intersects with a growing list
of issues and concerns that have a powerful impact on
people's lives – from investment and competition
policies, to environmental, development, human rights,
labour standards, health, animal welfare, distribution of
resources, ethical issues, and even security.
More and more the WTO is under pressure to expand its
agenda because more and more it is seen as the focal
point for the many challenges and concerns of
globalization.
It
is clear that the trade system cannot ignore these vital
concerns. But it is equally clear that it cannot
give solutions to all the issues which globalization
raises. Every global issue needs its own solution.
Environmental and social problems need environmental and
social answers. And seeking solutions through trade rules
can never be a substitute. In each policy
area we need to define what these solutions are.
And these solutions should be multilaterally agreed in
the proper forum so that different policies can reflect
common values and be mutually supportive.
In
particular, I believe that the environmental community
needs its own house – as Mr. Töpfer, the new head
of UNEP, is rightly working to build. Without a
house it will be difficult to find a consensus on
internationally agreed rules and standards for
environmental protection. And without rules and
standards, it will be impossible to build a durable
bridge to the rules of the WTO.
The
success of the multilateral trading system was the
result - not the cause - of a broadening international
consensus about the value of trade liberalization,
painstakingly built up over the past fifty years.
In the same way, we will only reach global solutions to
the many other global issues now on the agenda by
constructing the same kind of international consensus
from the bottom up. The WTO is a key pillar of the
emerging international architecture. But it cannot
– and should not – be asked to play this role
alone.
CONCLUSION
We
live at a time of extraordinary change and technological
progress – progress which is moving us towards an
ever-more interdependent, even borderless
economy. It is critically important to
underline this reality. Globalization is not a
policy to be judged right or wrong. It is a
process. And it has introduced a whole new
dimension to the management of the problems of our daily
life, in all our countries.
What
is lacking is the appropriate international architecture
to manage this complex reality. We need an
architecture which embraces – around the same table
– the needs of developing and developed countries
alike. One whose horizon encompass, not just trade,
finance, or development, but the human dimension of
globalization in all its many facets. This is the
future we need to invent.
The
choice we face is between an interdependent world that
moves forward on the basis of shared rules, or on the
basis of power. Between stability or
uncertainty. Consensus or conflict. How we
manage the challenges in the months and years ahead will
depend on the choices we make today. The prospect
of a borderless economy has enormous potential to
generate growth, to spread the benefits of technology,
and to weave a more stable planet. But it also
challenges the status quo. It demands that we
adapt. This is not the moment to turn back to the past
– a past which has shown us with such stark clarity
how building barriers to one another can only make our
economies poorer and our world less secure.
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