Thank you Mr. President.May
I say what an honour it is to speak at the National Press
Club – a place where, over the years, so many of my
heroes have spoken. The greatest men and women of our
time and of our parents' time, have spoken here. Franklin
Roosevelt, Golda Meir, Nelson Mandela, Kim Dae-Jung, have
all graced this setting with their presence. This is a
tribute to the Press Club and an inspiration to others
like me who are sharing this opportunity.
It
was Franklin Roosevelt, together with Lord Keynes, Jean
Monnet and others who sought to assure that the economic
and geopolitical conditions which lead to depression and
war, to famine and holocaust, could never be repeated.
They learned from the Great Depression and the war that
peace had to be fought and worked for with the same
degree of dedication and intensity that was employed in
the pursuit of victory in 1945. Franklin Roosevelt knew
it was self-destructive, even for a great power like the
United States of America, to retreat behind walls of
protection. He knew that building barriers between
nations and between people lead to friction and
ultimately, to war.
In
1945, at his fourth Inaugural Address, Roosevelt said:
"We have learned that we cannot live alone at peace;
that our own well-being is dependent on the well-being of
other nations, far away. We have learned that we must
live as men, and not as ostriches, nor as dogs in the
manger. We have learned to be citizens of the world,
members of the human community."
Empowered
by the strength of this conviction, Roosevelt provided
inspiration for those who drafted the blueprint for
multilateral co-operation. It is a system that has served
the world well for over 50 years.
The
GATT was a hybrid creature that arose from the
international negotiations to set trade rules. It was not
technically even an organization. It was less effective
than the WTO at enforcing dispute settlement rulings and
it did not cover large segments of international economic
activity including trade in services, agriculture,
international protection of intellectual property or
textiles.
In
1994, trade ministers in Marrakesh signed the Uruguay
Round agreement which brought about the World Trade
Organization.
[[Few
organizations have been the subject of so much attention
in so short a period of time. Much of that attention has
been critical, some deservedly so, much of it undeserved.
And much of that criticism melts away as people come to
understand exactly what the WTO is and what it stands
for. The WTO is an intergovernmental organization.
Governments meet in Geneva to discuss trade issues, to
negotiate rules for the further liberalization of trade,
to settle disputes. Governments deal directly with each
other, face to face. The 530 person Secretariat, which I
head, has virtually no power to determine the policies of
governments. Our budget is roughly $80 million a year, or
about what Michael Jordan earned in his last year in the
National Basketball Association. Our budget is one-third
that of the World Wildlife Fund.
Over
93 per cent of all our documents are available to the
public and virtually all of those that are restricted
today, will soon become publicly available. Moreover,
there are few organizations, national or international,
which brief the press and NGO communities so regularly
and so completely. We invite journalists, NGOs, members
of Parliaments, business groups, students and the general
public to come and visit us, and they do.]]
All
of our agreements are reached through consensus of the
member governments. All of our agreements are subject to
ratification by Congresses and Parliaments.
The
rules-based framework for trade has provided the platform
for a remarkable expansion of trade in the post-World War
II era. Since 1950, global trade has increased 15 fold,
providing a powerful engine for economic growth across
the planet.
In
this country, trade is linked closely to one-third of the
21 million new jobs created since 1993. The United States
is far and away the world's largest exporter, of goods,
services and agricultural products, shipping $958.5
billion worth of goods to other countries last year. US
exports have risen 55 per cent since 1992. In manufacturing
alone, exports have risen 91 per cent since 1989
and 35 per cent since the WTO came into force in 1995.
(Manufactured exports were $694.62 billion in 1999,
$514.44 billion in 1994 and $363.22 billion in 1989:
Source FT).
The
11.7 million jobs linked to the exporting sector in the
United States pay, on average, 13-16 per cent more than
the average US wage, and these jobs underpin a labour
market in which wages have risen 4 per cent in the past
year.
In
economic terms, there is little doubt that the United
States – whose economy is now the envy of the world
-- has benefited from a rules-based trading system.
Nonetheless,
civil society has rightfully said that progress in the
economy is not enough. International institutions must
take a broader perspective. The environment, social
issues including forced child labour, development and
consumer rights must be addressed either directly or
through improved coherence with other international
organizations.
[But,
decision-making in the WTO is difficult, and at the
moment we do not have consensus among member governments
on the role the organisation should play in these areas.
Consensus of our 136 member governments is required
before any agreement can approved and this will
not change. Nor should it, because with each of our
member governments wielding the equivalent of UN Security
Council veto, each nation retains full protection of its
sovereignty.]
Nevertheless,
some have criticised the WTO as an organization that
infringes on the sovereignty of its member governments.
But as Paul Krugman stated so simply yet perfectly in the
New York Times several months ago, "the WTO …
is basically a commercial court. All it does is determine
when countries are violating agreements they have already
made." Furthermore, international agreements on
issues like the protection of intellectual property
rights, trade in telecommunications and financial
services and agricultural actually represent an extension
of US values and objectives to all corners of the world.
Consensus
is beginning to form around a host of issues that may not
have garnered many headlines but which are of great
importance; better market access for the Least Developed
Countries in the developed world, greater funding for
technical assistance and training, closer cooperation
among development agencies in bringing the LDCs in from
the sidelines of the Multilateral Trading System.
But
consensus remains elusive on a large number of
environmental and especially social issues. Governments
in virtually all developing countries, see the inclusion
of these issues on the WTO agenda as a smokescreen cast
by industrial countries for protectionist purposes. They
say countries which have the financial resources and
which create 500 times more waste per capita than
Bangladesh and other Least Developed Countries, ought to
take the lead by taking measures at home first. This does
not mean that progress cannot be made in these issues
down the road, but greater efforts must be made at
building trust.
The
way in which we make decisions, the manner in which we
deal with civil society, our degree of openness to the
outside world: all of these practices have been
criticised in this country. The critics are not all
wrong. We are now in the process of examining how we can
be more transparent, more efficient, more inclusive.
Franklin
Roosevelt knew that the United States had to lead. He
knew that if the world was to be peaceful and prosperous,
American guidance, strength and compassion were required.
For more than 50 years, this country has answered the
call, taken up the challenge and the world is a better
place for it.
Certainly,
the Multilateral Trade System owes much to the United
States. The United States has been at the forefront of
every one of the eight trade rounds launched since 1948.
This is as important today as ever before, not just for
the WTO, but for the United States, which in this
increasingly interdependent era has become more and more
dependent on trade for growth. In 1970 total US trade
(exports and imports) was the equivalent of only 13 per
cent of Gross Domestic Product. Last year, that figure
had risen to 30 per cent and I don't know anyone who
thinks that figure will, or should, decline in the
future.
We
have seen huge social and economic change before. We saw
it when we left behind a society dominated by
hunter-gatherers, then agriculture and to the industrial
revolution. At each point of change there was massive
dislocation, fear and hatred directed at leaders and
kings who did not, or could not, maintain the old ways.
Today
we have entered the post-industrial age, where more than
ever before information is power. The internet explosion
can only be equalled in history by the invention of the
printing press and the steam engine. Nothing will be the
same, not even that tyrant, distance. And again, America
has taken the lead. Through the internet, international
trade is now within the grasp of small and medium-sized
enterprises that 10 or even five years ago could only
dream of selling in foreign markets.
Rules
for international electronic commerce are, at the moment
in a state of suspension. WTO member governments are in
the process of discussing how the electronic commerce
work programme would move forward and whether the
moratorium on charges on electronic commerce deliveries
should be extended. US officials are fighting hard to see
that cyberspace remains duty-free and that a solid work
programme of rules is established. While others agree
with this position, advocacy by the United States of an
open system for electronic commerce is crucial to the
formation of global rules, just as it was in the
negotiations for agreements on telecommunications,
financial services and information technology products.
These
agreements have been fundamental in establishing a
constructive, open roadmap for the global economy in the
21st century. The 1998 agreement on
telecommunications covers 95 per cent of the $1 trillion
in global telecommunications trade. Greater competition
through this agreement has pushed rates down to as low as
10 to 20 cents per minute for calls between the United
States and Japan. The surge in investment that followed
this accord could lead to a 50 fold increase in capacity
for fibre optic cables by 2001 compared with June 1999.
Such investment will be crucial if e-commerce is to
continue its exponential growth.
I
think these changes are good for people. It cost a week's
wages 120 years ago to put one word in a cable from my
New Zealand home to London. Now on the internet
transferring information half-way across the globe is
almost free. The dream of working class parents in the
1950s was to buy the Encyclopaedia Britannica for their
kids. But to do so cost a year's wages. Now the contents
of the Encyclopaedia Britannica are free on the internet.
The technology which has lead to the information
revolution is good for the environment too. A pound of
optical fibre shifts as much information as a ton of
copper.
The
1997 financial services agreement, which came into force
in March 1999, covers nearly $60 billion in financial
services transactions. Not only has this agreement opened
markets for exporting firms, it has also provided
customers with greater selection, provided a deeper pool
of capital in developing countries and introduced an
element of "best practices" into markets where
technology and know-how lag behind the west.
In
February of this year, WTO Members launched a new round
of services negotiations in hopes of broadening and
deepening those two agreements and of adding some new
ones as well. Discussions are underway in environmental
services, express delivery, professional services and
tourism.
The
two sectors, agriculture and services, in which WTO
negotiations are currently underway cover 65 per cent of
global economic output. Half of global employment is in
the agriculture sector, while services employ 29 per cent
of the global workforce – and more than 70 per cent
of the US workforce. These negotiations are of great
importance to the trading system, to the global economy
and to the United States of America.
At
the moment, I do not see sufficient flexibility among
governments – in either the developing or developed
worlds – to lead me to conclude a round of
negotiations beyond these sectors is imminent. At the
moment. But this could change.
The
one truly heartbreaking outcome of Seattle, for me, was
that it meant a delay in addressing many of the problems
that confront the WTO. It means delay in putting place a
programme of support for the world's poorest countries,
delays in tackling subsidies that are harmful not only
because they are trade distorting, but also because they
are environmentally damaging. It also means delays in
securing future trade liberalization that will lift
family incomes around the globe.
I'd
like to take a moment to specifically address the issue
of the world's poorest countries. With official
development assistance contracting, it is vital that
these countries turn to trade as a means of accumulating
hard currency earnings. But sadly, this is not happening.
In 1980, the Least Developed Countries accounted for 0.8
per cent of world trade. By 1997, the total trade of the
world's 48 poorest countries had fallen to less than 0.5
per cent. Yet we know trade openings are not enough. Not
when a nation faces a debt burden nine times greater than
its budget for health, at a time when 25 per cent of the
population is HIV positive. We know more must be done.
Among
the many developing countries that find themselves in
this situation of an extremely narrow supply capability,
the most acute example is of the Least Developed
Countries. They are the 48 nations, of which 33 are in
sub-Saharan Africa, where 600 million people live or
survive with barely one dollar a day, the poorest among
the poor. Not by coincidence you will find in this
category most of the troubled spots of the world, where
you have endemic civil war, mass violation of human
rights, genocide. These are countries where there is at
the same time economic regression and chronic civil
unrest, absence of an effective government and where as
Michel Camdessus put it, one should invert Pope Paul VI's
phrase "development is the new name of peace"
and to say instead "peace is the new name of
development."
I
know that leaders in many of the world's mighty and
modest nations are working to remedy this situation.
Charlene Barshefsky has shown compassion and leadership
here. I hope very much that in the coming weeks, I will
be able to announce a package of market access opening,
increased technical assistance and better co-ordination
and coherence between the WTO and the key development
institutions like the World Bank and United Nations
Development Programme on building capacity in the Least
Developed Countries.
I
don't pretend for a moment that integrating the LDCs more
completely into the global trading system will bring an
end to all of their problems. Implementation of sound
macro-economic policies, debt relief, more official
development assistance for blighted regions and better
governance in these countries are all crucial if we are
to see these nations lifted from the quagmire of poverty.
Raising living standards in the poorest countries also
transforms their citizens into consumers and we all need
more customers.
Perhaps
no country has better demonstrated the remarkable
benefits that accrue to its citizens through enhanced
trade than China.
China's
decision to take its head from the sand and open itself
up to the outside world is one of the defining moments of
the post-war era. It has done much to reduce, though
certainly not eliminate, tensions between countries.
Moreover, it has been a great success for the Chinese
themselves. Never before in history has one country
lifted so many of its people from poverty. A policy of
greater openness has been instrumental in lifting 120
million people out of extreme poverty over the last 20
years.
The
benefits of participation in the global trading system
are obvious to many of China's economic leaders. They see
enhanced linkages with the outside world, commitment to
internationally agreed trading rules and the introduction
of a more market-based system as being inherently in
China's interests. So do I. But there are many others
inside China, who have a different idea, an idea that
China can go it alone, without adherence to
internationally agreed rules and laws. These officials
seek a nationalistic approach to economics and trade that
would mirror the nationalistic approach they apply to
geo-politics.
By
integrating China more completely into the global economy
we, as President Clinton said last month,
"strengthen China's stake in peace and stability.
Within China, it will help to develop the rule of law;
strengthen the role of market forces; and increase the
contacts China's citizens have with each other and with
the outside world."
Actually
America gives little out of this negotiation. It is China
that now must adjust to operating inside a system of
trade rules. It is China that must make concessions,
including reducing tariffs on US industrial products from
an average of 24.6 per cent to an average of 9.4 per cent
by 2005. Tariffs on US agricultural products will be
slashed by more than 50 per cent to an average of 14 per
cent by January 2004. Moreover, the US will retain
special strong safeguards and anti-dumping regulations
which have been written into the US-China agreement.
[[Should
China be spurned, America faces risks as well. I need to
tell you that regardless of how the US Congress votes on
Permanent Normal Trade Relations, China could enter the
WTO. Should Congress vote against PNTR, the United States
would be obliged to invoke Article XIII of the Marrakesh
Agreement which established the WTO. Article XIII states
that terms of the WTO agreements do not apply to either
party. This means that the benefits accruing to all other
WTO Members, in terms of access to China's market, would
not automatically apply to the United States. A sobering
thought when you consider the potential business
opportunities in a market of 1.3 billion people.
But,
assuming the political will exists, these issues can be
resolved and China can enter the WTO this
year.]]
Ladies
and Gentlemen, it's a cliché to say we live in a world
which is growing smaller each day. Remarkable
breakthroughs in telecommunications, computer and
transportation technology means that knowledge and ideas
can be sent around the world almost instantaneously. The
barriers which kept ideas from crossing borders are
rapidly melting away. Goods, services, people and capital
cross borders in most countries with relative ease.
This
is globalization.
Globalization
has its downsides too. Pollution crosses borders easily,
so do criminals. But globalization is not a policy
option. It's not something which politicians or political
parties dreamed up one day. It is a process which dates
back to the first time men emerged from caves, walked
upright and decided to have a look at what was going on
around them.
So
how do we deal with this phenomenon? To me it's a simple
proposition. The first half of the last century was
marked by force and coercion. This century ought to be
one marked by persuasion not coercion; by engagement and
interdependence, and by a system where States settle
their differences through that great equaliser, the rule
of law.
I
ask you to think of these brave men and women from the
1940s and others who most recently tore down the walls of
economic and political oppression.
Reflect
gently on those who have never had much anyway. Those who
come from the poorest countries, the most distant islands
and valleys who simply want a chance. Not favours, but
opportunities, that we take for granted.
I
say, let's welcome the future with confidence. I do,
because too much is at stake for us to falter, be timid
or to fail.
Thank
you very much.
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