Ladies
and Gentlemen, It
is a great pleasure and honour to give this keynote
speech at the National Foreign Trade Council's World
Trade Dinner here in New York City. I welcome this
opportunity to report to you on the considerable work the
WTO has done, including on issues related to the new
knowledge-based economy, and the important results we
have achieved over the last few months.
I
am pleased to report that the WTO has not stood idle
since Seattle. Standing still is going backwards.
Accepting the status quo means accepting yesterday's
compromise, and that's not good enough.
First,
we have launched sectoral negotiations on agriculture and
services. Together, these sectors account for over
two-thirds of world output. The potential gains from
further liberalisation in these areas are huge.
Second,
we have worked through an important package to help the
world's poorest countries reap greater benefits from the
world trading system. This package includes better access
to rich-country markets (on that note, I must
congratulate the Clinton administration and Congress for
pushing through the bill to boost trade with Africa and
Caribbean), increased technical assistance, and closer
co-operation between the WTO and other global
institutions that promote development, notably the World
Bank.
Third,
we have established a mechanism for dealing with the
problems that some developing countries have with
implementing some of their commitments from the Uruguay
Round. This was a major area of difference at Seattle.
Fourth,
we are looking at ways to improve how the WTO works, and
in particular how to adjust to having 136 members, all of
whom demand respect and their rightful seat at our table.
Last
but certainly not least, thirty candidates, more than 1.5
billion people, are lining up to join the WTO. This is a
clear vote of confidence in the WTO system and we are
doing everything we can to facilitate their entry under
the appropriate conditions. Next month Georgia will
become our 137th member and the fourth former
Soviet republic to join. Russia itself is actively
pursuing accession and I am meeting their experts again
next week.
The
country that is getting most attention right now, of
course, is China (particularly in light of the agreement
just concluded with the European Union). China's decision
to join the WTO is momentous. One Chinese leader has said
that this is the most important decision China has made
since 1949. China has chosen openness rather than
isolation. It has opted for reform rather than reaction.
The
benefits for China are clear. Opening its markets to
foreign trade and investment will make it richer.
Committing itself to WTO rules will entrench market-based
reform and strengthen the rule of law. It will also give
Beijing a seat at the WTO table and a stake in the world
trading system, bolstering progressive forces in China.
A
more open China brings benefits for everybody. For
example, the WTO accession deal that the United States
struck with China last November will give American
business better access to an economy of 1.3 billion
consumers that is growing at 8% a year. China's opaque
and arbitrary trade and investment rules will become
transparent, stable and more predictable. And a stable
and peaceful China will make investments elsewhere in
Asia more secure too.
The
United States loses nothing from this deal. But it
stands to gain enormously.
These
benefits are real. China knows it has to stick to its WTO
commitments. If it doesn't, the US or any other WTO
member government can use the organisation's
dispute-settlement procedures to ensure it does.
Of
course, American business and workers will only get these
benefits if Congress votes for permanent trade relations
with China. In this, I agree with President Clinton: if
Congress votes for permanent trade relations, 10 years
from now everyone will wonder why it was a hard fight.
And if Congress votes against it, they'll be kicking
themselves 10 years from now.
History
demands we welcome China into the world trading order.
But don't just take my word for it. Ask Dai Qing, one of
China's most prominent environmentalists and independent
political thinkers, who served time because she opposed
the Tienanmen crackdown. She says: "All of the
fights—for a better environment, labour rights and
human rights—these fights we will fight in China
tomorrow. But first we must break the monopoly of the
state. To do that, we need a freer market and the
competition mandated by the WTO."
The
WTO has an ambitious agenda. And rightly so. It is a
powerful force for good in the world. Consider what the
WTO, and its predecessor, the GATT, have done for
America. Over the past 50 years, America's average
import duties have fallen from over 40% to a mere 2.8%.
Thanks to these falling trade barriers, the two-way flow
of trade now amounts to more than a quarter of America's
national income, a record high for this century. That in
turn has helped raise living standards, as exporters sell
more abroad, new technologies spread faster, foreign
competition keeps domestic firms on their toes, and
consumers enjoy an ever wider choice of cheap imports.
The
gains to the United States from the Uruguay Round alone
come to over $40 billion a year. That's a pretty good
return on the $12 million that America contributes
annually to the WTO's budget. And that $40 billion a year
is actually an underestimate of the true benefits to
America.
The
WTO also provides a stable and predictable framework for
business. It does this firstly by locking in governments'
commitments to liberalise. In this regard, WTO rules
helped discourage protectionist pressures in the wake of
the Asian crisis. And the WTO also promotes stability
through its dispute-settlement system, which acts like a
world commercial court. I should mention here that the US
has won 23 of the 25 cases it has brought to the WTO.
Critics
of free trade often say that imports costs jobs. That is
an odd claim when imports are at a record high and
unemployment is at a 30-year low. Indeed, a new study by
the Cato Institute points out that since 1973 there has
not been a single year when falling imports have been
associated with a falling unemployment rate. What's more,
America's openness to foreign investment is also creating
jobs. One in eight manufacturing workers now works for a
foreign-owned company.
Another
myth is that free trade is destroying well-paid
manufacturing jobs and replacing them with low-paid
service-sector jobs. In fact, since 1993 America's share
of world manufacturing exports has remained steady, the
number of manufacturing jobs has risen, and manufacturing
output has leapt by 42%. As for the service sector, yes,
some jobs there are poorly paid, but most pay
above-average wages. The lion's share of the new service
jobs is in communications, computing and finance: the
heart of America's dynamic new economy.
Few
can fail to be impressed by this new economy. As
John Micklethwait and Adrian Wooldridge say in their
new book, "A Future Perfect": "Technology
gives entrepreneurs the freedom to challenge giant
companies and to break up concentrations of power.
Technology gives people the power to weave connections
all over the world. Technology allows people to escape
from the tyranny of place." All of that is true.
But
we should not fall into the trap of thinking that
new-economy firms cannot fall victim to trade barriers
and protectionist regulations. Yes of course the Internet
makes it easier to bypass trade barriers and government
regulations. Certainly, an Internet start-up can more
easily reach a global market than a new steel mill. But
even the new economy needs global free-trade rules to
prevent governments throwing spanners in the works.
Government regulations can easily hinder the global
development of e-commerce. So can trade barriers. We need
to be vigilant. Open up an American PC and you will
probably see memory chips from Japan and Korea, a disk
drive from a US company in Singapore, and a motherboard
from Taiwan. Those components can be imported duty-free
thanks to the WTO's information-technology agreement. The
competitiveness of American computer makers depends on
free-trade rules.
The
WTO provides certainty in an uncertain world. The WTO's
services agreement locks in governments' liberalisation
of a wide range of sectors. Additional agreements signed
since 1997 have lowered barriers to trade in information
technology, financial services, and telecoms. The WTO's
intellectual-property agreement protects businesses'
investments in areas such as pharmaceuticals, media, and
computer software. And WTO members agreed in May 1998 not
to impose customs duties on electronic transmissions.
Of
course, there is much more the WTO could do, and will.
The services negotiations that started this year aim to
expand the service agreement's country and sectoral
coverage and remove restrictions on market access and
national treatment. A second information-technology
agreement could enable a wider range of computer hardware
to be traded duty-free. A more ambitious telecoms
agreement would strengthen the backbone of the new
economy and help the poorest nations to share the
benefits of the knowledge economy.
All
these aims are achievable. Some may even be possible
without a new round of WTO talks. But it will be tough to
clinch a far-reaching deal without a round. And a broader
round would also spread the benefits of liberalisation to
other sectors where America is competitive, such as
agriculture. American farmers exported $54 billion
last year. Think how much more they could sell if farm
trade was freed.
I
hope we can get a new round started soon. But it will not
happen without your active support. Businesspeople are
not doing enough to promote freer trade. There is no
shame in trumpeting your role in making America, or
Mexico, or China, or South Africa, or anywhere else a
better place with more jobs. There is no shame in pushing
hard for a new round of trade liberalisation.
Our
critics say we don't have public opinion on our side. But
the facts tell a different story. 58% of Americans think
the WTO has a positive impact on the world, compared with
only 27% who think it has a negative impact, according to
a recent poll by the Angus Reid group. And 60% of
American union members think the US should stay in the
WTO, according to a poll by the Association of Women in
International Trade.
Of
course, we face a big challenge ahead. The WTO is too
often misunderstood, sometimes genuinely, often wilfully.
We need to put our case better. We need to explain that
we are not a world government of any shape or form.
People do not want a world government, and we do not
aspire to be one. But people do want global rules. If the
WTO did not exist, people would be crying out for a forum
where governments could negotiate rules, ratified by
national parliaments, that promote freer trade and
provide a transparent and predictable framework for
business. And they would be crying out for a mechanism
that helps governments avoid coming to blows over trade
disputes. That is what the WTO is. We do not lay down the
law, we uphold the rule of law. We do not tell
governments what to do, they tell us. That is how it
should be.
Free
trade is not an ugly concept. On the contrary, free trade
helps pay for the things we value most: jobs, health,
education, a cleaner environment. More trade, not less
trade, is the surest way to improve people's lives and
working conditions. More trade, not less trade, is the
surest way to promote freedom, security and peace.
Free
trade needs more champions. So does the WTO. I hope you
will join us in fighting for a better world by taking the
case for free trade to a wider public. We will do our
share. But we need your help so that in these days of
great change the voices of reason and progress prevail
over those of fear and doom.
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