and Gentlemen: I come to praise the future. There has
never been a time in the history of our species when we
have had such an opportunity to build better living
standards and a safer and more secure world for all.
Globalisation is a part of this opportunity.
topics are as controversial as globalisation. That is
hardly surprising. It is the defining feature of our
time. Bringing distant markets and people across the
world closer together is a huge change that affects
everyone, whether they are peasants in India, students in
London or bankers in New York. Such an enormous upheaval
is unsettling, especially when it seems unpredictable and
uncontrollable. People tend to assume the worst: that
what they value most will be lost, and that what replaces
it can only be bad.
need to reassure people that globalisation is generally a
force for good. The last 20 years have seen a dramatic
rise in living standards for many countries across the
world. But those gains can be lost. Of course, the
Internet cannot be uninvented. But Governments can, and
do, intervene to prevent products, money, people and
ideas from flowing freely across national borders. They
can slow or block progress. In the first half of the 20th
century, the globalisation of the 19th Century was rolled
back. We cannot rely on peoples grudging acceptance
of the perceived inevitability of globalisation, freedom
and openness. We must make our case again and again.
me add that globalisation and trade are not new
phenomena. Trade as a percentage was higher in 1914 than
it is now. Globalisation is a process, not a policy.
Its just accelerating. Just as we went from
hunter-gatherer societies to agricultural, feudal
societies and then into the industrial age, so today we
are in the post industrial age. 100 years ago over 80% of
New Zealanders or Americans were on the land, now it is
less than 10%. Yet we produce more food, fibre and
each generation must relearn the old lessons. Our
parents, having suffered the great depression and the
collapse of the trading system, made deeper and more
lethal because of tariff hikes in major markets, then
suffered a world war. Those two events were connected.
Great men, liberal and progressive leaders like
Roosevelt, Lord Keynes and others, erected a new system
of global structures, including:
United Nations; to handle political matters
World Bank, to manage development
International Monetary Fund, to manage global
International Trade Organisation (which became
GATT and then the WTO), to manage trade.
in the Marshall Plan, the most generous idea by victors
in war ever, this was the mirror opposite of the
spiteful, short-term thinking of 1918 and Versailles.
What a different and more dangerous world it would have
been without this visionary political leadership.
once defined insanity as people or societies doing
exactly the same thing over and over again and expecting
different results. The forces of reaction and economic
tribalism still lurk out there. For example, I see two
Europes. There is a united Europe confident; where
people enjoy each others culture and commerce, move
freely, respect human rights, and promote and defend
environmental standards. Contrast this with the other
Europe the Balkans, where political and economic
tribalism still destroys hope and tortures the truth. A
grotesque example of what really happens when tribalism
wins over openness and democracy.
I said, we need constantly to reassure people.
the critics of globalisation are trying to say that the
benefits of globalisation mean little to ordinary people.
After all, no one has ever manned a barricade demanding
that efficiency be maximised. But although the
terminology may not have a human face, the reality does.
Inefficiency is never a good thing: it means people are
wasting their talents and countries are squandering their
scarce resources. Maximising efficiency means getting the
most out of what youve got. It means enabling
people to fulfil their potential and helping countries to
make the most of their resources and conserve their
environment. Efficiency is just another word for
evidence of people doing better for themselves is
captured in economic statistics. There is overwhelming
evidence that trade boosts economic growth. Just compare
the protectionist nightmare of the 1930s with the
long boom in America and Europe as trade barriers fell in
the 1950s and 1960s. Or read the famous study
by Jeffrey Sachs and Andrew Warner of Harvard University,
which finds that developing countries with open economies
grew by 4.5% a year in the 1970s and 1980s,
while those with closed economies grew by 0.7% a year. At
that rate, open economies double in size every 16 years,
while closed ones must wait a hundred. Or cast an eye on
the countless country studies that support their results.
people say globalisation lacks a human face, they may
also mean that it doesnt benefit ordinary people.
But that is simply not true. More has been done to
address poverty in the past 50 years than the previous
500 years. In 40 years, developing countries have seen
child death rates drop by half and malnutrition drop by a
third. The percentage of rural families without access to
clean water has fallen dramatically.
is not just Wall Street traders, management gurus and
international civil servants who gain from globalisation.
is also everyone with a pension who enjoys a more
comfortable retirement because their savings are more
fruitfully invested abroad, as well as everyone abroad
who benefits from that foreign investment.
is people in Britain who can talk on Finnish mobile
phones, use Japanese cameras, drive American cars, drink
Colombian coffee and wear clothes made in Asia.
is poor people everywhere who can buy cheaper food and
clothes produced abroad.
is Indian computer programmers who can sell their
services to American companies and earn enough to give
their children a better education and decent healthcare.
it is poor people in poor countries who are grasping the
opportunities provided by trade and technology to try to
better their lives: Mexican farm hands who pick fruit in
California; Bangladeshi seamstresses who make clothes for
Europeans; South African phone shop owners who hawk time
on mobile phones to their fellow township dwellers. They
and countless other real people everywhere are the human
face of globalisation.
is true that, in general, living standards in poor
countries are not catching up with rich ones. It is a
tragedy that 1.2 billion people a quarter of the
worlds population survive on less than a
dollar a day, and that a further 1.6 billion
another third of the worlds population make
do with between one and two dollars a day. But let us be
clear. Trade and openness is not the problem for these
poor countries. Rather, it is too little trade and not
enough openness. Sometimes. It is also a lack of good
governance or democratic structures.
extreme poverty must be a priority. Of course, it is
easier said than done. But we can learn from the example
of those developing countries that are catching up with
the rich ones. Take South Korea. Thirty years ago, it was
as poor as Ghana; now it is as rich as Portugal. Or
consider China, where 150 million people have escaped
from extreme poverty over the past decade.
do these successful countries have in common? Openness to
trade. That is the main finding of a new World Trade
Organisation study on trade and poverty by Dan Ben-David
of Tel-Aviv University and Alan Winters of Sussex
University revealed recently.
bottom line is this: the developing countries that are
catching up with rich ones are those that are open to
trade; and the more open they are, the faster they are
converging. That is particularly good news for China. The
liberalisation that joining the WTO requires will give
another big boost to Chinese living standards.
alone is not enough to eradicate poverty. For instance,
abolishing trade barriers will not help much if countries
are at war and farmers cannot get their crops to market.
Nor will abolishing trade barriers have much impact if
debt repayments account for nine times more expenditure
than healthcare. And if 25% of the people are HIV
positive, as is the case in some parts of Africa, then
trade on its own will not be the whole solution. But
trade will be a key part of any solution.
so, critics of free trade argue that poor people within a
country lose out when it liberalises. Not so. The new WTO
study finds that the poor tend to benefit from the faster
economic growth that trade liberalisation brings. It
concludes that trade liberalisation is generally a
strongly positive contributor to poverty alleviation
it allows people to exploit their productive
potential, assists economic growth, curtails arbitrary
policy interventions and helps to insulate against
shocks. This concurs with the finding of a new
study by David Dollar and Aart Kray of the World Bank
which, using data from 80 countries over four decades,
confirms that openness boosts economic growth and that
the incomes of the poor rise one for one with overall
course, in the short term, some people do lose from
globalisation. As trade barriers fall, foreign
competition forces domestic firms to specialise in what
they do best, rather than making goods which are more
efficiently produced elsewhere. Those who are no longer
gainfully employed have to find new jobs. Some are fat
cats grown rich from cosy deals with governments. But
others are poor farmers who lose their subsidies or
unskilled workers who lose their jobs and take time to
find another one.
plight must not be forgotten. But their hardship, like
that of anyone who loses their job, should be eased with
welfare benefits and job retraining, not by putting a
halt to liberalisation. The temporary losses of a few
should not prevent a country from reaping the much
bigger, and permanent, gains from free trade. After all,
the interests of candle makers were not allowed to stop
the introduction of electricity. Nor are governments
scrambling to stop the Internet cutting out middlemen.
Freeing trade, like new technology, causes change. That
is how it boosts economic growth. Some of us lose at
first, but eventually we all gain. Technology can be the
friend of the people. Nobody wants yesterdays
information age is providing opportunities in education,
health care, entertainment, enjoyment and employment
never before dreamed of. On lonely atolls and distant
villages, one can enjoy Pavarotti, get weather reports
and teach ones children. Contrast when I was a
child, the hope of every working class family was a set
of the Encyclopaedia Britannica. In those days it cost a
years pay. Now, its free on the internet or
you can buy the CD with a weeks social security.
trade is generally a good thing. And so is the WTO. We
are too often misunderstood, sometimes genuinely, often
wilfully. We are not a world government in 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 to
match the acceleration of globalisation. 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.
Thats what the WTO is. We do not lay down the law.
We uphold the rule of the law. The alternative is the law
of the jungle, where might makes right and the little guy
doesnt get a look in.
best friends of the WTO are those who are not members.
This year, Georgia, Jordan, Albania and Croatia have
joined the WTO. The Albanian President said to me that
those who oppose economic integration and support
isolation should visit Albania. Later this year we hope
to have China, Chinese Taipei, Oman and Lithuania as new
members. It is worth reflecting that the Baltic states
had living standards equal to Denmark before the Soviets
closed them up. Czechoslovakia had a living standard
comparable with France before the war. And at the turn of
the century, Chile, Argentina and Uruguay had higher
living standards than New Zealand, Australia and Canada.
Then they turned inwards and downwards. The
lessons are overwhelming.
the WTO is not a development organisation, it does a lot
to alleviate poverty. After all, free trade is not an end
in itself. It helps to raise living standards, which
lifts people out of poverty.
so, the WTO could do more to help the poor. Poor
countries do not always make the most of the world
trading system, and sometimes their interests are
overlooked. I am glad to report that we have made
progress on that front, with a package that includes
better access to rich country markets, increased
technical assistance, and closer co-operation between the
WTO and other global institutions that promote
development notably the World Bank.
are important steps. But the surest way to do more to
help the poor is to continue to open markets. A new round
of multilateral trade negotiations would bring huge
benefits. As Kofi Annan, the Secretary General of the
United Nations, has said: whatever cause you
champion, the cure does not lie in protesting against
globalisation itself. I believe the poor are poor not
because of too much globalisation, but because of too
little. He is right. The poor as well as the rich
Kennedy, on the launch of the Kennedy round of trade
This will assist
developing countries like Japan. Look at Japan
today. I think this makes our case.