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Ladies
and gentlemen,
Someone
once said that change is threatening to the fearful because it means
that things may get worse, but to the confident it is inspiring
because the challenge exists to make things better. Woodrow Wilson
also made the point that “if you want to make enemies try to
change something”. I have been trying to change things all my
life and I am still trying. I confidently expect to have a lot of
enemies by the time this year is out.
On
a more serious note this is a critical time for the multilateral
trading system. The next WTO Ministerial Conference will be held in
Qatar this November. It is a key opportunity to build on the huge
achievements of the multilateral trading system over the past fifty
years. It is an opportunity to make the WTO stronger and more open,
vibrant, ready to play a fuller role in international trade relations,
to keep pace with the realities of a fast changing global
market-place.
It
is no secret that our aim is to come away from Doha with a mandate to
start broad trade negotiations. The economic argument is strong.
Already current trade rules permit world trade in goods and services
to be successfully conducted at the rate of close to US$1 billion per
hour every hour of every day. If we cut by a third remaining barriers
to trade in agriculture, manufacturing and services, this would boost
the world economy by $613 billion, according to one study from
Michigan University. That is equivalent to adding an economy the size
of Canada to the world economy. If we do away with all trade barriers,
this would boost the world economy by nearly $1.9 trillion, or the
equivalent of two Chinas. Of course, these are only estimates.
Reasonable people can quibble about the exact size of the gains from a
new round. But the basic message from study after study is clear: more
liberalization will bring huge benefits to all parts of the globe.
The
development argument is equally compelling. Notwithstanding the
advances in living standards over the last 50 years, 1.2 billion
people are still living on less than $1 a day. Another 1.6 billion are
living on less than $2 a day. It is a tragedy that while our planet is
blessed with sufficient resources to feed its 6 billion people, many
are going hungry and many are living in the misery that poverty
breeds.
Poor
countries need to grow their way out of poverty. Trade is a key engine
for growth but currently products of developing countries face many
obstacles in entering the markets of rich countries including high
tariffs, mainly in agriculture, textiles, clothing and leather. Most
rich countries have higher tariffs on processed goods than on raw
materials which makes it harder for developing countries to
industrialize. As a study from the Tinbergen Institute points out, the
potential benefits of a new round to the developing world are three
times what is received each year in overseas aid. Thirty years ago,
Ghana had the same living standards as South Korea. Now South Korea is
in the OECD. Where policies of autarky and import substitution have
singularly failed and been abandoned, countries with open markets have
prospered. That is why over the past 15 years, developing country
after developing country has unilaterally made liberalization the
keystone of their economic policies.
Key
decisions will be taken in the weeks and months ahead and the
preparatory process has been underway for some time. Recently, senior
officials from capitals came to Geneva and through this initiative the
process has been further energized. We will have a “reality
check” at the end of July when we will report clearly and
objectively what is possible to include in a trade negotiation, beyond
those on agriculture and services which are already underway. The
agenda has to be broad enough to have something in it for everyone. It
has to be detailed enough to be meaningful, but not so detailed that
it becomes a pre-negotiation. I can report on one consensus that
Ministers have already reached. They want a balanced agenda for Doha.
If we have the same differences in July as we had in Seattle, we will
have the same result as Seattle. We are in the hands of our owners,
the Members. More leadership, more flexibility and generosity must be
shown soon, so that all are accommodated.
Brokering
agreement between 142 member governments from all sizes and stages of
development is not easy, particularly as all decisions in the WTO are
made by consensus. Putting to one side the evidence that greater
openness domestically promotes economic growth in itself, negotiations
by their very nature involve dealmaking, concessions and dividends.
For Switzerland to get better market access for its exports of
high-tech manufactures and financial services, for example, it may
have to lower tariffs in other, more sensitive, areas.
Every
country has its unique interests, priorities and concerns. Developing
countries want to see perceived imbalances in previous agreements
addressed. Agricultural exporting countries and many developing
countries want subsidies to be reduced. For others, food safety is a
top public concern.
In
the context of a slowdown in the world economy, however, all countries
have a common interest in creating the conditions for economic growth.
According to the just released WTO Annual Report 2001, the world
economy is retreating from the high growth path seen last year,
dimming the prospects for world trade in 2001. The volume of
merchandise trade is expected to grow by 7%, a marked reduction from
the estimated 12% in 2000. The US economy, motor for the world economy
is stuttering. A recession in America could export trouble to the rest
of the world. An upsurge in protectionism could make things much
worse. The virtuous cycle of trade liberalization and economic growth
could all too easily become a vicious spiral of protectionism and
stagnation.
Countries
want market access, they want to do deals. But if this proves
impossible at a global level, then they will look at other options. I
am not suggesting for a minute that failure to engage in negotiations
this year will render the WTO irrelevant. But there is a risk that the
focus of attention in capitals could shift to regional deals. These
can be building blocks for a more open world economy, but by their
very nature they are discriminatory. Big countries have a distinct
advantage because everyone wants to knock on their door leaving the
poor and weak with little negotiating leverage. Even outward looking
regional arrangements are a second-best option to a global rules-based
system based on non-discrimination. They cannot be a substitute for
multilateralism, but they can help build towards our work in Geneva.
It need not come to this. The fragility of the world economy provides
an opportunity as well as a threat. That is why Doha is so important.
If
asked for my personal view about prospects for launching a broader set
of negotiations, I would say that I am cautiously optimistic.
Certainly we are in better shape now than we were this time two years
ago. The atmosphere in the house has improved enormously. On substance
delegations are working hard and in a positive spirit to bridge the
differences that made progress in Seattle so difficult. I am seeing
encouraging signs of flexibility but not enough yet.
We
are working hard in other areas. We have changed our working methods
so all our members have a better opportunity to participate. We have
taken concrete steps to reach out more to those countries who cannot
afford to have a presence in Geneva - including bringing them to
Geneva for a week a year to participate in workshops and meetings and
to touch base with the other delegations. We have revamped our
programme of technical assistance and capacity building to least
developed countries in cooperation with a number of other agencies. A
number of countries have made improvements to market access for LDC
products.
Many
countries are also signalling their commitment to wider negotiations.
The US and EC want to engage and made a strong statement of support at
Göteborg last month. The OECD recently called for negotiations, as
did APEC.
A
major new challenge that we face, and I know that this is one familiar
to business, is to put a human face on what we do, to explain
ourselves better and become more open and accountable. Whereas the
GATT was virtually invisible, the WTO, like big business, has become
heavily identified with the demon “globalization”. We are
seen as the spectre of world government, forcing change, putting
profit above other considerations, undermining traditional ways of
life. People feel vulnerable, threatened. Ministers often find the
toughest negotiations are not with each other, but at home, with their
parliaments, cabinets and party factions.
Globalization
is not new, and the WTO is certainly not responsible for it. It is not
a policy, it is a process that has been going on since the beginning
of time. Some historians claim trade is now at about the same level it
was at the turn of the last century. Closer integration between
nations can bring huge opportunities in terms of access to goods and
services that can't be made at home. Everyone is in favour of
globalization when it allows them to get medicine for their sick
children. The WTO exists to support the benefits of a more integrated
world economy, to resist the possibility of hostile trading blocs.
Having a framework of transparent and legally binding rules promotes
stable and predictable trade flows, it gives business the legal
certainty of access to foreign markets. It prevents escalating trade
tensions and random government interference.
Of
course, more trade means more opportunities for disputes between
countries to arise and to spill over into broader political tension.
But that is why our Members built a strong dispute settlement
mechanism – one where panel findings cannot be vetoed by the losing
party. This allows disputes to be isolated from each other and
evaluated on the basis of the legally binding commitments that
countries have taken. The grim alternative is dispute resolution
through economic or political might.
I
vividly recall at Davos earlier this year, Mr. James Schiro, CEO of
PricewaterhouseCoopers USA commenting that for business in today's
world transparency is not an option – it will take place because the
network economy means that everyone can talk about your performance.
If you don't manage it yourselves, others will manage it for you. This
is as true for the WTO as it is for the business community, and we
have learnt a very hard lesson in recent years. I am staggered by the
amount of misinformation about this institution – we are charged
with forcing privatization of public services and the deregulation of
services in general – this is false. We stand accused of undermining
national sovereignty – how can this be true when all decisions made
in the WTO are made by our member governments on the basis of
consensus? We have no security council. Every country has a veto and
they are not afraid to use it. Our agreements are ratified by national
parliaments.
It
saddens me only the bad news seems to make the headlines – that
sound bites are more appealing than substance. Little credit is given
to the important role that the multilateral trading system played
during the Asian financial crisis. The world economy could have been
blown out of the water had countries like the United States not
adhered to their multilateral commitments and withdrawn into
protectionism as a consequence of a flood of cheaper imports. They
kept their markets open, the American economy remained robust and the
Asian economies quickly recovered.
I
am glad that our stakeholders, the people, are taking a greater
interest in the WTO. We should be held accountable by the taxpayer. We
have a lot to be proud of. Within the constraints of our resources we
are taking steps to outreach more to civil society. Tomorrow we will
be having a two day symposium for non-governmental organizations to
discuss in-depth the substantive concerns of civil society. Gone are
the days when NGOs could only “infiltrate” WTO meetings
disguised as journalists. At Seattle just under 700 NGOs took part in
the event and were able to participate in the opening and closing
plenary sessions. In conjunction with the IPU we held a meeting with
parliamentarians from 75 countries last month. We are looking to
develop stronger ties with Universities. We have substantial informal
contact with business. But ninety percent of the responsibility lies
with Member Governments to explain the benefits of trade
liberalization – they own this institution, they make all the
decisions. Frankly I believe that many are not doing enough.
Business
too has not been forceful enough in pushing for a new round. That, in
some ways, is understandable. A round can seem nebulous and distant,
hard to measure and harder to achieve. Much like an effective domestic
legal system, the WTO's impact on a business's bottom line may not be
immediately obvious. All of this is true, but it does not alter the
inescapable fact that world trade rules are the backbone of a
globalizing economy. They benefit multinationals and the millions of
people in rich and poor countries who work for them by enabling them
to conduct business internationally. If the WTO is to remain relevant
to the fast moving global market-place it requires changing the
legally binding commitments of Members. The only way to do this is
through negotiations.
You
have a big stake in this game, as do your employees and your
customers. It is tempting to take the system for granted. It is easy
to assume it will look after itself. But that is to run a big risk. We
need your critical support in capitals to give strength to progressive
talks that can see beyond the next opinion poll.
Thank
you. |
