Mike Moore's speeches
I First of all
my sincere thanks to my good friend Fred Bergsten and the Institute of International
Economics for organizing this timely conference on the future of the trading system. One
of the constants of this system over the past fifty years has been US leadership. America
has been a major driving force behind no less than eight rounds of world trade
negotiations, including the successful conclusion of the Uruguay Round. Recent
multilateral agreements to free trade in information technologies, telecommunications, and
financial services - the value of which is equivalent to a major Round - were largely a
result of US leadership. And there would be no WTO today without the imagination, tenacity
and commitment of the United States government - both Republicans and Democrats. So when
we talk about the future of the trading system, almost by definition we are also talking
about the future of US leadership and US trade policy.
There is another important point to be made about the subject of this conference.
Just two decades ago the challenge facing the trade community was to bring subsidies,
antidumping, or technical standards fully into the rules of the system. Now the trading
system is being called on from one side or another to take account of environmental
policy, financial instability, labour standards, ethical issues, development policy,
competition law, culture, technology, investment, marginalization, security, health - an
ever-lengthening list of issues which can be associated in one way or another with trade.
This is a reflection of the system's success in lowering barriers - trade barriers first
and foremost but not only trade barriers. As we all know, trade's importance goes far
beyond trade; as the European experience has already shown, it can also be the cement of
peace. So, on this fiftieth anniversary we are celebrating the past achievements and the
future promise of a system which is as indispensable to global stability and security as
it is to global prosperity.
underlines how interdependent our present world has become, and how important the trading
system is to managing globalization. As trade, investment, and technology weave our
economies closer together, the trading system has become a growing focal point for public
expectations and concerns. Do differing labour standards confer an unfair trade advantage?
Are environmental regulations a national or a global concern? Should governments be able
to regulate content on the Internet? These new issues are a long way from
"traditional" trade concerns such as tariffs. But all underline how economic
integration can turn what were once domestic issues into global concerns. And all
represent legitimate and important policy goals that the international trading system is
being asked in one way or another to address.
What I want
to try to do here is to introduce a few elements of clarity to this emerging debate. The
first point is that in the interdependent world in which we live, the need to address
policies, issues and objectives that are in different ways related to trade is certainly
not something the multilateral trading system can turn away from. As Charlene Barshefsky
recently pointed out "both trade and the environment are critical. No one is being
asked to choose one over the other and no one should". None of us can ignore the
reality of these global concerns - whether they be environmental, development, social or
ethical issues. To describe the WTO - as sometimes happens at present - as an institution
which is only focused on free trade and is insensitive to broader human concerns and
values is a false representation.
the beginning the mission of the trading system to improve human welfare has been clear.
The preamble to the GATT, negotiated in 1947, emphasizes that trade liberalization should
be conducted with a view to "raising standards of living, ensuring full employment
and a large and steadily growing volume of real income". For over fifty years the
system has fulfilled that mission in a way which has made an immeasurable contribution to
creating a more prosperous and stable world.
multilateral system has contributed to an extraordinary period of growth in world trade
and output - growth which in turn generates the economic resources that allow more
ambitious and costly environmental and social policies to be put in place. World trade
flows have increased fourteen fold since 1950 - exceeding US$ 6 trillion for the first
time in 1995. In the same period, world GDP increased by 1.9 per cent per year at constant
prices and taking account of overall population growth - an extremely high figure by
More and more
countries - especially in the developing world - are being drawn into this system as its
relevance and influence expands. While early GATT rounds in the 1950s typically involved
some 20 to 30 countries, the Uruguay Round had 123 participants. And today the WTO has 132
members - eighty per cent of which are developing or transition economies. Developing
countries as a whole now account for a quarter of world trade today, compared to less than
a fifth a decade and a half ago; and for the manufactured sector, its share has doubled
from 10 to 20 per cent. Over the same period of time, 10 developing countries with a
combined population of 1.5 billion people have doubled their income per head.
Then there is
the political value of the trading system - placing international economic relations on a
firm foundation of the rule of law rather than the rule of power. Open trade on the basis
of universally accepted rules helps to build shared international interests and provides a
powerful motive for maintaining global stability and cooperative relations. And
cooperative relations in turn provide the best possible foundation on which to build
is an ambitious list of negotiating commitments on the WTO's future agenda
- including, beside services, negotiations in agriculture and aspects of intellectual
property. Decisions must also soon be taken about investment and competition policy. And
new issues like electronic commerce are already demanding a response from the WTO system.
As Lou Gerstner, head of IBM, has suggested, technology is pushing international
cooperation to a new level - what he describes as "global public policy". At the
next Ministerial Conference, in Geneva in mid-May, we have to agree on the mandate for the
preparation of these and perhaps other negotiations.
All of this
in turn reinforces the WTO 's institutional role as a forum for ongoing negotiations and a
binding mechanism for settling disputes. Some 106 cases have been brought to the WTO in
the first three years of its existence, compared to approximately 300 cases throughout the
life of the GATT - and many more of these cases are being brought by developing countries,
underlining their growing faith in the system.
the public relations aspects of the dispute settlement mechanism are far less satisfactory
than the system itself. Preliminary results of sensitive disputes - usually based on
partial or incomplete knowledge - have found their way into the public domain via the
press or the Internet. And on these partial and incomplete presentations, political
judgements are sometimes expressed. Yet the WTO is prevented - by the rules to which
member governments have agreed - from providing the full details of cases until the
process is completed. By which time opinions and political positions have been formed and
it is often too late to correct mistaken impressions. This poses a major political
challenge for the dispute settlement process - a challenge which members will have to
address as soon as possible if they want to preserve the legitimacy of the system in the
that trade has an important role to play in creating an economic environment more
favourable to sustainable development or social justice, I am not arguing that the link is
somehow automatic or inevitable. A free global market, for example, can do little to
ensure that air, water or energy resources are accurately priced for sustainable
development as long as no mechanisms exists to internalize environmental costs. In the
same way, trade liberalization is a hugely powerful engine for economic growth, but it can
do little by itself to guarantee that wealth will be equitably distributed. The essential
point is that environmental and social policies are needed to redistribute the benefits
that trade brings and to target particular public goals. And in our increasingly
integrated world, many of these policy solutions will have to be as global in scope as the
global economy they must now address.
would be difficult not to recognize that much more progress is needed in the WTO Committee
on Trade and the Environment. Its work must be revitalized if the trade and environmental
agendas are to advance in a mutually supportive way - and if we are to move beyond
identifying problems, to identifying solutions. In all this work it will of course be
essential to take full account of the views of all WTO Members, including developing
countries. One clear priority is the need for a better framework to define the
relationship between Multilateral Environment Agreements and the WTO in cases where there
is room for contradictions and inconsistencies between the two systems of law - which will
in turn require greater technical coordination between trade and environmental
policy-makers, both at the national and the international level. Other areas where we need
to clarify the relationship between both policy objectives - trade liberalization and
environmental protection - include, among others, eco-labelling, Production and Process
Methods, and the so-called precautionary principle.
must continue to make progress on the issue of labour standards. Already we have made a
crucial step forward with the clear and strong consensus which emerged from the WTO's
Ministerial Conference in Singapore - a consensus first, that members were committed to
the observance of core labour standards; second, that the ILO was the relevant body to
address these issues; third, that standards are best promoted by growth and development,
fostered by trade liberalization; and fourth, that labour standards should in no way be
used for protectionist purposes or to put into question the comparative advantage of
countries. The fact that the ILO is now making important strides in these areas
demonstrates, not only that consensus on the most difficult issues is possible, but that
consensus is absolutely critical to real and lasting progress.
step was the WTO initiative last year to provide assistance, in collaboration with UNCTAD,
UNDP, the World Bank and others, to address the needs of least-developed countries. One
objective is to give least-developed countries better access for their exports in advanced
markets - and here I have strongly advocated that we provide bound duty free access.
Another objective is to integrate the new technologies more effectively, so that least
developed countries are aware of the opportunities in the global trading system, and
better equipped to seize them. And the third objective is to better integrate a wide range
of policies - linking technical assistance with capacity building to design a mutually
reinforcing strategy for development.
I give these
examples to emphasize three points: First, that multilateral approaches in the
environmental, labour and development fields are working - though no doubt much more
progress is needed. Second, that WTO Members have a direct interest in real, substantive
and durable progress in these areas - not least because without such progress it is the
momentum of the world trading system itself which could suffer. And third, that progress
in these and other policy areas will be greatest where they advance in accordance with
their own logic and needs and the forums best adapted to them. The WTO cannot provide a
shortcut to consensus in these other policies. On the contrary, if governments cannot
reach a consensus in the appropriate forums, it is even more difficult to see how they
could reach consensus in an organization whose focus is trade and whose objective is trade
Let me say a
word about an area where we also need to clarify the relationship between different
systems and to emphasize their common ground - and that is the relationship between
regional arrangements and multilateralism. No doubt regional arrangements can be helpful
to the integration process - providing an impetus to greater liberalization - especially
for the developing countries. But in a world where the reality of global integration is
calling for global solutions across a whole range of policies and issues, regionalism
cannot provide an alternative to the multilateral system.
difference between multilateralism and regionalism comes down to one basic question:
whether or not the agreement is discriminatory. It is true that the multilateral system
has always accepted some qualifications to MFN treatment in the case of regional
arrangements as long as they meet the test of Article XXIV of the GATT and article V
of the GATS. But with the growing scope and ambition of regional arrangements today it is
increasingly clear that conformity with the legal requirements of the multilateral system
cannot be the only consideration. There are other issues at stake which are of as great or
even greater importance. One is the adverse impact of a complex web of differing regional
and multilateral rules - especially the potential for competing dispute settlement
procedures - on our ever-more integrated world trading system. An even greater concern
arises when regional areas cover too many countries and too great a share of world trade -
to the point where preferential deals become the rule rather than the exception in
international trade relations. It is the answers we find to these questions - as well as
the more legalistic issues - which will have a powerful impact on the future direction of
the trading system.
I do not
claim that the multilateral trading system that we have built in the last 50 years is
a perfect one. But it is a system which is treats all countries equally, regardless of
size, wealth or power. It is a system which operates by consensus, with all decisions
approved by each government and ratified by each national parliament. And, more
fundamentally, it is a system which is rule-based, not power-based, as a shared
responsibility of all its members. It would be difficult to find a more transparent and
democratic system in the international community - a reality which explains the
lengthening list of developing and transition economies lining up to join. And yet we do
not offer grants or loans, but just a framework to negotiate the lowering of trade
barriers inside binding rules with the appropriate flexibilities for developing countries.
of globalization is the reality of interdependence, an interdependence that, as I said at
the outset, extends far beyond trade or strictly economic criteria. The human dimension of
globalization is ever-more important. In every country and every region, the same
questions, concerns and anxieties are being expressed: People want the fruits of economic
growth and integration, but at the same time they fear the effects of globalization on the
environment, wages levels, or cultural identities. They want a strong and enforceable
system of rules - but only for others. They claim that their policies and practices are
best, and want them adopted by others - but rarely do they accept the same proposition in
reverse. And they recognize the benefits of greater cooperation and coordination at the
international level, but they instinctively resist interference in domestic affairs or
laws or policies. This reflects the fact that politics are mainly national, while
technology, economics - and people's hopes and fears - are increasingly global in scope.
This is why we need an international architecture which can take account in a balanced way
of the policies and objectives which must come together in cooperation.
definition, the global challenges we all face call for shared and cooperative solutions.
They demand consensus. And this means using multilateral negotiations to construct
multilateral agreements - which will require determination, skill, and patience. Next
month we have an opportunity to celebrate a unique - and uniquely valuable - exercise in
global economic cooperation: the fiftieth anniversary of the multilateral trading system.
But we also have a window of new opportunity to be as creative in developing the
architecture of an increasingly borderless, global economy as our forefathers were a half
a century ago in developing the postwar international system. What is needed is a kind of
breadth of vision that can match this emerging global age. Now, as then, America will be
looked upon to help provide that vision and the leadership to make it a reality.