PRESS/43
22February 1996
RUGGIERO CALLS FOR TRADING SYSTEM TOBEKEPT
INLINE WITH GLOBALIZATION PROCESS
TheDirector-General oftheWTO, Renato Ruggiero, today called forgovernments
toensure themultilateral trading system continues torespond totheneeds oftheglobal market.
InaspeechinBrisbane,hereviewedtheimplementationoftheUruguayRoundresults,progress
withtheexisting negotiating agenda, andnewissues which maybecome theobject offurther
work intheWTO.
MrRuggiero wasspeaking attheConference onFuture Directions fortheMultilateral
Trading System, organized bytheAustralian Government. Thefulltextofhisspeech is
attached.
ooOoo
96-0664 MORE PRESS/43
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Calling ontheDirector-General oftheWTO tomake aspeech on"Why theWorld
Needs aStrong andEffective WTO" isnotunlike asking acardinal toprovide asermon on
thebenefits ofvirtue: there isalongversion andashort version -butneither leaves much
room fordoubt orargument. Today, youwillbehappy tohear, Iamgoing togiveyouthe
short version.
Before Istartonit,letmecongratulate BobMcMullan andhiscolleagues fortheir
initiative inbringing ustoBrisbane. Itisentirely appropriate -andindeed almost tobeexpected
-thatAustralia would takesuch aleading roleinthepreparation forSingapore andthe
consideration oftheWTO 'sfuture agenda. Australia hasalways beenastrong supporter of
anopen multilateral trading system based onagreed andenforceable rules -and,Ithink it
isfairtosay,amajor beneficiary ofthatsystem. Australia wasoneofthe23founding members
oftheGATT. Itwasalsooneofthefirstcountries toratify theWTO Agreement andjoin
theneworganization. Australians chaired important Uruguay Round negotiating groups and
Australian Ambassadors haveconsistently played amajor roleinthelifeoftheGATT and
theWTO. Thisconference isafurther signofAustralia 'scommitment totheWTO, andI
canassure Senator McMullan thatitisverymuch appreciated.
Isuspect thatformostofusinthisroom there isnoserious doubt about theneedfor
astrong andeffective WTO. Werecognise theextraordinary success oftheGATT overits
forty-eight years oflifeandwehaveconfidence thattheWTO hasthepotential toinspire
economicgrowth,developmentandanoverallimprovementinsocialwellbeingoverthecoming
decades. Inpartourconfidence isbornofonesingle perception which overwhelms allothers
inthewaywenowviewtheconduct oftrade; afactor which points exclusively towards the
multilateraltradingsystemasthemostcoherentvehiclefordrivingsustainableeconomicgrowth.
Thatperception, thatreality, isglobalization.
Thefactthatwehavecontinually beenabletoreport much higher growth rates for
world trade thanforworld production from thefifties andonwards, demonstrates eloquently
howfastandhowconsistently theprocess ofwhatwasoncecalled interdependence, butwhich
wenowknow asglobalization, hasproceeded overthepastfivedecades. Thefactthatwe
cannowtalkabout aglobal market -albeit anincomplete andimperfect one-means only
thattheprocess hasreached thepoint where people aremore conscious oftradeandinvestment
ontheglobal scale andlessconscious ofnational orregional limits.
Thatconsciousness brings withitgreat hopes andexpectations. Many developing
countries -even, Iamgladtosay,more andmore inAfrica -areopening uptotheglobal
market. Andifwecanhelpthem succeed inopening uptheir economies andprovide
opportunities forthem tomarket theirproducts abroad, thenthey, intheirturn, willbecome
vigorous, demanding newmarkets fortheexports oftheindustrial andadvanced developing
economies. Thatisthewaytheglobal market issupposed tooperate.
Howshould werespond intheWTO? First, weneedtowork hardtoensure fulland
faithful implementation oftheUruguay Round commitments. Properly enacted, those
commitments arequite capable ofsupporting andpromoting trade andinvestment growth in
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thecoming years. Wehavegiven ourselves averymodern system; theonlyissue iswhether
wearegoing touseiteffectively andenergetically.
AttheendoftheWTO 'sfirstyearIwasabletoreport agenerally favourable situation
withrespect toimplementation. Intheareaofdispute settlement, thepicture isespecially
encouraging. Aconsiderable number ofcountries -small aswellaslarge-aremaking frequent
andvaried useoftheprocedures andtheyareveryoften succeeding inresolving disputes at
theconsultation stage rather thanengaging thefullweight ofthepanel andappeal processes.
Wehaveyettoseethelaterstages oftheprocedure tested; nevertheless, Ihavenoreason
tobelieve thatgovernments willnotcontinue totaketheirobligations aswellastheirrights
veryseriously inthiscontext.
Atthesame time, itwould beasurprise ifimplementation were toproceed without
anyhitch. Clearly thatisnotgoing tobethecase-wehaveasked much ofgovernments and
theirparliaments, anditwould beanillusion tobelieve thatcomplete implementation ofthe
Uruguay Round results iseasyorstraightforward anywhere. Buttheeffort hastobemade.
Without thateffort, themany benefits wesawstemming from theRound willbereduced or
willsimply failtomaterialize. Forthepresent, Iseenodanger ofthateventuality. Butwe
willneedtobevigilant andwewillneedtoeducate andinform public opinion astowhythe
changes required byWTO membership arebothvaluable andunavoidable.
Asecond response tothepressing needs oftheglobal market mustbetosucceed with
ourexisting negotiating agenda. Thisconcerns principally, butnotexclusively, trade and
investment inservices. Wehaveamandate tonegotiate anumber of"horizontal" disciplines
which arecurrently absent intheGATS -onsubsidies, public procurement, safeguards,
standards, forinstance. Wearenegotiating onprofessional services, particularly withrespect
totheaccountancy sector. BytheendofJune, weareduetowrapupnegotiations onmaritime
transport. But,pre-eminent among allthese mandates, fortheverygood reason thatitis
inextricably tiedtotheprocess ofglobalization, isthebasic telecommunications negotiation.
Success here, willbeacrucial signal ofthewillingness ofgovernments tofollow thelogic
ofaglobal market intheirapproach tothemultilateral trading system. Wehaveuntilthe
endofApril. Wearegetting close tothefinal bargaining. Asofnow, weneed more
participants, more offers andbetter offers. Icallonyoualltoensure these areforthcoming.
Athirdresponse istotakeupagain some ofthebiggest liberalization exercises inthe
Uruguay Round. Thetariff cutting results were impressive but,atsome stage andperhaps
sooner rather thanlater, wewillhavetoconsider whether wecangofurther orimplement
faster. Andbytheendofthecentury wearecommitted tosubstantial newnegotiations on
bothagriculture andacross-the-board inservices. These areserious andmajor commitments
which arenotfardown theroad andwhich should bekeptvery much inmind when
governments consider theirtrade negotiating agendas forthecoming years.
Fourthly, ifthesystem istoremain fullyrelevant totheglobal market, itsagenda must
beinconstantevolution.Ofcourse,onecomparativelynewissue-TradeandtheEnvironment-
hasalready been included intheWTO 'sagenda. TheCommittee onTrade andthe
Environmentismakinggoodprogresstowardsdefiningsomeagreedparametersinthiscomplex
andsometimes controversial relationship. Ithink itwillhaveanencouraging report tomake
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atSingapore, onewhich Ihope willunderline thatopen trade policies andenvironmental
concerns canandshould bemutually supportive.
Asweprepare forSingapore weneedtoalsothink about howweapproach theother
"new" issues which various WTO members haveindicated theywould liketoseetaken up.
Take trade andinvestment: thattheywere everregarded asseparate oralternatives
wasmore anhistorical andpolitical aberration thanapractical reality. They areclosely
intertwined andallthemore sointhecontext ofglobalization. Businesses trade toinvest and
invest totrade. Developing countries andeconomies intransition cannot diversify theirexports
onanyimportant scale unless theyattract investment which becomes allthemore important
asaidbudgetscomeunderpressure.Nor,withoutinwardinvestment,aretheylikelytodevelop
service sectors which willadequately support manufacturing activity andbeservices exporters
intheirownright.
TheGATS waslargely founded onthenotion thatservices suppliers needtoinvest
andestablish themselves within markets inorder tosupply those markets. Much oftheTRIPS
agreementisaboutcreatingsecurelegalconditionsforinvestmentand,inparticular,thetransfer
oftechnology. And, ofcourse, wehaveaWTO agreement outlawing certain trade distorting
investment measures. Inshort, investment ishardly anewissue fortheWTO.
Theproblem ishowwegofurther, andwhere. Inward investment hastraditionally
beenpromoted andprotected bybilateral investment treaties: some 60percentofthe900
suchtreaties havebeennegotiated inthepast10years. Added tothose aretheinvestment
conditions included inrecent regional agreements. Alltogether thishardly suggests avery
coherent orpredictable climate forinvestment worldwide. Infactthepresent situation isthe
veryantithesis ofwhat theglobal economy would argue for.
Current efforts torationalize thesituation arewelcome butarestillfragmentary: many
countries areleftoutandtheterms ultimately agreed maybefarfromacceptable totheexcluded
majority. Moreover, itisvery important thatattempts tosecure international rules on
investment donotruncounter either toexisting WTO commitments ortotheWTO 'swork
programme -asImentioned earlier, forinstance, anewround ofnegotiations onservices
willstartinjustafewyears. There aremany arguments which weigh infavour ofagenuinely
multilateral initiative inthisarea.
Another consequence ofglobalization istheincreasing attention being given toprivate
practices which mayrestrict ordistort international tradeandcompetition. Hitherto theGATT
andnowtheWTO havemainly concerned themselves withtheelimination orreduction of
governmental measures thathavethese effects.
There is,however, nothing newabout theneedtoaddress competition policy matters
ininternational trade agreements.
- Itisinteresting tonotethat,backinthesecond halfofthe1940s when theGATT
wasborn, theneed tointegrate questions oftrade, competition policy and
investment wasalready recognized inthestillborn Havana Charter.
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- Invarious regional agreements, reflecting more advanced states ofeconomic
integration, these subjects havealsobeendealtwithinacoherent andunified
way.
- Some WTO agreements, notably onservices andintellectual property, already
contain competition-related provisions.
- Inthecurrent negotiations ontelecommunications, theneed foradequate
safeguards toprevent theabuse ofpositions ofmarket dominance isakeyissue.
Youareallaware ofrecent trade disputes thathaverevolved around differences of
conception oftheroleofcompetition policy andofitsenforcement inproviding trading
opportunities. Infact,itisinevitable thattheWTO willbecome increasingly involved with
questions ofcompetition policy, whether ornotthismatter isformally putontheagenda at
Singapore. Thequestion iswhether theWTO should onlydealwithcompetition policy-related
issues inanadhocmanner inthecontext ofspecific trade policy questions, orwhether an
overall examination ofthelinksbetween trade andcompetition should beinitiated withaview
todeveloping coherent multilateral vision ofhowtradeandcompetition policy canbemutually
supportive.
Some WTO members would liketoseethenewagenda include thesubject oftrade
andlabour standards. Iamcertainly wellaware ofthesensitivities onbothsides oftheissue.
Butheretoo,Ithink itshould bepossible atleasttodiscuss thequestion -eveninaninformal
way-inorder toavoid confrontation. Inmyviewthepossibilities forsuchadiscussion are
greatly enhanced ifitisclearly accepted thatprotectionism isnoanswer toconcerns about
labour standards. Ontheother hand, Ibelieve itshould beequally accepted thatcountries
should notimprove theircompetitive position through deliberately exploiting vulnerable sectors
ofthelabour force. Itisnecessary toclarify whether thisisaconcern forhuman rights or
competitivity. If,asIamsuremost people think, itisahuman rights issue, thequestion is
thenwhich categories ofrights areinvolved. Themostbasic relevant ones-concerning child
labour, forced labour ortrade union rights -arealready accepted more orlessglobally, in
theUniversal Declaration onHuman Rights. Theproblem ishowbesttoimplement them,
andwhere theyshould bediscussed. FortheWTO, theimmediate challenge istobuild a
consensus inorder toavoid thisbecoming adivisive issue atSingapore orelsewhere.
Theissueofcorruption ininternational trade hasalsobeenraised. IntheWTO context
anywork inthisareawould presumably focus firstongovernment procurement. Thenew
Agreement,whichcameintoforceon1Januaryextendstheamountofgovernmentprocurement
opened uptointernational competition bytentimes compared totheearlier agreement.
However, itremains onlyaplurilateral agreement withlimited membership. Extending its
coverage would helpimprove thetransparency which istheenemy ofcorrupt practices.
Thefifthresponse totheglobalization challenge mustbefortheWTO tobecome truly
global initsmembership. With 29current accession negotiations andmany other countries
considering anapplication formembership, wehaveavastjobonourhands ifwearetoensure
thattheintegration ofthese neweconomies istoleadtoconcrete benefits andeconomic growth
forthem aswellasfortheir trading partners. Iftheright terms canbeagreed, upwards
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of1½billion newconsumers andworkers could enter thesystem inthecoming years. That
should beseenasanopportunity forallofus,notapotential problem ofnewcompetition.
Thefinalresponse mustbetomake sense oftherelationship between regional economic
integration andthemultilateral system.
There isnonatural contradiction here. Thishasbeentheshared assessment ofthe
greatmajority oftheinternational trade community. Buttherelationship between regionalism
andamultilateral system based ontheMFN principle isnonetheless acomplex one,andit
isbecoming more complex asthenumber andthescope ofregional initiatives increase.
Regional trade initiatives canbethebasis forbreaking down oldhostilities, asthey
were inEurope and,wehope, theymaybeintheMiddle East. Andfortheleast-developed
countries, likemany inAfrica, theyareanessential steponthewaytofullintegration into
theworld economy. They alsohelpfocus andstrengthen thepolitical commitment toopen
economies andtrade régimes which itisessential tomaintain.
Nonetheless, no-one credibly presents regionalism asanalternative tothemultilateral
system. Aglobal economy calls foraglobal system oftrade rules, aglobal forum for
continuing negotiation andaglobal platform forbuilding thenewtrade agenda. Thisiswhat
theWTO system uniquely provides, andthisiswhyitistheessential andirreplaceable
framework forthegrowth ofregional initiatives.
Howtoensure thatthetwogrow together -andnotapart -isperhaps themosturgent
question facing trade policy makers. Iwant tosuggest three possible elements towards a
response.
- Firstly, improving theWTO 'sinstitutional capacity todealwith regional
initiatives. Application oftheexisting rules designed toensure theydevelop
inanopen wayhasbeenlessthaneffective. Therecent establishment ofa
unified Committee onRegional Trading Arrangements, replacing 25separate
WorkingParties,shouldconsiderablyimprovethissituation.Incasethissounds
likejustabureaucratic reshuffle, letmeemphasize thatthenewCommittee 's
mandate includes thesystemic implications oftherelationship between regional
agreements andthemultilateral system.
- Secondly,ensuringthatthelevelofambitionandrateofprogressinmultilateral-
orglobal -trade liberalization isatleastequal tothatofregional efforts. What
countries arewilling todoregionally, theyshould alsobewilling todo
multilaterally. Inpractice thismeans pressing onvigorously withtheWTO 's
built-in agenda andevenaccelerating itasmuch aspossible; italsomeans
keeping theWTO attheforefront ofthenewtrade agenda.
- Thirdly, enhancing thepolitical dimension oftheWTO. APEC countries meet
annually atHead ofGovernment levelandmore frequently atMinisterial level.
Thesame istrueforother regional groups. Ontheother hand, WTO Ministers
aresofarscheduled tomeetonlyevery twoyears. Yetthemultilateral system
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isbecoming more andmore apolitical issue. Thisishappening because its
evolution increasingly concerns national regulatory policies rather than
cross-border obstacles which means thatthechallenges tothesystem are
increasingly political asmuch astechnical. Logic suggests thattheactive
involvement ofpolitical leaders should become asregular afeature oftheWTO
asitisofmany regional groupings.
Letmesumuplikethis.Theworld needs astrong WTO simply because theWTO
reflects andrepresents theglobal economy asitreally is.Itismore intunewitheconomic
reality andpractical business thananyother similar economic institution orlegalframework.
Butitcannot stand still-itmustgoondeveloping andkeeping pacewithevents andchange.
Thefuture agenda islargely pre-ordained orsimply theproduct oflogic andcommon-sense.
Singapore isonlyastage -albeit animportant stage -inbringing thatagenda tomaturity and,
where there isconsensus, towards anewphase ofnegotiation. Thesignals thatcome from
Singapore willtelluswhether governments areprepared tofollow thelogic oftheglobal
economy andmaximize thebenefits through astrong, vibrant, up-to-date multilateral trading
system.
END