EMBARGO:NOTFORPUBLICATIONBEFORE1300
HOURS GMT TUESDAY 14NOVEMBER 1995
PRESS/29
2November 1995
HIGH RATES OFWORLD TRADE GROWTH CONTINUE
TOOUTSTRIP OUTPUT GROWTH
WTO SECRETARIAT SEES LINK TOGLOBALIZATION
World trade inmerchandise goods isexpected toincrease involume by8percentin
1995-down marginally ontheveryhigh91/2percentfor1994. Although thecurrent outlook
isforafurther modest slowing nextyear, trade growth willremain above theaverege ofthe
pastdecade.
Initsnewreport1"International Trade -Trends andStatistics", theWTO Secretariat
points outthatrecent trade growth figures continue toexceed world production growth by
alarge margin -in1995 probably byafactor ofalmost three andnextyearclose todouble.
Thispersistent pattern relates closely tothe"globalization" oftheworld economy; aprocess
which, saystheSecretariat, brings far-reaching benefits andwhich canbepromoted through
thefurther development ofthemultilateral trading system.
Thereport 'sdetailed statistical analysis concentrates on1994. Itexamines recent trade
trends bycountry, region andmajor product groups andservices sectors. Among thepoints
highlighted are:
-a13percentrisepushed thevalue ofworld merchandise trade pastthe$4,000 billion
mark forthefirsttime, to$4090 billion;
1"International Trade -Trends andStatistics" iscurrently available inEnglish andinFrench and
canbeordered from theWTO Publications Service atacostofSF40(also available ondiskette at
SF40orboththepublication anddiskette atSF70). TheSpanish version willbeavailable inthe
nearfuture.
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-an8percentincrease inthevalue oftrade incommercial services, to$1100 billion,
afternearstagnation in1993;
-a23percentincrease inthedollar value ofmerchandise trade inthefirstsixmonths
of1995 which, allowing forthedepreciation oftheUSdollar, isconsistent withafull-year
growth intrade volume of8percent.
TheReport examines thechanging relationship between world tradegrowth andoutput
andseeks todraw some conclusions withrespect tothenature ofglobal economic integration,
or"globalization".
Over theperiod from 1950 (when theprocess oftrade liberalization through theearly
GATT Rounds gotunder way) to1994 thevolume ofworld merchandise trade increased at
anannual rateofslightly more than6percentandworld output byclose to4percent. Thus,
during those 45years world merchandise trade multiplied 14times andoutput 51/2times.
However, theexcess oftrade growth overoutput growth varied; from anaverage ofamere
halfpercentage point intheperiod 1974-84 tonearly 31/2percentage points inthemostrecent
10years. Infact,theexcess during theyears since 1990 hasbeenmuch higher stillbutitis
notyetclear whether ornotthisrepresents apermanent shifttoafaster rateofincrease in
theworld 'strade-to-output ratio.
Having analyzed these trends fromregional andproduct points ofview, theSecretariat
comments that:
"...the rising ratio-andglobal integration more generally -arebeing driven bythe
interaction ofchanges ingovernment policies (especially theliberalization oftrade andcapital
flows), bytechnological innovations thatreduce communications andtransport costs, andby
evolving corporate andindividual investor strategies which bothdrive andarefacilitated by
thefirsttwodevelopments"
Thereportconsiderseachoftheseelementsinsomedetailandthenaskstwofundamental
questions.Astowhyanyoneshouldcareaboutthepaceofglobalization,theSecretariatobserves
thatthebenefits from innovation, newproduct development andspecialization inproduction
arewide-ranging. Inparticular, those developing andtransition economies which have
participated inglobalization byopening uptheirownmarkets haveenjoyed faster economic
growth. FortheOECD countries, there isevidence thatthedeepening oftrade linkages has
helped moderate cyclical economic downturns.
Tothequestion "Will globalization continue?", thereport observes thattwofactors -
technological change andtheevolving strategies offirms andindividual investors -impart
anatural momentum toglobal integration. Itisgovernment policies which canspeed-up, slow
down oreven reverse progress onglobal integration. Inthiscontext, theroleofnon-
discrimination-inparticular,throughthe"most-favoured-nation"(MFN)clause-isexamined.
MFN wasthecentrepiece ofamultiplicity ofbilateral trade agreements reached in
Europe inthesecond halfoftheNineteenth Century, aperiod marked byverylowtariffs and
rapidly increasing trade. Incontrast, the1920s and1930s sawefforts torestore liberal trade
through international trade conferences rather thanlegally-binding commercial treaties based
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onMFN. Thefailure ofthese efforts contributed totheGreat Depression andprovided some
oftheroots ofmilitary confrontation in1939. Itwasonlyafter theWarthatnegotiations
established whatbecame theGATT, amultilateral contract consisting ofrulesanddisciplines
andbased firmly (Article I)onMFN treatment.
TheGATT system hasbeenapost-war bulwark against areturn tothetrade chaos
ofthe1930s. TheSecretariat considers that,inthe1990s, adis-integration oftheglobalized
international economy onthescaleofthe1930s isalmost unthinkable. Incontrast, today "the
threat thatwould beposed byalossofcredibility ofthemultilateral rules" (now represented
bytheWTO) would be"afracturing oftheglobal economy intoinward-looking andpotentially
antagonistic trading blocs".
Thereport suggests twosafeguards against suchaneventuality:
-theexaminationofnewwaystoensurethatfree-tradeareasandcustomsunionsremain
outward-looking andcomplement rather thancompete withthemultilateral trading system;
and
-progressindealing,atthemultilaterallevel,withnewissuestieddirectlytothefurther
evolution oftheglobal economy. These include telecommunications, financial services,
environment, competition andinvestment policies among others.
Thereport concludes:
"Progress indealing withthese andother issues atthemultilateral level willhavea
significant impact onthefuture paceofglobal integration, bothdirectly andthrough itsimpact
onthecredibility ofthemultilateral system ininfluencing thebroad spectrum ofnational trade
policies"
END