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Ladies and Gentlemen,
Let me begin by thanking the city government and people of Seattle for hosting this very important, but evidently very controversial, conference. I wonder if they realised what they were letting themselves in for!
Personally, I am delighted to be here, and deeply honoured to be invited to address this gathering, which is indeed very important. I hope and believe it will be remembered as the Conference which launched the "development round", and laid the foundations of a world trade system which will be fair as well as free. In the past, developing countries have been told time and again that they stand to benefit from trade liberalisation, and that they must open up their economies.
They have done so, often at great cost. For the poorest countries the cost of
implementing trade commitments can be more than a whole year's budget. But time
and again, they have found the results disappointing - not because free trade is
bad for them, but because they are still not getting enough of it.
In the last great round of liberalisation - the Uruguay Round - the developing countries cut their tariffs, as they were told to do. But in absolute terms many of them still maintain high tariff barriers, thereby not only restricting competition but denying crucial imports to their own producers, and thus slowing down economic growth.
Even so, they found that rich countries had cut their tariffs less than poor ones. Not surprisingly, many of them feel they were taken for a ride. Industrialised countries, it seems, are happy enough to export manufactured goods to each other, but from developing countries they still want only raw materials, not finished products. As a result, their average tariffs on the manufactured products they import from developing countries are now four times higher than the ones they impose on products that come mainly from other industrialised countries.
Ever more elaborate ways have been found to exclude third world imports; and these protectionist measures bite deepest in areas where developing countries are most competitive, such as textiles, footwear and agriculture.
In some industrialised countries, it seems almost as though emerging economies are assumed to be incapable of competing honestly, so that whenever they do produce something at a competitive price they are accused of dumping - and subjected to anti-dumping duties.
In reality, it is the industrialised countries who are dumping their surplus food on world markets - a surplus generated by subsidies worth 250 billion dollars every year - and thereby threatening the livelihood of millions of poor farmers in the developing world, who cannot compete with subsidised imports.
So it is hardly surprising if developing countries suspect that arguments for using trade policy to advance various good causes are really yet another form of disguised protectionism.
I am sure that in most cases that is not the intention: those who advance such arguments are usually voicing genuine fears and anxieties about the effects of globalisation, which do need to be answered.
They are right to be concerned- about jobs, about human rights, about child
labour, about the environment, about the commercialisation of scientific and
medical research. They are right, above all, to be concerned about the desperate
poverty in which so many people in developing countries are condemned to
But globalisation must not be used as a scapegoat for domestic policy failures. The industrialised world must not try to solve its own problems at the expense of the poor. It seldom makes sense to use trade restrictions to tackle problems whose origins lie not in trade but in other areas of national and international policy. By aggravating poverty and obstructing development, such restrictions often make the problems they are trying to solve even worse.
Practical experience has shown that trade and investment not only bring economic development, but often bring higher standards of human rights and environmental protection as well. All these things come together when countries adopt appropriate policies and institutions. Indeed, a developing civil society will generally insist on higher standards, as soon as it is given the chance to do so.
What is needed is not new shackles for world trade, but greater determination by governments to tackle social and political issues directly - and to give the institutions that exist for that purpose the funds and the authority they need. The United Nations and its specialised agencies are charged with advancing the causes of development, the environment, human rights, and labour. We can be part of the solution.
So too can the private sector. Transnational companies, which are the prime beneficiaries of economic liberalisation, must share some of the responsibility for dealing with its social and environmental consequences.
Economic rights and social responsibilities are two sides of the same coin. This is why, earlier this year, I proposed a Global Compact between business and the United Nations, under which we will help the private sector to act in accordance with internationally accepted principles in the areas of human rights, labour standards and the environment. The response so far has been encouraging, and I believe we can achieve a great deal by working together more closely.
But this meeting, and this Organisation, must not be distracted from their vital task - which is to make sure that this time a new round of trade negotiations really does extend the benefits of free trade to the developing world. Unless we convince developing countries that globalisation really does benefit them, the backlash against it will become irresistible. That would be a tragedy for the developing world, and indeed for the world as a whole.
Trade is better than aid. If industrialised countries do more to open their markets, developing countries can increase their exports by many billions of dollars per year - far more than they now receive in aid. For millions and millions of poor people this could make the difference between their present misery and a decent life. And yet the cost for the rich countries would be minuscule.
In fact, industrialised countries might even be doing themselves a favour. It has been calculated that some of them are currently spending as much as six or seven per cent of their gross domestic product on various kinds of trade protection measures. No doubt some of their citizens are benefiting from this, but surely there must be a cheaper and less harmful way for the rest of the population to help them!
This time, tariffs and other restrictions on developing countries' exports must be substantially reduced. For those of the least developed countries, I suggest, duties and quotas should be scrapped altogether.
And developing countries should receive technical assistance, both in the negotiations themselves and in implementing and benefiting from the agreements once reached. At present, some of them do not even have missions in Geneva. But UNCTAD - the United Nations Conference on Trade and Development - is there to help, if given the resources to do so.
Ladies and Gentlemen,
In exactly one month we shall leave the twentieth century behind. The first half of it saw the world almost destroyed by war, partly as a result of its division into rival trade blocs.
The second half, by contrast, has seen an unprecedented expansion of global trade, which has also brought unprecedented economic growth and development, even if as yet very unequally distributed.
That expansion did not happen by accident. After the carnage and devastation of the Second World War, far-sighted statesmen deliberately constructed a postwar economic and political order governed by rules which would make free trade possible and thereby, they believed, make future wars less likely. Broadly speaking, they were right.
Several factors combined, at that time, to make such a liberal world order possible. One of them was a broad consensus on the role of the state in ensuring full employment, price stability and social safety nets. Another was that most big firms were still organized within a single country - so that international economic relations could be negotiated between states, each of which corresponded to a distinct national economy, and could be controlled by raising or lowering barriers at national frontiers.
And that in turn made it relatively easy to put in place a set of international organisations which were based on, and in their turn supported, the economic order: the World Bank, the International Monetary Fund, the General Agreement on Tariffs and Trade, and the United Nations.
Today's world is very different. Today, networks of production and finance have broken free from national borders, and become truly global. But they have left the rest of the system far behind.
Nation states, and the institutions in which they are represented, can set the rules within which international exchanges take place, but they can no longer dictate the terms of such exchanges exclusively among themselves. Economic life is no longer embedded in a broad framework of shared values and institutionalised practices.
The result is that, on top of the gross imbalance of power and wealth between industrialised countries and developing ones, there is now a second imbalance: the gap between the integration of the world economy and the continued parochialism of political and social institutions. While economics is global, politics remains obstinately local. It is for this reason, I believe, that so many people, even in the industrialised world, feel vulnerable and helpless.
And that, Excellencies, is why this is such a historic moment.
It will depend on what we decide here, and in a few other crucial meetings over the next few years, whether the twenty-first century will be like the first half of the twentieth, only worse - or like the second half, only better.
Let's not take the onward march of free trade and the rule of law for granted. Instead, let us resolve to underpin the free global market with genuinely global values, and secure it with effective institutions.
Let us show the same firm leadership in defence of human rights, labour standards and the environment as we already do in defence of intellectual property.
In short, let us emulate the wisdom, and the will-power, of those who laid the foundations of the liberal world order after the Second World War. They made change work for the people - and we must do the same.
Thank you very much.