WORLD TRADE WT/MIN(96)/ST/32
9December 1996
ORGANIZATION(96-5196)
MINISTERIAL CONFERENCE Original: English
Singapore, 9-13December 1996
ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT
Statement byMr.Donald J.Johnston
Secretary-General
(Speaking asanObserver)
Asthelatter partoftheTwentieth Century recedes intohistory, it,likeother periods ofhistory,
willbecharacterized byaword oraphrase which inturncarries amultitude ofimages, lessons and
historical memories. TheDarkAges, theRenaissance, theIndustrial Revolution areexamples. Iwould
predict thatthisperiod willbecharacterized asthedawn ofthe"Age ofGlobalization", withallthat
implies.
Technology hasbeencentral toglobalization. Transportation andcommunications technologies
havebeenleading theway. Governments arescrambling tocatch upwiththeinternational commerce
which hastaken advantage ofthetechnologies insomany areas andinsomany newandinnovative
ways.
Yes,thisisthedawn oftheageofglobalization andwhen historians tellofit,letusmake
surethatitisagoodstory: astory ofhowworld leaders seized thismoment toharness unprecedented
opportunities notjustforthedeveloped world butfortheworld community; ofhowthepoverty, misery
anddisease inmany parts ofthedeveloping world wereputonthefasttrack toeradication through
multilateral freetrade andinvestment; ofhowtheprosperity ofthedeveloped world wassustained
through theevolution oftheglobal market andhow, inturn,economic growth wasfirmly established
inthedeveloping world through thetransfer ofcapital, technology andknow-how combined with
unfettered access fortheirgoods andservices tothemarkets ofthedeveloped world; ofhowthe
widening gapbetween therichandthepoorintheworld community wasarrested andthenbegan to
narrow.
What awonderful storyitcould be...andyou,gathered hereinSingapore, havetheopportunity
toensure thatitiswritten. AndweattheOECD wishtohelpinanywaywecan. Ibelieve there
aremany ways where theOECD should playarolebutIshalljusthighlight afewofthem.
Iimagine thatmostofyouarefamiliar withworkdonebytheOECD Secretariat before Ibecame
Secretary-General which made asignificant contribution tothesuccessful conclusion oftheUruguay
Round. Iremind youespecially ofthework onagricultural subsidies, thefamous PSEandCSE.
TheOECD enjoys aremarkable andperhaps unique capacity fortackling complex cross disciplinary
issues from anobjective andhence credible position. Armed withhighly trained professional talent
drawn from allcorners oftheOECD universe, itisthecaptive ofnoone. Ithasproved thattime
andagain whether thetaskathandrelates totrade, theenvironment, thechallenges ofjobcreation,
theappropriate allocation oftaxrevenues through transfer pricing guidelines orcomplicated andhotly
debated issues suchastherelationships, ifany,between fairtradeandlabour practices. Anyperception
thattheanalytical work oftheSecretariat iscontrolled ormanipulated byaselect group ofrichcountries
issimply wrong. Thecredibility oftheSecretariat 'sanalytical scholarship speaks foritself!WT/MIN(96)/ST/32
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Iassure youasIhaveassured Director-General Renato Ruggiero thatthisgreat resource is
atthedisposal oftheWTO tohelpmove thetradeandinvestment agenda forward. There areanumber
ofareas frequently citedasemerging ornewissues where theOECD iscurrently doing suchwork.
Irefertotrade andlabour standards (which Ihavealready mentioned), tradeandtheenvironment and
tradeandcompetition policy. Thelistwillcontinue togrow because weknow thatthetrading system
doesnotstopattheborder ofnations orregions andwemustincreasingly dealsquarely withtheinterface
between domestic policies andglobal trade.
Trade liberalization isshattering tariffwalls andborder barriers thathaveprotected economies
assurely aspolitical changes shattered theBerlin Wall.
Most oftheregulatory structure oftheindustrialized world evolved within thecontext ofa
domestic market place. Regulatory regimes arenotadapted toaglobal market-place, andoftenhamper
economic efficiency andtheability ofproducers ofgoods andservices tocompete. Anexample would
bedomestic transportation costsforcomponents offinished export products. Ifthose costsaredriven
upbyregulatory monopolies within nations, theytranslate directly intohigher less-competitive prices
inexport markets.
Domestic regulatory frameworks ofnations mustadapt quickly tothisnewenvironment. If
not,theireconomies andtheirdomestic industries willbecome marginalized inthefaceofstrong
international competition. Butadaptation iseasier saidthandone.
Regulations create vested interests. Inmany ofthese cases, those vested interests havestrong
political constituencies, andgovernments indemocratic societies aresensitive tothenextverdict of
theballot box. Thepolitical willtotakeonthose regulatory measures protecting suchvested interests
canbereinforced byinternational organizations, nottheleastbytheOECD. Indeed, theOECD work
onregulatory reform isacritical building block oftheinternational free-trade andinvestment agenda.
Another areaofsupport forfreetradewithwhich theOECD ismuch involved isthatofassisting
thestructural adjustment process inOECD countries necessitated bytheglobalization process. Yes,
regulatory reform oftenintheformofderegulation andfreetradedoesnotreduce jobsinlessproductive
sectors oftheeconomy while creating jobselsewhere. TheOECD analysis demonstrates amajor net
benefittoallsocietiesthroughopenmarketstructuresandliberalizedtrade.Properlydesignedadjustment
policies should ensure thateveryone benefits. Thisistheonlywaytostilltheprotectionist voices of
dissent which, intheabsence ofsuchpolicies, could derail orseriously slowdown themove toglobal
freetrade andinvestment.
Afurther areaofOECD activity insupport ofthefree-trade agenda isthatofpathfinder on
newissues. Irefertoareas notyetaddressed inWTO negotiations butwhich ultimately should find
theirplace inthatforum. Theliberalization ofairtransport isoneexample. Amajor study bythe
OECD incooperation withgovernments andtheprivate sector onthisimportant issuewillbepublished
inamatter ofweeks. Hopefully thisareawillbemoved under theumbrella oftheWTO assoonas
possible.
TheOECDcanalsoreportdecisiveachievementsinitseffortstowardseliminatingtradedistorting
government subsidies forexport credits.
Bribery andcorruption which distort tradejustaseffectively assubsidies isanother active area
ofwork within theOECD.
Amajor preoccupation istheaccelerating emergence ofelectronic commerce andwhatitimplies
fortradeingoods andservices, especially thelatter. What kindofregulatory regimes willberequiredWT/MIN(96)/ST/32
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toensure consumer protection, totaxprofits, tomonitor trade data,totraceelectronic money? The
OECD isdoing much work inthisarea,including thecomplementary efforts toestablish cryptography
guidelines intended tobalance theinterests ofprivacy andthepublic interest. Again, Iseethisasa
pathfinder issuewhich ultimately should finditsplace intheworld tradecontract administered bythe
WTO.
Inconclusion letmeemphasize thattheOECD willcontribute inanywayitcantoensuring
thatmomentum remains intheglobal free-trade agenda within theWTO tobefollowed Ihope, by
acomplementary investment agenda within theWTO. Thisisanareawhere much important work
isalready under waywithin theOECD inthenegotiation oftheMultilateral Investment Agreement.
Butletusnotcreate unrealistic expectations norbediscouraged bytemporary obstacles ...
theyultimately willbeovercome because theadvantages ofglobal freetrade andinvestment willin
timebeseenintheinterests ofeacheconomy oftheglobal community. Patience, perseverance and
understanding oftheconcerns ofthose whowishtomove atadifferent pacethanothers iscritical.
What isimportant isthattherebeconstant movement towards theultimate goal. Thatwillensure that
thestoryoftheAgeofGlobalization willhaveahappy ending towhich allofyouwillhavecontributed.
Itisadaunting challenge butitisanevengreater opportunity which hasfallen tothisgeneration of
world leaders atthismoment inhistory.
AsIprepared these comments apassage from Shakespeare came tomind which offers wise
counsel.
"There isatideintheaffairs ofmen,
Which, taken attheflood, leads ontofortune;
Omitted, allthevoyage oftheirlife
Isbound inshallows andinmiseries."
Ladies andgentlemen, theglobal tideoffreetrade isattheflood.