WORLD TRADE WT/FIFTY/H/ST/1
19May1998
ORGANIZATION(98-2004)
Original: English 50thANNIVERSARY
Geneva, 19May1998
SINGAPORE
Statement circulated byH.E. Mr.GohChok Tong
Prime Minister
TheMultilateral Trading System: Challenges andopportunities
1. Thisisanimportant occasion totoastthesuccess aswellasponder overthefuture ofthe
multilateral trading system.
2. TogetherwiththeBrettonWoodsInstitutions,theGATThasprovidedthefoundationforpost-war
global prosperity. Through anon-discriminatory system ofrulesgoverning international trade, ithas
underpinned therobust post-war growth intradeandoutput. Without themultilateral trading system,
theworld would notbeasprosperous asitistoday, noraspeaceful.
3. Thebenefits ofmultilateral trade cannot beevenly spread bydecree. Each country hasto
compete foritsshare ofthebenefits through itsownhardwork, efficiency andcompetitiveness.
Competition istough, butevery country canfindsome areas where theycandowell.
4. Developing countries haveshown thistobetrue. Over thepastdecade, theirshare ofworld
trade hasincreased from20percentto25percent,while theirshare oftrade inmanufactured goods
hasdoubled from 10percentto20percent.
5. The remarkable success oftheGATT, however, israther recent history. The
“beggar-thy-neighbour ”policies thatwerepursued during theinter-war period brought disaster toworld
tradeandtheglobal economy andcontributed tothe2ndWorld War. Themost-favoured-nation principle
isverymuch apost-war phenomenon. Itisnotyetsecurely entrenched.
Asian financial crisis
6. Forallitssuccess, themultilateral trading system facesgreatchallenges ahead. Theon-going
Asian financial crisis isitsfirstmajor test.Thiscrisis wiped outlarge amounts ofpublic andprivate
wealth intheaffected countries. Amore serious concern isitssystemic implications. Theeconomic
development oftheNICs, ortheso-called “tigereconomies ”,seems tohavegoneawry. Liberalization
intrade, capital flows, andinvestment maynolonger beviewed astheright model forgrowth but
therootcause fortheirfinancial collapse. Thiswould bethewrong conclusion, buttheperception
maynevertheless grow inprevalence.
7. Even ofgreater danger arepossible errors inthepolicy responses ofthedeveloped economies.
Theaffected Asian countries willrecover through cheap exports because oftheirdepreciated currencies.
Thiswillleadtostrong political pressure inthemajor markets toprotect theiraffected industries.
There mayberampant useofsafeguards andanti-dumping actions toprotect domestic industries against
competition from therecovering Asian economies. Recent workers agitation inEurope maybea
precursor tothese market closing activities.
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Coping withregionalism
8. Ifthemultilateral trading system failstosupport therecovery ofthetroubled Asian economies,
itwould reinforce demands forbilateral andregional arrangements. Thiswasdemonstrated bythe
vigorous pursuit ofregional arrangements inthelate80sduetofearofthecollapse oftheUruguay
Round. Currently, more than100bilateral orregional agreements areinplace. Such agreements,
inpurelogic, goagainst MFN. Thatcountries choose topursue regionalism when themultilateral
trading system isthriving isacause forconcern. Regionalism cannot provide thesame efficiency as
equal access under amultilateral trading system. Theproliferation ofregional trading arrangements
could fragment theworld economy intocompetitive trading blocs. Theycould intimecreate economic
rifts,andbeanunderlying cause forglobal tension andpossibly conflicts. Idread thedaywhen the
global economy isdivided intomega trading blocsliketheFreeTrade AreaoftheAmericas, theenlarged
Single European Market, aGreater AsiaProsperity Sphere, andaNewAfrica Economic Bloc.
9. Itisessential thatregional initiatives reinforce rather thandetract fromthemultilateral trading
system. Managing relations between regional andmultilateral trade liberalization, andensuring that
regionalintegrationagreementsopenupfurthertradeliberalizationunderthemultilateraltradingsystem,
willbeachallenge totheWTO.
Marginalization
10. Another keychallenge thatthemultilateral trading system faces isthemarginalization ofthe
leastdeveloped countries. Many small andleastdeveloped countries playonlyamarginal rolein
international trade fora. They faceconsiderable difficulties inparticipating inpolicy formulation as
wellasimplementation ofGATT/WTO obligations. Thislackofeffective participation alsoextends
totheincreasing number ofcountries thatareawaiting toaccede totheWTO, themostimportant being
China andRussia. Hence, waysshould befound fortheearlyentry ofthesenewmembers, particularly
those thathavemajor trade share.
Technological advances
11. Lastly, advances intelecommunication technology willposeachallenge tothetraditional notion
ofnationalborders.TheadventoftheITAgeandcyberspacetradecallsintoquestionexistingdefinitions
oftrade across borders thatform thebedrock oftheWTO. Itwould alsohaveimplications forthe
trade-related aspects ofintellectual property rights protection. TheWTO willhavetoadapt itsrules
tothechanging technological environment.
Thefuture
12. Theexisting multilateral trading system willundergo severe testsandchallenges. Letushope
thathistory andthepastachievements offreertrade willguide ustotherightdecisions forthefuture.
TheGATT andanopenmultilateral trading system haveenabled nations tocompete peacefully without
theneedtoresort towarsinorder tocarve outtrading empires tokeepouteconomic rivals. TheWTO
must nowcarry thisresponsibility. Itcandososuccessfully ifitisclear onwhatitcanandshould
achieve inpursuing itsfundamental objective ofmultilateral trade liberalization. Singapore would
liketoseeonWTO ’s21stcentury agenda anewround oftrade negotiations. The50thanniversary
ofthemultilateral trading system isafitting opportunity toseedtheideaforsuchanewround tobuild
onthepastsuccess ofthesystem.
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