WORLD TRADE WT/MIN(96)/ST/30
9December 1996
ORGANIZATION(96-5195)
MINISTERIAL CONFERENCE Original: English
Singapore, 9-13December 1996
INTERNATIONAL MONETARY FUND
Statement byMr.Michel Camdessus
Managing-Director
(Speaking asanObserver)
ItisagreatpleasuretoaddressthisfirstMinisterialConferenceoftheWorldTradeOrganization.
Iwould liketotakethisopportunity tocongratulate theWTO anditsMembers onthismilestone in
theirefforts topromote freertrade anduphold themultilateral trading system.
Theinternational community hashereahistoric opportunity. What canwedotohelpmake
themost ofthisopportunity? Ithink thateachofourinstitutions andeachofyourcountries hasa
critical roletoplay.
TheIMFandtheWTO rolesarecomplementary. Asstated intheIMFArticles ofAgreement,
oneoftheprimary purposes oftheFund is"tofacilitate theexpansion andbalanced growth of
international trade". Wedothisinseveral ways.
First, through oursurveillance overmembers 'economic policies andourassistance inthedesign
ofFund-supported programmes, wepromote thesound macroeconomic policies, appropriate andstable
exchange ratesandstructural reforms thatmust underpin trade liberalization.
Second, inkeeping withourmandate "toassist intheestablishment ofamultilateral system
ofpaymentsinrespectofcurrenttransactions",wehaveencouragedourmemberstoeliminaterestrictions
onallcurrent account transactions. Todate, 134ofour181Members havedone so,while over
50countries havealsotaken thefurther stepofeliminating restrictions oncapital transactions. Careful
progress inthisdirection isattracting increased attention inourpolicy dialogues.
Andthird, weencourage countries toadopt outward-oriented policies -thatis,policies that
donotdiscriminate between production forthedomestic market andforexport, orbetween purchases
ofdomestic andforeign goods. Moreover, programmes wesupport frequently include measures to
increase theoutward orientation oftheeconomy inkeeping withmembers 'obligations totheWTO.
Butasweallknow reforming economies anddismantling protection isapainful process with,
attimes, atleastintheshort andmedium term, harsh social consequences. Thisiswhytheenhanced
andsound competition wewant topromote through trade liberalization canonlybebeneficial if
accompanied byappropriate useofsocial policies athome andcredible instruments ofmultilateral
solidarity. Time istooshort formetoexpand onthis,butletmemention thattheIMFhasadapted
itsfinancing instruments tosupport members 'adjustment andreform needs. Inparticular, theExtended
Fund Facility andtheEnhanced Structural Adjustment Facility forlow-income members haveallowed
theIMFtosupport medium-term programmes withgreater emphasis onstructural adjustment, including
trade liberalization. Atpresent, there are62suchcomprehensive arrangements inplace, ofwhichWT/MIN(96)/ST/30
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32areESAF programmes. Support ofthepoorest, whoareparticularly vulnerable totheriskof
marginalizationmustbemadepermanentlyavailableandeffective.Thisiswhyweareworkingcurrently
tofinalize ESAF 'sfuture financing, sothattheIMFwillhaveconcessional resources available ona
permanent basistosupport thereform efforts ofourpoorest members. Special ESAF operations will
alsobethevehicle fortheIMF'scontribution tothejointinitiative withtheWorld Bank toreduce
thedebtburden ofheavily indebted poorcountries whose reform efforts could nototherwise beexpected
toresult inasustainable debtposition.
Meanwhile, what hasbeen theIMF'sexperience withtrade liberalization? Inourwork
181Member countries, werepeatedly seethatopening economies toexternal tradehelps getdomestic
prices "right", sothatmarket signals improve domestic resource allocation, increase efficiency, and
create conditions under which domestic firms cancompete successfully inforeign markets. Wealso
seethatcountries thatopentheirmarkets tendtoattract additional resources andgrow more rapidly.
Thiscreates avirtuous circle oftrade, investment, andgrowth thatgreatly facilitates achieving other
developmentpolicyobjectives,suchasthereductionofpovertyandthedevelopmentofhumanresources.
Countries suchasChile andanumber ofASEAN countries havefollowed thisapproach, andtheir
levelofdevelopment isnowconsiderably higher thanothercountries thatbegan insimilar circumstances
butpursued more inward-looking policies. More recently, countries such asBolivia, Peru, the
Philippines, Poland, andUganda havemade trade liberalization animportant partoftheiradjustment
andreformstrategies,andthesepoliciesarepayingoffinlowerinflation,higherinvestment,andstronger
growth.
Butthere istheother sideofthecoin. Justasdeveloping countries andcountries intransition
must adopt outward-oriented policies -bothforthesakeoftheirowneconomic development and
integration intotheglobal economy andforthegreater prosperity oftheglobal economy -somust
industrialcountries.Andnotjusttoprovidegreatermarketaccesstodevelopingandtransitioncountries,
although thisisessential, butalsotoincrease theirownefficiency sothatthey, too,cantakeadvantage
ofnewtradeopportunities intheglobal economy. Inmany cases, thisprocess could begreatly facilitated
ifindustrial countries accelerated theirownstructural reforms, especially inlabour markets. More
thaneveringlobalized markets, eachindividual country, butespecially themaintrading nations, have
aninescapable responsibility through theopenness oftheireconomies toensure global prosperity.
Ofcourse, itisnever easytomake suchadjustments inanycountry. Allcountries face
temptations totrytopreserve thestatus quobymaintaining existing barriers orerecting newones-
always saidtobejusttemporary. Yetweallknow thatprotectionism isself-defeating. Andwhile
itisimportant toprovide asocial safety netforthemostvulnerable segments ofthepopulation, attempts
topreserve anuncompetitive sector orenterprise areinthelongrundoomed tofailure -andinthe
meantime, impose unjustified costs onthetaxpayer andtheconsumer. Letmebriefly recall thatthe
IMF'ssuccess inpromoting theliberalization oftheworld 'spayments system isinnosmall partdue
totheemphasis itplaced from theoutset onliberalization onamultilateral andnon-discriminatory
basis. Perhaps itisnowtimefortheinternational community torenew itspledge toambitious trade
liberalization onanon-discriminatory basis thatbrings allcountries intotheliberalization process.
Thisbrings mebacktothisfirstMinisterial Conference. Considerable progress hasbeenmade
ontrade liberalization, butthere isstillmuch more tobedoneinsuchareas asagriculture, textiles,
andservices. Infact,withtheglobalization oftheworld economy, trade hasbecome more complex,
andtradeliberalization,morechallenging.Wearefortunatetohavetheforumandmachineryestablished
under theWTO tohelpmove theprocess forward. TheIMF, foritspart,willjoininthistaskthrough
itssurveillance andsupport ofmembers 'adjustment andreform efforts. Iampleased tonotethatour
joint efforts cannowproceed inthelegal framework oftheCooperation Agreement thatthe
Director-General, Mr.Ruggiero, andIwillsignhereinSingapore. Inaddition, Iunderstand thatthe
World Bank'sExecutive Board hasapproved theWTO/World Bank Cooperation Agreement. Thus,WT/MIN(96)/ST/30
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thestageissetfortheWTO, theFund, andtheWorld Banktoworktogether toward theimplementation
ofourcomplementary objectives. Ihavenodoubt ourMember countries willencourage ourefforts
andplaytheirfullpartinhelping achieve thesefundamental objectives forthecommon goodofmankind.