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24April 1996
REGIONAL INITIATIVES SHOULD AIM FOR AFREE GLOBAL MARKET,
SAYS RUGGIERO
WTO Director-General cites progress intelecoms andcalls onthe
Singapore agenda toaddress problems ofleast-developed countries
"Only afreeglobal market andafreeglobal trading system cancope with theglobal challenges
ofourtime," saidMr.Renato Ruggiero, WTO Director-General, today (24April) inSingapore atthe
World Trade Congress, sponsored bySingapore 'sTrade andDevelopment Board andtheInternational
Herald Tribune .
Inwide-ranging address entitled "Implications forTrade inaBorderless World", Mr.Ruggiero
called for"open regionalism" inwhich regional groups would eliminate internal barriers totrade on
thesame timetable asthelowering ofbarriers towards non-members. "Each oneoftheexisting and
emerging regional groupings hastocontribute with vision anddetermination toensure thatattheend
oftheprocess both regional andmultilateral approaches willhave contributed tofullliberalization in
afreeglobal market," hesaid.
Ontelecoms, Mr.Ruggiero saidthatastheWTO negotiations approached the30April deadline,
the"commonality ofinterest ofindustrial anddeveloping countries alike isclear". Theissues, hesaid,
related nottothesovereignty ofnational telecommunications regimes butrather to"theneed forall
economies tobeopen tomodern telecommunications inorder tolessen theconstraints ofspace and
time ontheir traders andtowiden theaccess oftheir citizens tothemost important rawmaterial of
the21st century -information".
Regarding theagenda forWTO 'sfirstMinisterial Conference, tobeheld on9-13 December
1996 inSingapore, Mr.Ruggiero stressed thatinreviewing theimplementation oftheUruguay Round
Agreements, "thegrave problems oftheleast-developed countries should have aspecial claim toour
attention". Healsounderlined theneed tomonitor progress inaddressing theproblems ofnetfood-
importing countries.
ThefulltextofMr.Ruggiero 'sspeech isattached.
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96-1556 PRESS/46
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IMPLICATIONS FOR TRADE INABORDERLESS WORLD
Address byRenato Ruggiero, Director-General,
World Trade Organization
totheWorld Trade Congress, Singapore, 24April 1996
Nothing would give memore pleasure than tospeak about thereality ofaborderless world,
ifwewere living inone-butasweallknow thatisfarfrom thetruth. Instead Iwant toconcentrate
onwhat trade, orrather theWorld Trade Organization, candotohelp bring uscloser tothatultimate
goal. Insodoing, Iwillfocus onsome oftheissues which arelikely toconfront theWTO 'sfirst
Ministerial Meeting, duetobeheldhereinSingapore inDecember, andonthebroader challenges facing
themultilateral trading system. Letmealsotakethisopportunity tocommend theSingapore Government
andtheInternational Herald Tribune fortheir initiative inorganizing thepresent conference, which
Iamsure willmake aconsiderable contribution toimproving theunderstanding ofthose issues and
providing auseful intellectual background ofthework oftheMinisterial.
From aSingapore vantage point, theborderless world may, perhaps, seem closer athand. Few
other economies have embraced theopportunities offered byglobal economic integration with thesame
vision anddetermination. Singapore 'scontribution andgrowing economic strengths aremore andmore
inthose areas where globalization isfurthest advanced -services, high-technology, andintellectual capital
ofallkinds. However, forother Members oftheWTO -those dependent onagriculture ortextiles
exports, forexample -theborderless world might appear amore remote goal. Itcanseem along way
away inAfrican orother least-developed countries whose immediate problem istointegrate with the
trading system asitistoday.
TheWTO, with itsmembership of120countries, hastohelp shape theeconomic andtrade
agenda ofthe21st century, while notoverlooking thecontinuing need tofindsolutions toproblems
which have been with usformany years. Itsagenda must therefore beabroad andbalanced onein
linewith theconsensus principle onwhich theWTO works, butitmust beaconstantly evolving one.
Theeconomic reality against which theWTO agenda hastobedeveloped isthecontinuing
andunstoppablemomentumofglobaleconomicintegration.Recenttradedatashowsthattheglobalization
ofeconomiesiscontinuingatarapidpace,makingnations,includingdevelopingcountriesandeconomies
intransition, evermore interdependent. World trade isgrowing ataratethatisnearly three times that
ofgrowth inworld output. In1995, world merchandise exports expanded by8percent involume
terms, while thegrowth ofworld merchandise output was3percent.
Global economic integration isbestreflected inAsia. Asian developing countries have become
amajor focus ofglobal commercial activity; they arealsothefastest growing markets. Thevolume
ofimports intoAsia asawhole grew atanannual rateof10percentbetween 1990 and1995. In1995,
theimports ofthetenleading Asian developing economies amounted toalmost US$750 billion.
Asia'simportgrowthof13percentin1995exceededtheworldaverageforthefourthconsecutive
year. 1995 wasalsothefourth consecutive year inwhich thevolume ofimports intoAsia expanded
more rapidly than Asia'sexports.
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Inthenext fiveyears, theincrease inthevolume ofmerchandise imports intothetenleading
Asian developing countries could well beaslarge asthatintotheEUandtheUScombined. More
than athird oftherealincrease inglobal imports could gotojustthese tenmarkets.
InGeneva, thepreparatory process fortheMinisterial isnowunder way. Itsfirstachievement
hasbeen anagreement onthestructure ofthemeeting itself. This willbeaflexible andbalanced
framework which provides anopportunity both forthebroader political statements thatministers will
wish tomake andforsubstantive treatment ofissues with theaimofproducing solid results.
Discussion ofthemeeting 'sagenda hasjustbegun, andithasdone soinapositive climate.
Certainly there aredifferent priorities andemphasis among themembers, butnone thatseem atthis
stage tobeirreconcilable.
Inmyview thispositive climate results atleast inpartfrom anevolution intheway issues
areapproached intheWTO. This isshowing upintwomain ways. Firstly, weareseeing thatitis
now possible toundertake very important sectoral negotiations without necessarily having inallcases
toconstruct awide-ranging cross-sectoral package aswedidinsuccessive GATT Rounds. Thenecessary
elements ofgive andtakecanexist within thesector, aswehave found intherecent negotiations on
services.
Secondly, these sectoral negotiations ofglobal significance have confirmed andadvanced the
achievement oftheUruguay Round inputting industrial anddeveloping countries onthesame side
ofthenegotiating table. Take theexample offinancial services: itwasclear thattheinterest ofthe
industrial countries layinopening upaccess tothegrowing markets ofdeveloping economies. But
itwasequally clear thattheinterests layinthesame direction, since byagreeing onamore open,
transparent andpredictable structure forfinancial services theyboth maximize their investment appeal
andensure oneofthebasic conditions forgrowth across alleconomic sectors.
Thesame istrueintelecoms, where wemust reach asuccess next week. Aswenear theend
ofthenegotiation thecommonality ofinterest ofindustrial anddeveloping countries alike isclear.
Itisalsoclear thatwhat isatstake isnotthesovereignty ofnational telecommunications regimes;
thisisaconcept which fastandradical changes intechnology arerequiring ustorethink. Theissues
here relate instead totheneed foralleconomies tobeopen tomodern telecommunications inorder
tolessen theconstraints ofspace andtime ontheir traders andtowiden theaccess oftheir citizens
tothemost important rawmaterial ofthetwenty-first century -information.
Inboth financial services andtelecoms wearetruly trading intothefuture.
Though thetechnologies involved areolder, Icould make much thesame points about the
continuing negotiation onmaritime services. There, too,thefundamental importance ofthesector to
most forms ofeconomic activity inpractically every country makes itunthinkable toaccept failure.
These points arenotjusttrueoftheservices sector. Consider trade andtheenvironment, once
considered dangerously divisive ofindustrial from developing countries -there, too,weareseeing an
emerging common ground.
This istheencouraging background against which weareapproaching theMinisterial agenda.
Abasic structure fordiscussing it,broadly based onanearlier proposal byMinister Yeo, appears to
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bewinning awide level ofacceptance. Iwould liketomake afewbrief comments onsome ofthe
items onthatlist.
First andforemost isimplementation. Thismust notmean justaquantitative stocktaking exercise
butalsoarenewed political vision andcommitment. Itmust mean inparticular how wearealltaking
intoaccount thesituation ofdeveloping andespecially least developed countries.
Thegrave problems oftheleast developed countries should have aspecial claim onourattention
attheMinisterial. Inthelight oftheMarrakesh texts wehave toseewhat further specific actions might
betaken toassist them byopening markets, fostering investment andpromoting theenhancement of
institutionalandhumancapacitiesthroughanambitiousprogrammeoftechnicalassistanceinco-operation
with other agencies.
Lastly, wemust notforget thatwealsohave anobligation tomonitor progress inaddressing
theproblems ofnetfood-importing developing countries.
Letmenow turntotheso-called new issues. Thefirstthing topoint outisthatsofarthere
isonly onewhich isreally new-thatistheUSproposal totakeupcorruption intheWTO. Itwould
behard todeny thatthisisaconcern which isatleast worth considering seriously.
Among theothers, Iwould liketofocus especially ontrade andinvestment.
Unlike, say,trade ingoods, investment does notimply arelationship which istime-bound.
Oncethegoodsaredeliveredandpaidfortheexporter'sinterestmaymoveelsewhere-butwheninvestors
putmoney intoacountry they acquire astake initssuccess. Investment represents avery effective
mechanism fordiffusing knowledge andexpertise, aswell asgrowth around theworld. Itisessential
inorder torelease theuntapped production potential ofdeveloping andtransition economies, while
atthesame time opening upnewmarkets forthose exports ofgoods andservices which generate the
best-paid jobs inexporting countries.
Inaworld where budgetary constraints increasingly limit traditional development aidfinancing,
foreign direct investment ismore than ever thekeytodevelopment. However, significant imbalances
remain ininvestment flows; only some 35percent ofallFDI goes todeveloping countries. Even
thisfigure paints anoverly bright picture, since ithides thefactthelion'sshare ofFDIgoes toonly
10major developing countries.
These figures show thesizeofthetask involved inencouraging investors tospread their
confidence more widely. Clearly thisisashared effort; thecountries involved alsohave towelcome
investment andensure itsbasic security inacredible way. Itishard toseehow thiscanbedone
effectively orequitably outside themultilateral trading system.
Ifully recognize thatsome members seedifficulties -even political problems -intheideaof
anegotiation oninvestment intheWTO. Their concerns maybeunderstandable, butitisworth recalling
thattheexisting experience ofinternational agreements oninvestment shows thatthere arealways
elements offlexibility. There issurely noreason torefuse tocontemplate taking upthisvitally important
issue intheWTO -andthereby denying themajority oftheworld 'scountries thepossibility oftaking
partdirectly inshaping decisions onitsfuture international treatment. This silent majority, Iwould
remind you, includes those who aremost inneed ofthebenefits ofinvestment. Like theother sectors
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Ihave mentioned, theapproach toinvestment inthemultilateral system should start from thepremise
thatthese areissues which canandshould bring uscloser together rather than divide us.
Other so-called "new" issues have been discussed more outside than inGeneva, andIdonot
want togointothem indetail.
Iwould simply liketonote thattheissue oftrade andcompetition becomes more significant
themore trade barriers arereduced -wehave seen thisinpractice onrecent occasions. Competition
questions have ahistory inoursystem -they were taken upintheHavana Charter, andarenow an
important element inthetelecoms negotiation. Thus, whether ornotwerecognize it,competition is
making itself partofouragenda. Itisjustaquestion ofwhen andhow thisbecomes explicit.
Onavery different andvery complex issue, trade andlabour standards, Ijustwant tonote
thatinthelastinformal meeting inGeneva, both theEUandUSdelegations have made theimportant
statementthatanyWTOdiscussionmustnothaveasanobjectivetheenforcementofcorelabourstandards
through trade sanctions, norputintoquestion thecomparative advantage oflow-wage countries.
Lastly, following Minister Yeo'soutline, wecome tofurther liberalization -atopic which brings
home how much remains tobedone before weareentitled tospeak with conviction ofaborderless
world.
Iftheseven longyears oftheUruguay Round negotiation taught usanything, itisthattheexisting
barriers inlong-established industries liketextiles anagriculture aresome ofthehardest toreduce, not
leastbecause theyhave built upextensive andpowerful political constituencies overtheyears. Achieving
aworld which, ifnotborderless, atleast does notsimply replace oneform oftrade restriction with
another, demands aconstant effort. This effort willneed therenewed support ofMinisters here in
Singapore inDecember.
Asthey consider thepoints ontheSingapore agenda, governments should alsohave inmind
theneed torespond tothree major challenges which confront themultilateral system asweapproach
thenew century.
Thefirstistorespect andstrengthen thefundamental contract thatnow unites countries atall
levels ofeconomic development. Theindustrialized world hastokeep open itsmarkets andimprove
their openness intheyears ahead. Ontheir side, thedeveloping countries have tocontinue with their
liberalizingreformsandincreasetheirintegrationintotheglobalsystem.Andtogether,bothindustrialized
anddeveloping countries have towork toimprove thesituation oftheleast developed.
Thesecondchallengeistoacceptthesharedresponsibility,sharedamongexistingWTOmembers
andthose countries wishing tobecome members, forconstructing atruly universal system which all
thepresent andfuture candidates canjoininandcontribute to.
Lastly, thethird challenge istoensure thatnational barriers arenotjustreplaced byregional
ones, butthat, onthecontrary, regionalism andmultilateralism converge attheendoftheroad. Isee
thisasthemain challenge facing themultilateral system atpresent onewhich willshape itsfuture and
help shape theworld ofthe21st century.
Thetrading system isnowmoving forward ontwotracks -regional andmultilateral. Regional
trade initiatives areexpanding andhave ambitions toexpand further. Itwould bewrong toassume
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thatthemultilateral system isinaperiod ofdormancy. Ihave given yousome examples ofthesystem 's
dynamism. Where weareperhaps lacking, however, isinshowing alevel ofambition atleast equivalent
tothatofthemajor regional systems. Letmeexplain what Imean.
Some recent regional initiatives aretruly gigantic, atleast inperspective; take forinstance
theEuropean project tocreate apreferential trade areawith alltheMediterranean countries by2010;
ortheframework agreement between theEUandMERCOSUR ortheplan setoutintheMiami
Declaration tocreate afreetrade areaoftheAmericas by2005; or,finally, APEC 'scommitment to
create afreetrade area intwostages between 2010 and2020.
Themultilateral system hasnocomparable roadmaptowards theelimination ofalltrade barriers.
However, some ofthenewer regional groupings (such aAPEC andMERCOSUR) contain acommitment
which isvery important forthefuture ofthemultilateral system: thisis"open regionalism".
Ofcourse, weneed tobeclear about what open regionalism means. Among thedifferent
possibilities, Iseetwobasic alternatives.
Thefirst isbased ontheassumption thatanypreferential area under consideration willbe
consistent with thelegal requirements ofthemultilateral system. Thiswould mean thatsuch areas could
atthesame time belegally compatible with theWTO 'srules andpreferential intheir nature, which
means they would beanexception tothem.f.n. clause which isthebasic principle ofthemultilateral
system. Thepossibility ofmaking such alegal exception totheprinciple within therules wasconceived
inacompletely different time andsituation. Today, with theproliferation ofregional groupings, the
exception could become therule, andthiswould riskchanging completely thenature ofthesystem.
Thesecond interpretation ofopen regionalism istheoneIhearfrom anumber ofgovernments
whoaremembers ofAPEC orMERCOSUR. Inthisscenario, thegradual elimination ofinternal barriers
totrade within aregional grouping willbeimplemented atmore orlessthesame rateandonthesame
timetable asthelowering ofbarriers towards non-members. Thiswould mean thatregional liberalization
would begenerally consistent notonly with theruesoftheWTO butalso-andthisisvery important -
with them.f.n. principle.
Thechoice between these alternatives isacritical one; they point tovery different outcomes.
Inthefirstcase, thepoint atwhich wewould arrive innomore than20to25years would beadivision
ofthetrading world intotwoorthree intercontinental preferential areas, each with itsown rules and
with freetrade inside thearea, butwith external barriers stillexisting among theblocs. Isthisthesort
ofworld anyofuswould want?
Ileave youtoimagine theconsequences ofthisvision interms ofeconomic andpolitical
equilibrium; theproblem ofthose who didnotfitintoanyoftheblocs would beaserious one-and
where would China andRussia beinsuch aworld?
Thesecond alternative, ontheother hand, points towards thegradual convergence onthebasis
ofshared rules andprinciples ofallthemajor regional groups. Each oneoftheexisting andemerging
regional groupings hastocontribute withvision anddetermination toensure thatattheendoftheprocess
both regional andmultilateral approaches willhave contributed tofullliberalization inafreeglobal
market. Attheend, wewould have oneglobal freemarket with rules anddisciplines internationally
agreed andapplied toall,with thecapacity toinvoke therespect oftherights andobligations towhich
allhadfreely subscribed. Insuch aworld there could andmust beaplace forChina, Russia andall
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theother candidates totheWTO. Theglobal value ofasystem based onrules anddisciplines will
bealimited oneaslong assome major player remain outside.
Only afreeglobal market andafreeglobal trading system cancope with theglobal challenges
ofourtime. Inthenext20years theworld population willgrow bysome twobillion people. Already
atpresent wehave almost twobillion people inAsia, inLatin America, intheeconomies intransition
andinparts ofAfrica who arejoining theglobal market economy.
Intheface offacts ofthismagnitude, itisclear thatthere isnorational alternative toan
increasingly integrated global market within therules anddisciplines ofthemultilateral system. Itis
notacaseofimposing aims ortimetables onthesystem from outside; ifwechoose theglobal option,
asIamconvinced wemust, these willbepartoftheorganic evolution ofthesystem, andwillrespond
tothelogic ofglobal needs.
Achieving agenuine world freetrade areawould make atremendous contribution topromoting
growth andensuring asafer world inthecentury tocome. Thisisthemessage thatIhope willbepassed
onfrom thisvery timely conference byparticipating governments, business andmedia alike.
END