The development and social
By United States Trade Representative
Oct 16 - 22, 2000
The World Trade Organisation (WTO), is working towards a new round of
global trade negotiations, monitoring and enforcing the implementation of its 20
multilateral agreements, and litigating numerous dispute settlement cases. Negotiations
also are underway on the entry of 30 prospective new WTO members. It has regional trade
initiatives underway in each part of the world; talks are underway to create a Free Trade
Area of the Americas, the Asia-Pacific Economic Co-operation forum, or APEC, promotion of
regional integration in the Middle East, implementing trade and investment in Africa and
strengthening the Transatlantic Economic Partnership. The WTO is working with each of its
major trade partners towards market-opening and deregulation in Japan; ensuring
implementation of the large number of trade agreements world-wide that have grown
exponentially since 1992 and devoting special attention to developing the high-tech
infrastructure for trade in the next century.
Hoover and Roosevelt: The ideas are based in part on economic
logic applicable throughout the world: exports allow us to serve larger markets and are
generally associated with higher-paying jobs; and imports increase competition and
economic efficiency, dampen inflation and raise the standard of living, especially for the
poorest families. Policies are based not only on theory but on practical experience.
Seventy years ago, President Herbert Hoover signed the Smoot-Hawley
Act, which was the largest single restricition on trade in American history. President
Hoover's trade policy had rested on the belief that Americans could not compete
effectively with developing countries. As Hoover put it, "we cannot successfully
compete against foreign producers because of lower foreign wages and a lower cost of
production." The result was a cycle of tarifff hikes and retaliation which cut trade
by 70% between 1930 and 1933, deepened the depression and intensified the political
tensions of the era.
After this experience, Franklin Roosevelt proposed the alternative,
followed ever since. As he put it in 1944:
"A basic essential to peace, permanent peace, is a decent standard
of living for all individual men and women and children in all nations. Freedom from fear
is eternally linked with freedom from want. [And] it has been shown time and time again
that if the standard of living in any country goes up, so does its purchasing power-and
that such a rise encourages a better standard of living in neighbouring countries with
whom it trades."
Since the Second World War, the work has continued for more than fifty
years, and it has brought enormous benefits, such as:
Growth and rising living standards: The opening of world markets
has helped to spark what is in effect a fifty-year boom, in which trade has expanded
fifteen-fold since the 1950s, world economic production has grown six-fold, and per capita
income nearly tripled. The result has been historically unprecedented social progress.
Since the 1950s, world life expectancy has grown by twenty years, infant mortality dropped
by two-thirds, and famine receded from all but the most remote or misgoverned corners of
Economic security: In the Asian financial crisis of 1997-99,
with 40% of the world in recession, the respect WTO members had for their commitments kept
open the markets affected nations needed to recover. Thus, the system of mutual benefit
and rule of law represented by the WTO helped prevent a cycle of protection and
retaliation like that of the 1930s. Ultimately, it also averted the political strife that
can erupt in economic crisis.
Peace and stability: The GATT, and now WTO, have helped us
address some of the most profound political challenges as well. It helped to reintegrate
Germany and Japan in the 1950s, and the nations emerging from colonial rule in the 1960s
and 1970s. Now, the WTO has taken up a task of equal gravity as nearly 30 nations breaking
with communist planning systems following the end of the Cold War seek WTO membership to
reform their economies and integrate with the world.
Trade policy and development: A trade policy can never be
enough: ultimately, countries largely control their own destinies. Trade policy, while
they can create new opportunities, can never substitute for effective domestic policy or
for financial stability. To believe otherwise is to court disillusion. Rather, development
comes from the union of several different fields:
Appropriate domestic policies: the rule of law and a stable,
democratic political system; a market-based economy; health and social safety net
policies; financial stability; and, perhaps above all, education and the development of
The right balance of international assistance and financial policies
including recognition of the fact that for the least developed countries, the financial
burden posed by debt has made growth very difficult. President Clinton has thus challenged
the Congress and the world to forgive 100% of this debt when such relief will help finance
basic human needs in those countries.
A trading system that gives developing nations (in particular the least
developed) greater access to world markets and more ability to defend their rights and
interests. The system must do more to ease the unique difficulties newer and smaller firms
encounter in the world market.
A more open trading system: In an open trading system, the most
important point is more open markets.
Benefits of open economies:
Part of the responsibility for
creating more open markets lies with developing country governments. Experience shows that
the most open economies grow fastest, create new and innovative businesses most
efficiently, and reduce poverty most effectively.
This clearly has occurred not only in America but worldwide. As
Southeast Asia, Central Europe and Latin America opened to the world, they grew more
rapidly; reduced poverty; and built more stable, peaceful regions. By contrast, South
Asia, the Middle East and Africa, where trade barriers remain highest, poverty has been
reduced more slowly and political tensions persist. There is simply no substitute for
membership in the WTO and participation in its most recent agreements on information
technology, telecommunications and financial services. The development of regional
integration initiatives like the ASEAN Free Trade Area, the Free Trade Area of the
Americas and Africa's three regional trade groups is also essential.
US programmes: At the same time, however, when countries do the
right thing, the world must do more than stand by and applaud. The US offers a generally
open market, as evidenced by the more than $500 billion worth of imports of goods and
services it purchased from developing countries last year. This total will perhaps reach
$600 billion in 2000. The US has developed a series of programmes, which offer special
market access privileges to developing countries such as The Generalised System of
Preferences, or GSP, which offers duty-free treatment to about two-thirds of all goods
from developing countries, and which we recently increased by over 1,700 tariff lines for
the least developed countries.
A trading system easier to use: Open markets mean little in
practice without the ability to reach them. This presents us with two separate challenges:
first, ensuring that the least developed countries can take full advantage of a trading
system that is more complicated than ever before; and second, making sure the WTO and its
agreements give new ventures and small family firms the same opportunities they
create for larger companies.
Technical assistance and capacity-building: Some of the WTO's
agreements on intellectual property, services, sanitary and phytosanitary standards, or
dispute settlement demand considerable expertise from participating governments.
Therefore, the WTO is committed to a programme of increased technical assistance and
capacity building to build understanding of the agreements; help governments comply with
them; and also help countries assert their rights and interests in negotiations.
This is especially important for the least-developed countries, which
come to the WTO with less experience and resources. Last year the WTO joined Bangladesh,
Lesotho, Nigeria, Senegal, and Zambia, in a proposal to improve its current programme,
known as the Integrated Framework, in these areas.
More broadly, WTO has already begun a series of workshops and sessions
in several different regions of the world on its own and together with colleagues
from the Agency for International Development, the Federal Communications Commission, the
Department of Agriculture and others to offer advice and assistance on the WTO, as
well as on the US market access programmes. This will help to make sure that governments,
businesses and academics are familiar with, and can take advantage of, all the options the
Electronic commerce and trade facilitation: At the same time,
WTO believes that new information technologies, together with practical trade facilitation
measures, can offer a fundamentally better world for smaller and newer businesses. One of
the most profound and exciting trends today is the development of the Internet and a
worldwide telecommunications network.
Internet access requires little capital, helps entrepreneurs find
customers and suppliers quickly, and eases technical and paperwork burdens that can slow
participation in trade. Thus, electronic commerce is ideally suited for developing
countries. WTO is working to ensure access to these technologies through programmes like
the Leland Initiative in Africa and the Internet for Economic Development programme, which
help developing countries gain information technology skills and ease access to the
WTO is also capitalising on these new opportunities through a greater
focus on trade facilitation. Here the work is very practical. For instance, in the Free
Trade Area of the Americas talks, there is a hemispheric agreement to post all visa and
customs requirements on the Internet, and are also implementing streamlined customs
procedures for express shipments and commercial samples. Similar initiatives are underway
Altogether, WTO hopes to create a system that does more to support
long-term growth and export opportunities for developing countries, as well as make it
easier for governments to use and also takes into account of the special problems of
smaller businesses and new entrepreneurs. Broadly speaking, the objective is to create a
trading system, which gives people a broad sense that the world economy offers opportunity
to anyone who is willing to work.
The challenge is complex and all questions cannot be answered. But in
partnership with 136 other WTO members, there can be a trading system of shared
responsibility and shared benefit, welcoming every country to its rightful place in this
The above is the edited version of the keynote address delivered at
The Centre for International Private Enterprise (CIPE) at its second international
conference for women entrepreneurs in June 2000. Ambassador Charlene Barshefsky is the US
Trade Representative and also the President's principal trade negotiator and policy
A CIPE/AsiaNet Feature