SECRETARY-GENERAL TELLS CHICAGO AUDIENCE UNITED NATIONS HAS KEY ROLE IN EVOLUTION OF GLOBAL TRADING SYSTEM

20 October 1997

Press Release
SG/SM/6365

SECRETARY-GENERAL TELLS CHICAGO AUDIENCE UNITED NATIONS HAS KEY ROLE IN EVOLUTION OF GLOBAL TRADING SYSTEM

19971020 Speech Notes Technological Advances, Calls for More Investment In Poorer Countries, Pledges Continued Reform of World Organization

This is the text of a statement by Secretary-General Kofi Annan today to the World Trade Centre in Chicago:

It is truly a pleasure to join you today in this great city. This may be America's heartland, and we may be far from both coasts, but Chicago is one of the world's leading international centres. This is a place in which immigrants have made their home and fashioned a vibrant urban mosaic. It is the proud host to consulates, companies and banks from countries on all continents. Its extraordinary output of manufactured goods has made it one of the world's major exporters.

Here in Chicago, I've noticed, radio stations offer the latest commodities prices along with weather and traffic reports. Long known as "the city that works", Chicago is also "the city that trades".

Trade is as important to the United Nations as it is to you. Peacekeeping operations, refugee crises and the Organization's financial problems keep the United Nations in the world's headlines. The "Blue Helmets" are the Organization's most well-known public face. But by far the biggest portion of our budget, as well as the lion's share of our personnel, are devoted to development: the lower-profile work of helping countries to create jobs and raise their standards of living, and helping people live peaceful, healthy, productive lives. Trade and investment lie at the core of this effort.

International trade has been growing strongly at a rate of 10 per cent per year since the mid-1980s, enabling many developing countries to enjoy remarkable gains in prosperity and growth. Private investment in developing countries has increased even more dramatically -- from $5 billion in the early 1970s to more than $240 billion today. This, too, has allowed some countries to attain vital social, economic and environmental goals.

Other numbers, however, are not quite as encouraging. Eighty per cent of the private capital flow to developing countries goes to just 12 countries.

Only 5 per cent goes to Africa. Nearly 50 developing countries are not attracting any foreign capital at all. This is marginalization -- the downside of globalization.

Extreme poverty remains a plague, with more than 1.3 billion people lacking even the most basic health, sanitation and education services. One hundred countries are worse off today than they were 15 years ago. Aid budgets, already far short of targets agreed upon by the General Assembly, are shrinking.

Thus, we see a mixed picture -- of progress and pitfalls, opportunities and obstacles, affluence alongside deprivation. I believe firmly that it is within our power to tip the balance towards the positive side of this ledger. But it will take all the will and creativity we can muster. That is why, since taking office in January, I have sought to establish a new partnership among governments, the private sector and the international community.

We live in a changing world. Today, market capitalism has no major ideological rival. There is now a universal understanding that market forces are essential for sustainable development.

The role of State is changing as well. In Africa, Asia, Latin America and the Commonwealth of Independent States, governments are embracing economic and political liberalization. Where once they sought to impose a model of development, today they are focusing more on creating the conditions and institutions through which development -- and private enterprise -- can flourish. The United Nations welcomes these new realities, and in particular the growing role of the private sector.

Businesses command vast resources and are the dominant engine of growth in the world today. Their technological prowess and entrepreneurial spirit make them leading founts of innovation and the principal creators of jobs and wealth. The United Nations would like to harness this dynamism for the common good. But just as there is no doubting the importance of business for the success of economic and social development, there is likewise no doubting the Organization's importance for the success of business.

The United Nations system defines the technical standards in shipping, telecommunication and postal services that make international transactions possible. We help countries privatize State enterprises, create special economic zones, remove trade barriers and devise business-friendly legislation. We protect copyrights. Our good governance programmes target corruption as a particularly insidious obstacle to development and growth. We are often the principal, if not the sole, source of financial and technical support to many nations. And in the broadest sense, our work -- such as electoral assistance, the promotion of literacy and the eradication of disease -- helps to build stable, functioning, democratic societies.

- 3 - Press Release SG/SM/6365 20 October 1997

These are the relative strengths of the private sector and the United Nations -- the contributions each of us is uniquely placed to make. The dividends for business are clear: reduced risk; emerging markets; new opportunities for production and investment; a rule-based global economy and trading system; and a peaceful international order.

But with such rewards come responsibilities. Globalization has helped to generate a sustained period of economic expansion. But globalization is not a panacea. We must bear in mind that market forces do not always heed the United Nations imperatives of sustainability, equity, social justice and long- term thinking.

Not all developing countries are participating in the global economy. Many lack the infrastructure, both physical and institutional. Communications may be inadequate. Information may be lacking or incomplete. People may lack skills in new technologies. Financial services may be unavailable. Government bureaucracy may hinder, rather than help, foreign investors and exporters alike.

Decision-makers in the new global economy must not forget the developing world. The emergence of powerful regional trading blocs has opened markets and enhanced trading opportunities. But it has also added to the marginalization of the world's poorest nations. Producers in developing countries fear they will be swallowed up by transnational corporations. Workers feel their livelihoods are secure only as long as it takes companies to identify the next low-wage economy.

If developing countries are unable to join the new world of international trade and investment, the cause of development will suffer. And if development suffers, so will international peace and security. In our changing world, it is perhaps here, in our understanding of peace and security, that the most profound change has occurred.

During the cold war, peace and security tended to be defined simply in terms of military might or the balance of terror. Today, we have a greater appreciation for the non-military sources of conflict. We know that lasting peace requires a broader vision, encompassing education and literacy, health and nutrition, human rights and fundamental freedoms. We know that we cannot be secure amidst starvation. We cannot build peace without alleviating poverty. We cannot build freedom on foundations of injustice.

In today's world, the profit motive and the development motive go hand in hand. They have become two sides of the same coin. Much of the dramatic growth in the world today is led by countries from the South. This offers you, business and corporate leaders, unprecedented opportunities. There is a clear link between profitability and raising living standards for the world's poorest nations.

- 4 - Press Release SG/SM/6365 20 October 1997

World Trade Centres understand this. They have been collaborating with UNCTAD -- the United Nations Conference on Trade and Development -- in promoting trade and linking local businesses with global opportunities.

World Trade Centres in 25 cities around the world have joined UNCTAD's "trade points" network. The trade points are one-stop electronic centres bringing together all the services required for international commercial transactions: customs, freight forwarders, transport companies, banks, insurance firms and foreign trade institutes.

Detroit and Minneapolis are part of this network, which contains valuable data about markets and ventures involving more than 7 million enterprises worldwide. It would seem natural for Chicago, a classic port city, to be among those who are now building the "cyber ports" of the twenty- first century.

Trade, investment and development are about partnerships. Partnerships between importers and exporters. Between producers and consumers. Among the countries of any given region. And especially, in our era of globalization, between countries of the North and those of the South.

The partnership between business, governments and the United Nations is one of the most fruitful to have taken shape in recent years. Already, we have achieved important economic goals. But we can do more. Strengthening this relationship will be one of the priorities of my term as Secretary- General.

I know that, for us to succeed, the business community must have confidence in the United Nations. That is one of the reasons reform is also among my highest priorities. The reform package now being debated by the Member States is aimed at transforming the way the United Nations manages the resources placed its disposal. The proposals touch on virtually every aspect of our global operations. We are seeking to create a culture of reform, so that the hallmarks of private enterprise -- agility, coherence and cost- effectiveness -- become part of the way we, too, do business.

Chicago's own Carl Sandburg wrote in 1922 that "Nothing happens unless first a dream." The founders of the United Nations had such a dream: peace, progress and freedom for all the world's peoples. Let us fulfil these high aspirations. But let us also be practical. With greater cooperation, our partnership can help unlock the economic potential of an underdeveloped world, for the benefit of all. I look forward to working with you in rising to this challenge.

* *** *