SECRETARY-GENERAL CALLS FOR GREATER COHERENCE BETWEEN TRADE AND FINANCIAL SYSTEM, IN STATEMENT TO WTO MINISTERIAL CONFERENCE

19 May 1998

Press Release
SG/SM/6566
ECO/3

SECRETARY-GENERAL CALLS FOR GREATER COHERENCE BETWEEN TRADE AND FINANCIAL SYSTEM, IN STATEMENT TO WTO MINISTERIAL CONFERENCE

19980519 It Is Sacred Duty of United Nations System, WTO and Bretton Woods Institutions to Give People Back Sound Reasons to Hope, Kofi Annan Emphasizes

Following is the text of Secretary-General Kofi Annan's statement to the Second World Trade Organization (WTO) Ministerial Conference, which was delivered on his behalf by Rubens Ricupero, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), in Geneva today:

I speak today on behalf of Kofi Annan, Secretary-General of the United Nations.

It is very appropriate that the United Nations should address this Conference on the fiftieth anniversary of the General Agreement on Tariffs and Trade (GATT). For the United Nations is not just one among many observers. It is the major source of legitimacy in the international system, and the cornerstone of the system of international organizations.

Moreover, it should be recalled that the United Nations was the political and legal framework within which the event we are commemorating today took place. The GATT was an agreement drafted and negotiated within a United Nations Committee. And it was concluded as an annex to the International Trade Organization (ITO) approved at the Havana Conference in 1947. To be precise, that conference was known as the United Nations Conference on Trade and Employment. Even though the ITO never came into being, it is worth recalling that it was the United Nations which convened the Havana Conference, provided it with preparatory support and later provided staff who went on to form the first GATT Secretariat. The GATT became the cornerstone around which the multilateral trading system was built.

The interface of trade and development was first articulated by the Latin American countries, at the Havana Conference. Later, the achievement of independence by the developing countries of Africa and Asia gave further impetus to a global initiative to create an international trading system consistent with the promotion of economic and social development. The UNCTAD was established in 1964 with the mandate to pursue this objective.

As the logical successor to the GATT, the WTO represents a new order in multilateral trade. It intensifies multilateral trade disciplines and extends them into new areas. And it provides the improved, and more secure, access to markets that is a prerequisite for successful export-oriented development strategies. On the other hand, it imposes stricter constraints on the scope of policy options open to developing countries in pursuing their development strategies.

Developing countries are now attempting to participate effectively within this system. This implies having the ability to exploit export opportunities, meet their obligations to defend their acquired rights, formulate development-oriented trade policies and pursue these policy objectives in the course of trade negotiations. Building what we at UNCTAD call "a positive trade agenda" is a prerequisite for developing countries, if they are to participate in future negotiations on a more equal footing and to defend their interests.

As its first Ministerial Conference demonstrated, the WTO has become a forum for continuous multilateral negotiations. Many countries find themselves simultaneously engaged in trade negotiations at the regional and subregional levels. Thus, the building of developing countries' capacity to defend their interests effectively in trade negotiations, and to establish the universality of the WTO, is an essential task.

As we all agree, the trade liberalization process must maintain its momentum. But, priority should be given to trade barriers targeting the exports of developing countries in both goods and services. Tariff peaks should be reduced and so-called trade remedies further disciplined. Access for the temporary movement of natural persons should also be facilitated.

The concept of special and differential treatment in favour of developing countries should be adapted so as to aim at improving their ability to compete in a globalized world. Subregional integration among developing countries is providing them with a training ground for competing in the global market, thus facilitating their participation in trade negotiations.

Meanwhile, the search for greater coherence between the trade and financial system should be pursued. As is so clearly demonstrated by the current Asian crisis, the trade system bears the burden of adjustment to inadequacies in the financial system. At this Conference, the international trading community is being called upon to demonstrate solidarity in the trade field, so as to assist Asian countries in remedying their situation.

A word of caution is required at this juncture on the extension of the frontiers of the trading system into new areas. The use of the trade rules as a mechanism for imposing disciplines in non-trade areas would create heavy

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strains on the system. The WTO must be seen as a partner in the overall international effort -- carried out by the United Nations and its various agencies -- aimed at the promotion of sustainable development and human rights, and pursuit of the goals of the United Nations Charter.

We are all caught up in the fast current of globalization. But this does not mean that we should allow ourselves to be carried aimlessly along the tide. The challenges of globalization, particularly that of avoiding the marginalization of the weaker members of the international community, must be addressed by the WTO, as by all other international organizations.

As Mr. Annan stressed in his message to last weekend's meeting of the Group of Eight, and as has been re-emphasized by Renato Ruggiero, Director- General of the WTO, trade barriers facing the least developed countries should be immediately abolished. In addition, they should obtain international support to support their competitiveness and their ability to attract investment. Building their capacity to compete effectively, and on equal terms, is a moral and practical challenge of the highest order to us all. In cooperation with the WTO and other agencies, UNCTAD is fully engaged in this task.

Looking back to the Havana Conference, we should recall that it tried to deal with two major goals -- trade and employment. Those were the days when statesmen and economists still believed in the possibility of full employment. Nowadays, in practice this goal has been virtually abandoned. In the Organisation for Economic Cooperation and Development's (OECD) countries alone, there are 35 million jobless. In the developing world, the number runs into the hundreds of millions. Inequality inside, and among, nations has not been reduced.

Trade is certainly not to blame for the failure of the twentieth century to solve this burning problem. But, at a time of global trade liberalization, the existence of mass unemployment, job insecurity and acute inequality undoubtedly has had something to do with the malaise -- even backlash, in places -- against trade and investment liberalization that we have noted in various quarters. Such preoccupations have shown their face in such diverse forums as the United States Congress' debate on "fast track", the OECD negotiations on a multilateral investment agreement and the protests and demonstrations of recent days here in Geneva.

No one should be fooled by the festive atmosphere of these celebrations. Outside there is anguish and fear, insecurity about jobs and what Thoreau described as a "life of quiet desperation". That is also part of the reality as much as the impressive achievements of global liberalization. It is the sacred duty of the United Nations system, WTO and the Bretton Woods institutions to create reasons to believe in the future and to give people back sound reasons to hope.

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