SECRETARY-GENERAL CALLS FOR FULL USE OF UNITED NATIONS SYSTEM TO AID TRADE LIBERALIZATION

6 July 1998

Press Release
SG/SM/6629
ECOSOC/5762

SECRETARY-GENERAL CALLS FOR FULL USE OF UNITED NATIONS SYSTEM TO AID TRADE LIBERALIZATION

19980706 Addresses Opening Meeting of 1998 Substantive Session of Economic and Social Council

Following is the text of an address by Secretary-General Kofi Annan during today's opening meeting of the 1998 substantive session of the Economic an Social Council:

I am pleased to join you today as the Economic and Social Council begins its annual deliberations.

You meet at a time of considerable turmoil and uncertainty, but also of great promise. Never before have we seen so clearly the global interdependencies of issues and events that pervade our lives and bind for us a common fate. Never before have opportunity and risk seemed so closely entwined. And never before have the responsibilities of this Council been more profound.

Global conditions today offer unprecedented prospects for peace and prosperity. The major Powers are at peace with one another. There is widespread acceptance of the basic tenets of democratic governance. Technological advances are making possible a free and unfettered global flow of information and ideas, which has been a crucial element in the growth of civil society and in improving transparency and accountability.

And yet, we seem ill-equipped to harness fully this tremendous potential. Ours is an era of stark contrasts: tremendous wealth exists alongside chronic destitution; economies expand in some regions, while sudden disruptions elsewhere erode the hard-won gains of a generation. The global economic situation can seem quite precarious, and people around the world are torn between the hopes engendered by decades of remarkable progress and the fear of upheavals to come.

Those hopes and fears are global. The economy is global. Markets are global. But politics are local. Thus, there is a widening gap between what citizens demand and what governments can deliver. Our challenge is to bridge that gap. We need to address global interdependencies in all their

complexity. We need to provide economic opportunities to those who remain excluded. And we need to unlock the potential for growth, while avoiding instability. But to succeed, we need to take collective leadership and multilateralism to a new level.

Multilateralism, let us not forget, has given us the international trading system. Just six weeks ago, we commemorated the fiftieth anniversary of the General Agreement on Tariffs and Trade (GATT). The international community has ample reason to be proud of this achievement. The open, rule- based trading system has generated an extraordinary surge in prosperity and dramatic reductions in poverty.

It is also an outstanding example demonstrating that joint efforts and multilateral cooperation -- where the strong respect the rights of the weak -- are not a zero-sum game, but bring benefits to all.

The trade liberalization process must continue. But views differ widely as to how this should be done. Some have suggested using trade rules to achieve goals with respect to labour, the environment and human rights. I believe instead that full use should be made of the United Nations system to pursue such goals. To attempt to use the multilateral trading system to solve problems in these and other areas would place it under great strain, and would be much less effective than adopting policy solutions in the sectors themselves.

It is good news, for example, that the 174 members of the International Labour Organization (ILO) -- governments, employers' organizations and trade unions -- agreed three weeks ago on the fundamental social rights that should be respected by the world community in a globalized economy. It is also good news that the United Nations Environment Programme (UNEP) is being strengthened.

Still, we cannot afford complacency. While we have every reason to treasure and nurture the achievements brought about by the international trading system, the unfolding of the Asian crisis is a reminder of just how many other factors -- finance, economics, social and political forces -- are now working in tandem to shape, and shake up, our world.

Debate continues about the interpretation of the Asian crisis and the conclusions to be drawn from it. We have all learned the hard way that there are important distinctions to be made between short-term, speculative capital flows and long-term commitments such as foreign direct investment. For the United Nations, three broad observations are paramount. First, the crisis has had its most devastating impact on society's margins: on the poor and vulnerable who are least able to withstand the sudden loss of jobs. It threatens to undo, with alarming alacrity, years of progress in alleviating poverty and advancing the rights of women. When a harvest fails because of

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drought, that is understandable. But when a person loses his or her livelihood on a construction site or in an assembly plant because of volatile financing or exchange rates, that is far more disorienting, and even destabilizing.

Job-seekers who have migrated during the good times, the poor who can no longer pay for higher-priced basic necessities, and people employed in the least organized sectors of the economy -- whatever mechanisms we now devise to respond to this crisis -- the well-being of these and others must now be foremost in our minds.

Second, just as poor and vulnerable individuals suffer first and most, so, too, do poor and vulnerable nations. Developing countries are less able than developed nations to withstand the fallout of the Asian crisis, and even countries far removed geographically and economically from the Asian region are feeling the impact. African nations, for example, are experiencing collateral damage in the form of reduced commodity prices. International cooperation must focus first on these nations: on those who do not have effective lobbying groups or whose voices are otherwise not heard.

Third, interdependence among nations has an essential complement: interdependence among issues. Finance, trade, governance and social equity are intimately linked. The Asian crisis was initially viewed as purely financial. It soon became clear that it was linked to trade and exchange rates, and that its consequences were affecting both trade and financial flows.

Indeed, the rule-based trading system is being made to bear the cost for inadequacies of the financial system. East Asian countries have experienced sharp contractions in domestic demand and have had to cut imports severely. To escape from the crisis, they are attempting to increase exports even further. Thus, we can see again the nature and depth of today's interdependencies: finance and trade cannot be treated as distinct sectors, nor can the national and international domains be separated. This Council has a responsibility to promote the coherence and cooperation that are so urgently needed.

However, one must not let the growing pains of globalization obscure the greater good. The truly open, inclusive global economy for which we are striving remains the most promising path for spreading more widely the benefits of globalization. Indeed, the aspirations and well-being of millions of people depend on the continued openness of markets.

At the same time, the fears of globalization must be taken seriously. In the north, significant segments of the population do not view freer trade as contributing to their economic well-being. Rather, many see measures towards further globalization and the integration of national economies into the global economy as threats to their jobs, environments and social "safety nets". The challenge for governments is to reconcile these demands: to show

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that global imperatives can coexist with local needs. The international community, including the United Nations system, has a duty to promote understanding of the new facts of global life, and wider involvement in decision-making.

In the south, people fear that marginalization and a lack of opportunity will jeopardize their very ability to find jobs, to feed families, indeed to survive. Here, the international community's responsibilities are even greater and more urgent, and it is here that the international community can make a significant, immediate difference: by focusing on the needs of Africa and the least developed countries.

I would like to take this opportunity to reiterate some of the main messages contained in my recent report to the Security Council on peace and development in Africa. Non-tariff barriers facing African and the least developed countries should be abolished. Least developed countries' exports to developed countries should enjoy duty-free access. Significant steps should be taken to relieve unsustainable debt burdens, for example, by converting remaining official bilateral debts into grants and by broadening access to the Heavily Indebted Poor Countries Debt Initiative.

And, it is unacceptable that official development assistance has fallen to its lowest point in history. Now is the time when aid is needed most. This is, first and foremost, a matter of solidarity; but it is also a question of avoiding, down the road, the even higher costs of humanitarian assistance and peacekeeping.

Allaying fears of globalization also means that the international community will need to acknowledge the real power it has to influence the course of events. The advent of a global economy may seem at times like a force of nature, as inevitable as the tides or as capricious as a tornado. But, globalization has been the outcome of deliberate policy choices, choices that have: established markets and set parameters for trade; choices that reflect shared values such as the rule of law; and our shared hopes for common progress.

Today, we face further choices. We can have chaotic international markets, or we can cooperate to create the supportive frameworks on which progress depends. We can confine ourselves within purely local points of view, or we can adopt a more global perspective. We can seek short-term gains, or we can orient ourselves for the long term.

One key choice will be whether the international community uses the international institutions at its disposal. Like each of the other choices I have just outlined, there is, in fact, no choice at all. At a time when the international system of trade and finance is under great strain, it would be a grievous error to retreat from multilateralism. Now is a time to rally around

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and breathe new life into the system of multilateral cooperation that has been built so assiduously over the years and which has served the world community so well. Now is the time to strengthen the frameworks of international cooperation that can spread prosperity in the age of globalization.

Already, there are ample signs that we are becoming a more mutually reinforcing network. The United Nations system is working more closely with the Bretton Woods institutions in all respects, from Headquarters to the field. Cooperation between the United Nations and the World Trade Organization (WTO) is already close. The WTO participates fully in the Administrative Committee on Coordination, and I have maintained close personal relations with the Director-General of WTO, Renato Ruggiero. In addition, the WTO and the United Nations Conference on Trade and Development (UNCTAD) are collaborating on a broad range of issues. I am pleased to note that the basic document on market access prepared for this session of the Economic and Social Council is a joint product of the UNCTAD and WTO secretariats.

The Economic and Social Council itself, in the spirit of United Nations reform, has been an integral part of this process of adaptation and renewal. I was happy to take part, this past April, in the ground-breaking meeting at which the Economic and Social Council, the International Monetary Fund (IMF) and the World Bank promoted closer links among the diplomatic, financial and development cooperation communities. The Economic and Social Council is also adjusting its agenda, streamlining its subsidiary machinery and promoting greater coordination among United Nations specialized agencies.

I am confident that this process will also lead to the Council having a more distinct profile in the minds' eye of the world public. The world knows the United Nations General Assembly as a great forum of debate, a body of nearly universal membership whose recommendations carry the weight of world opinion. The public also knows the Security Council for its responsibilities in the area of peace and security. Today, we have an opportunity to improve public awareness of the Economic and Social Council's work -- the work of development -- which is how most people around the world know and come in contact with the United Nations.

The biggest obstacle to global prosperity is not political or cultural differences, but our inability to do what makes good sense. Is it fear, greed, honest misunderstanding or a simple lack of information that feeds this inability? Probably, it is, to some degree, a combination of each. But most importantly, these are feelings we can rise above.

The distinguished internationalist and economist Barbara Ward, who pioneered many of the global ideas and initiatives of the 1970s, wrote in her classic book, The Rich Nations and the Poor Nations, that when "governments work intelligently and far-sightedly for the good of others, they achieve

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their own prosperity too". She went on: "Our morals and our interests -- seen in true perspective -- do not pull apart. Only the narrowness of our own interests, whether personal or national, blinds us to this moral truth."

In that spirit, I wish you great success for the vital work you will undertake in the month ahead. Thank you.

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