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PRESS/58
12November 1996
"Trading towards Peace"
Address byRenato Ruggiero
Director-General
World Trade Organization
MENA IIIConference
Cairo
12November 1996
ThefulltextofMr.Ruggiero 'sspeech, given attheMENA IIIConference, Cairo, on
12November 1996 isattached.
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I
Thisconference canmake nogreater contribution toimproving security andpeace intheregion
thanbyencouraging strong tradelinksandinvestor confidence, which canlaythefoundation fordurable
economic growth throughout theregion. Without economic progress, itwillprove immeasurably more
difficult toachieve lasting political stability intheMiddle East. Economic progress encourages
interdependence andtheshared respect fortheruleoflawwhich isthebasis ofstability. Certainly
nolasting peace haseverbeenbuiltontheshaky foundations ofeconomic insecurity, inequality and
isolation.
Thereason whytradehassuchavitalparttoplayinbuilding peace isbecause itmeans lowering
barriers -notonlytogoods andservices butamong nations andpeoples. Theelimination ofbarriers
creates interdependence andinterdependence creates solidarity. Thehistory ofthelastfiftyyears has
shownusalltheundeniablebenefitsofloweringtradebarriersandopeningeconomies.Themoststriking
examplehasbeenintheprocessofEuropeanconstruction,wherehistoricenemieshavebeentransformed
intoinseparable partners.
Clearly every region hasitsowncharacteristics, anditwould bewrong toimagine thatthe
same blueprint canapply everywhere andinthesame way. Butmymessage heretoday isthatthis
region which wasforthousands ofyears atthecrossroads ofworld trade should regain itsplace in
thecentre, because doing sowillhelpbuild peace aswellasprosperity. Thisiswhythenumerous
applications foraccession totheWTO fromcountries inthisregion aresosignificant. Currently, its
levelofparticipation intheWTO isrelatively low. Signs thatthisisintheprocess ofchanging are
most welcome.
II
Iwould liketoexpand alittleonwhatitmeans totalkoftheregion regaining itsplace inthe
centre ofinternational trade. There areessentially twotracks backtothecentre, andexperience suggests
thattheyarenotmutually exclusive butrather strongly complementary, especially atacertain stage
ofdevelopment.
Thefirstisthrough regionalism .Iknow thatthere areseveral efforts atregional trade and
economic initiatives among Middle Eastern andNorth African countries, andIhopethatsuchinitiatives
willbeencouraged toproduce positive results.
Regional initiatives areimportant because theycanhelpcountries atacomparable level of
development tomove relatively quickly inopening their economies andindeepening their
interdependence.
Regionalism isimportant asameans offacilitating theintegration oftheeconomies concerned
intothemainstream oftheglobal economy. Thisistherolethatfuture negotiations between theEU
andMediterranean countries aimed atestablishing afreetrade areainthenext15years should play.
Regionalism canalsoencourage acommon approach toissues ininternational debate ornegotiation.
Butabove all,regional trade initiatives areapowerful instrument todecrease oreliminate tensions.
However, therapidadvance ofglobal economic integration means thatwhile regional initiatives
remain important, theyarenotsufficient bythemselves toaddress successfully thenewperspectives
oftheinternational economy. Thatiswhyweneedasecond track, which istherule-based multilateral
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system. Andthatiswhythemultilateral system isoffundamental importance totheeconomic prosperity
ofthisregion.
III
Globalization isanirreversible process. Itsmomentum comes fromtheadvance oftechnology,
ofcommunications, andofaccess toinformation, aswellasfromtheinternational flowofgoods and
finance. Tostopthisautonomous process ortoslowitdown isalmost impossible -evenifwewould
restore highprotectionist walls around eachnation oreachgroup oftrading nations. Itwould bein
anycaseatragedy notjustforeconomic progress butalsoforsecurity andpeace. Theonlysensible
wayistomake globalization work forallofus.
Thatthisisentirely possible isshown bythefactthatathirdoftheworld 'stwenty-five leading
exporters arenowdeveloping countries. Developing countries nowaccount foraquarter ofworld
trade, compared tolessthan20percentadecade ago. Ifcurrent trends continue, thisfigure could
reach 40percentbytheyear2010 andoverhalfby2020.
These statistics alsodescribe thehuge diffusion oftechnology andeconomic power thatis
currently underway. Thisisnothing lessthanafundamental shiftintheeconomic equilibrium ofthe
world. Itshows upinthefactthatdeveloping countries whoopentheireconomy andadjust tothe
unprecedented opportunities ofglobalization areinmany cases nowthelocomotives ofgrowth, for
industrialized economies aswell. Atthebeginning ofthisdecade, industrialized countries inEurope
andNorth America haveemerged fromrecession mainly because oftheincreased import demand from
developing countries.
Thisshows thegrowing economic weight andleverage ofdeveloping countries. Youhave
economic power, andthepotential ofmuch more. There isthusnoneedfordefensive attitudes. And
therule-based multilateral trading system gives youthelevelplaying fieldyouseek-itisyours to
playonashardasyoucan.
Newtechnologies arechanging thetrading system asglobalization expands towards aneven
greater human dimension. What thismeans isthatthelines representing ourdifferent worlds -
developed, developing, least-developed -arebecoming blurred. Inlinking together oureconomies
through satellites andfibreoptics wehavealsolinked together ourfutures. Thisregion hastoshare
allthebenefits ofthisnew scenario.
When WTO ministers meetinSingapore nextmonth therewillIhopebe,firstly, anencouraging
review ofwhathasbeenachieved inthefirsttwoyears, especially thepositive experience ofthedispute
settlement procedures, theheartofoursystem. Secondly, ministers willbeabletotakenoteofanew
andpowerful movement intrade liberalization which truly seesustrading intothefuture: theaim
ofeliminating tariffs oninformation technology products bytheyear2000onanM.F.N basis. These
products account formore thatUS$400billion inannual global trade value -asmuch asagricultural
trade. Thiswillbeanachievement ofgreat value forallofus-weallneedthesame technology.
Asthefirstmajor international institution tobecreated inthepost-Cold Warera,theWTO
offers apromise ofthekindofglobal economic architecture weallneedinthecoming decades. Its
cultureisfirmlyrootedinthetraditionofconsensus-buildingandcooperationamongsovereigncountries.
AndtheWTO embodies rights andobligations negotiated byconsensus, approved andratified byeach
government andeachParliament, andtheyareenforceable, notthrough thecrude exercise ofeconomic
power, butthrough theruleoflaw.Thealternative would beapower-based system -whowould want
tochose thisoption?
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Butmostimportantly, theWTO isanorganization which brings allcountries --fromallcorners
oftheworld andfrom alllevels ofdevelopment --together asequals. There isnoweighted voting,
noexclusive clubs, noinner andouter circles. Developing countries representing 80% ofour
constituency sitasequals withindustrialized countries towrite therules ofashared trading system.
Thisiswhy28candidates, including many major partners likeChina andRussia, andcountries of
thisregion, consider membership oftheWTO ahighpriority. Even thesmallest country canchallenge
themostpowerful indefense ofitstrade interests --andnotonthebasis ofeconomic power buton
thebasisofcommon andenforceable rules. Thisisnotalegalabstraction norisitwishful thinking -
-these aretherealities ofthenewsystem wehavecreated together. Inaveryrealsense, theWTO
isthevisible embodiment ofthemostprofound development ofourtime --thedeepinterdependence
ofallpeoples andallnations.
IV
Thisnewunity ofdeveloping anddeveloped countries inside asingle system willbecredited
asthegreatest achievement ofthemultilateral system. Butthisunity isstillfragile: wecannot allow
ittobebroken: Thisiswhy, inpreparing theagenda ofthefirstMinisterial meeting inSingapore,we
haverecognized theparticularly difficult taskfacing developing countries inimplementing theUruguay
Roundcommitments.Wehavealsoacknowledgedthechallengestheyfaceincontemplatingthenecessary
work programme.
However noonehere,inthisConference heldunder thetheme "Building forthefuture: creating
aninvestor-friendly environment" would besurprised toknow thatoneofthemainissues ofourwork
programme tobediscussed byMinisters inSingapore isjustwhatkindofcontribution themultilateral
system could givetothepromotion ofinvestment, taking intoaccount thestrong interrelation with
trade andtheenormous number ofbilateral agreements.
UptoJune19961160bilateralinvestmenttreatieshavebeenconcluded(two-thirdsinthe1990's).
These treaties involve 158countries. Thismeans thatpolicy coherence ininvestment isacritical
consideration. Governments faceachoice between continuing todealwithFDIissues bilaterally or
insmall groups, orexploring options foracomprehensive framework designed toensure thatinvestment
andtraderulesarecompatible andmutually supportive. There islittledoubt thatinvestors haveastrong
preference forthesecond option. Thisshould beamessage which alsocomes outclearly from this
conference.
Alackofruleandpolicy coherence poses adanger tosecurity andpredictability, which are
basic goals oftrade andinvestment agreements. Furthermore, onlyacomprehensive andglobal
framework canrecognize theclose linkages between trade andinvestment, assure thecompatibility
ofinvestment andtrade rules, and-mostofall-takeintoaccount inabalanced waytheinterests of
allmembers ofthetrading system, developed, developing andleast-developed alike. Andonlya
multilateral negotiation intheWTO -when appropriate -canprovide suchaframework.
Thisregion received lastyearonly1.2percentofglobal foreign direct investment, andonly
3.7percentofthetotalinvestment inflows todeveloping countries. Thisunderlines thegreatimportance
ofinvestment forthefuture ofthisregion, andtheurgency ofarenewed effort. Inthelightofthis
situation, Ithink youwould finditsurprising ifIdidnotunderline theimportance ofbeginning to
study theproblem intheWTO.
Aclarification isneeded: nooneissuggesting inGeneva thatthere should beanegotiation
now, before aneducational effort hasbeenundertaken, northatlimits totherights ofhostcountries
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should beestablished orprivileges granted totherights ofinvestors. Theonlyissueunder discussion
iswhether aneducational effort inUNCTAD should beaccompanied byacomplementary oneinthe
WTO. Inmyresponsibility asDirector- General Iamconvinced thatitwould beintherealinterest
ofalldeveloping countries, andofthisregion, ifMinisters inSingapore would launch aninitiative
inthefieldofinvestment intheWTO aswell.
V
Theintegration ofdeveloping countries asequal partners inthemultilateral system isoneof
themost important challenges inshaping theeconomic order ofthe21stcentury. Thisisashared
responsibility ofdeveloped anddeveloping countries alike. There isnorational alternative tothis
objective. Theevolution oftheglobal economy makes thatclear. Without unity among industrialized
anddeveloping countries thepaths thatweunited attheendoftheUruguay Round willinevitably begin
todivide again. Theindustrialized world would trytobuild itsownrules toharness globalization
andthedeveloping world would besplit. Many developing countries would follow thepathofthe
industrialized, andtheothers would beleftonthemargins. Idonotthink thisisascenario anyone
would willingly choose.
Instead, weneedtowork together asequal partners toensure thefullintegration ofcountries
inthisregion, andallother developing andtransition economies, intotheglobal economy andtherule-
based multilateral trading system. Inconjunction withthisweneedtoencourage, notably inthisregion,
thegrowthofregionaleconomiccooperation.Thealternativeisaviciouscirclewhereeconomicisolation
feedsgreater political instability which inturnleadstogreater economic isolation. Theroadtoalasting
peace intheMiddle Eastbegins, notends, witheconomic integration andinterdependence. Taking
thismessage toheart willhelpbuild afuture where itisgoods, services, andinvestment thatcross
borders -notmissiles andsoldiers.
END