US trade representative on coming WTO round
Regional-USA, Economics, 11/29/1999

US Trade Representative Charlene Barshefsky last week outlined the US goals for the upcoming conference of the World Trade Organization in Seattle, Washington. The following is the full content of her prepared remarks before the National Press Club:

We are now one week away from the World Trade Organization's Ministerial Conference in Seattle. This event, which the United States will host and Chair, will bring 150 nations together to launch a new Round of global trade negotiations; and this Round in turn will help us create the foundation of the next century's world economy.

In the past months, beginning with President Clinton's call for a new Round in his State of the Union Address, our Administration has laid out a detailed and ambitious program for the Ministerial and the new Round. My purpose today, as the event approaches, is to give you a sense of the challenges this agenda will address, and the results it can achieve.

THE ACHIEVEMENTS OF THE PAST HALF-CENTURY

Let me begin with some general thoughts about American trade policy and its record.

The trading system represented by the WTO is the result of fifty years of progress and American leadership -- under ten Administrations and 26 Congresses -- toward a more open, fair and free world economy. We have led in this work through eight negotiating Rounds, from the foundation of the General Agreement on Tariffs and Trade (GATT) in 1948 to the creation of the WTO five years ago, and now the launch of a new Round. And we have done so to advance our own national economic interests; to promote the values of freedom and the rule of law; and to realize the aspiration, shared with our trading partners, of a more peaceful and prosperous world for each succeeding generation.

This effort rests on the understanding that open markets and freer trade are good for both Americans and our trading partners overseas. This is true in economic terms, first of all. With market opening comes growth, opportunity and rising standards of living: producers can sell to wider markets; consumers have greater choice and quality; technological progress accelerates; businesses become more efficient and competitive.

But it is also true in a deeper sense. Our development of the trading system has helped us to realize broader aspirations: the rule of law; a more stable international economy; a stronger peace. With a rules-based trading system that keeps markets open, trading nations rely on law and contract rather than on coercion in good times; and in moments of crisis, the world has a shield against the fears that can lead to cycles of protection and the "beggar-thy-neighbor" policies of the 1930s. And as countries trade more with their neighbors, they gain an interest in prosperity and stability beyond their borders, strengthening the chances of peace.

All these benefits are clear in the record of the past fifty years.

For us, open markets abroad offer the opportunity to export; and exports are essential to a strong economy. Almost 80 percent of world economic consumption, and 96 percent of the world's population, is outside the U.S. If these markets are opened more fully to Americans in the years ahead -- and foreign tariffs and other trade barriers are still substantially higher than ours -- our farmers will face less risk of gluts that drive down prices, and American businesses will gain the economies of scale that enable them to invest in plants, research, and hiring.

Open markets at home are equally important. Imports create the choice, price and competition that raise family living standards. This is true for all families, but most especially the poor. Imports, accompanied by a commitment to education and job training, help American workers specialize in the most technologically sophisticated and financially rewarding fields. And they give businesses access to inputs -- raw materials, parts, business equipment -- that reduce overall costs and therefore improve efficiency and competitiveness.

It is of course true that technological change, rather than trade, is principally responsible for job dislocation in the United States. But it is also true that an open American economy means competition; and competition also means change and adjustment to it. And the government has a responsibility to accompany an open trade policy with a commitment to education, job training, and adjustment.

But most of the changes underway in our economy -- falling unemployment, rising wages, rising demand for higher-skilled workers -- are unambiguously positive. These are very clear in the past seven years: as the world economy has further opened through the Uruguay Round and nearly 300 other trade agreements our Administration has negotiated, and as we concurrently committed ourselves to fiscal discipline and stronger support for education and job training, we have embarked upon the longest peacetime expansion in our history; created 19 million new jobs; reduced unemployment to 4.1 percent; and seen family incomes begin to rise again after a long period of stagnation.

On a broader scale, the work of developing the trading system has helped us to create a more prosperous, just and peaceful world. When the work began, our postwar leaders faced a world fragmented and impoverished by the Second World War; the communist experiment in Russia and soon China; and the older economic divisions among the Allies created after World War I through the colonial preference schemes of Britain and France, and then the American Smoot-Hawley tariffs of the Depression era. The core problem was that stated long ago by the Roman historian Livy:

"The defense of liberties is a difficult thing: pretending to want fair shares for all, every man raises himself by depressing his neighbor; our anxiety. to avoid oppression leads us to practice it ourselves; the injustice we repel, we visit in turn upon others, as if there were no other choice except either to do it or to suffer it."

That is, in the natural desire for freedom -- for security -- for prosperity -- lie dangerous temptations. Without the rule of law to prevent them, some will act on them -- if only because they fear someone else will do it first. This was precisely the experience between the summer of 1914 and the Depression. And the trading system embodied by the GATT and now the WTO is in essence a network of agreements that defend each of us -- the strongest and the weakest alike -- against such temptations.

And its effects in practice have justified its founders' hopes. Since 1950, global trade has grown fifteen-fold; world economic production has grown six-fold, and per capita income almost tripled. Life has improved nearly everywhere in the world: world life expectancy has grown by twenty years; infant mortality has dropped by two-thirds, and famine has receded from all but the most remote or misgoverned comers of the world. And slowly but steadily, as one region after another has committed itself to the principles of the trading system, peace and stability have strengthened -- first in Western Europe; then Southeast Asia; most recently Latin America and Central Europe.

And finally, the trading system has strengthened our guarantees of economic and political security. We see this clearly in the financial crisis: when the world met the test it failed in 1930. During an extraordinarily painful and dangerous period, the respect most WTO members showed for their commitments helped guarantee affected countries the markets essential for their recovery; shielded, to the maximum extent possible, American farmers and manufacturing exporters; and helped avert the political tensions that can arise in economic crisis.

AND THE CHALLENGES OF THE NEXT

Fifty years on, as we take stock, we see how much we have accomplished.

The immediate tasks of 1948 -- postwar reconstruction; the reintegration of Germany and Japan -- are far behind us. With respect to the industrial tariffs and other formal trade barriers which made up the agenda of the first Rounds, much has been accomplished: based (perhaps a bit simplistically, but not unfairly) on the ratio of trade to world economic production, in 1997 the world regained the degree of openness it had at the outbreak of the First World War. But we also see that much remains to be done; and that new challenges have arisen:

-- The decolonization of Africa, Asia and the Middle East, which brought nearly 90 new nations and 2.5 billion [2,500 million] people into world trade; and

-- The end of the Cold War, which has led China, Russia and 28 other nations once governed by Communist central planning to undertake economic reforms at home, and begin reintegrating themselves into the world economy.

-- The challenge of the scientific and technological revolution, which is now creating new products and even new methods of trade more rapidly than ever before.

-- And issues related to the quality of life and democratization: environmental protection, guarantees of core labor standards and consumer safety; the broad questions of transparency and citizen access to the institution's of the trading system.

Thus, as President Clinton's first term began with the completion of the Uruguay Round and the creation of the WTO, his second term will close with the opening of a new Round that meets the challenges before us today. The agenda we have developed for it is ambitious; and when completed, will meet the standard of the past fifty years.

PROSPERITY AND GROWTH

Our first challenge is the creation of new opportunities for prosperity and growth through the launch of the Round itself. This is our central mission for Seattle.

1. Market Access Agenda

Here, we respond with an agenda which will further open the world economy; which will meet the priorities of all WTO members; and which is focused enough to complete rapidly, offer concrete benefits in a reasonable time, and ensure that all WTO members, in particular the least developed nations, can participate fully in the talks and win their full benefits.

At the heart of our agenda is aggressive reform of agricultural trade. After fifty years, agriculture must be made fully part of the trading system. The rewards of success will be great: we can build prosperity in rural areas at home and abroad; we can help to raise living standards for consumers, in particular the poorest families who devote the greatest part of their income to food; and we can contribute to the fight against hunger and malnutrition by giving all nations access to diverse, market-priced, and speedily available supplies of food. The agenda we and others seek will meet the challenge. We will seek elimination of agricultural export subsidies -- an especially abusive policy that imposes its greatest burdens on the poorest farmers in developing countries. We will work toward reducing tariffs and other trade barriers, reforming state trading policies, and further reducing trade-distorting domestic supports. And we will begin the work of the next decade, by ensuring that farmers and ranchers can use scientifically proven new technologies without fear of trade discrimination.

Likewise in services, we take up a sector where liberalization has only begun, and which promises vast rewards in economic efficiency, technological progress, and the quality of life. By opening services to trade, we can address some of the weak regulatory practices in law and finance, which helped spark the financial crisis. We can promote technological advance in new telecommunications. We can give countries greater access to environmental services as well as goods, and help the world's most advanced hospitals and universities offer health care and education on-line as the information infrastructure improves. And we can create stunning opportunities for prosperity and growth: the services industries -- distribution, telecommunications, finance, audiovisual, environmental services, the professions, construction and others -- make up $5.5 trillion [$5,500,000 million] worth of production in the U.S. alone; 70 percent of our economy, and nearly a seventh of the world economy.

And in industrial goods we have equally important opportunities, from high technology to fields such as toys, jewelry and other sectors which are top developing country priorities. Here we can create opportunities for growth and employment in developing and industrial economies, improve price and choice for consumers, and create the economies of scale that support research, development and technological progress.

PEACE AND DEVELOPMENT

Our second challenge is to strengthen peace and promote development.

And we respond with our work towards the completion of the core vision of the GATT system in 1948: a trading system which includes all the world's major nations; gives the world's people greater hope of prosperity and rising standards of living; and strengthens peace by giving nations stronger interests in prosperity and stability beyond their borders.

1. End of the Cold war

Most fundamentally, this means the trade policy response to the end of the Cold War: that is, the integration of the nations now moving away from communist planning systems toward the market. Ten years after the fall of the Berlin Wall, they are the largest group outside the trading system. To bring them in -- on commercially meaningful grounds, addressing agriculture, services, industrial goods and rules -- is a task with implications for the world's economic and political future comparable to the reintegration of Japan and Germany fifty years ago.

Those nations which have completed the transition -- for example, Poland, Hungary and the Czech Republic -- have found that the WTO's principles of transparency, open markets and rule of law are also those which help economic reform succeed. That will be true for each new entrant as well. And for our part, as we help these countries integrate themselves into world trade, we strengthen peace by giving their people better economic prospects, and their governments greater interests in world prosperity and stability.
This is a complex task; but it is also an achievable task, and that is clear because it is well underway. Since its creation in 1995 the WTO has admitted six transition economies: Slovenia, Bulgaria, Mongolia, Kyrgyzstan, Latvia, and -- a week ago Sunday -- Estonia. This year, we have completed bilateral negotiations with Albania, Croatia and Georgia. We have made significant progress with Armenia, Lithuania and Moldova; and held fruitful discussions with Russia and Ukraine as well. In addition, in the Middle East we have completed negotiations with Jordan, made significant progress with Oman, and held important discussions with Saudi Arabia.

Most recently, we completed our talks with the largest transition economy -- the People's Republic of China. The result is a comprehensive agreement covering agriculture, services, industrial goods, unfair trade and investment practices and other rules, with specific and enforceable commitments that will phase in rapidly in each area. China's WTO entry under these terms will open new opportunities for American farmers and businesses; address trade practices designed to draw jobs and research to China from the U.S. and other countries, and ensure that we can address import surges and dumping into our economy rapidly and effectively.

At the same time, this agreement will help commit China to the principles Americans have advanced for many years. The WTO accession is not in itself, nor is intended to be, a sufficient human rights policy: it must be accompanied by active outreach on political prisoners, religious freedom, freedom of association and other issues. But as democracy advocates such as Martin Lee and Chinese dissidents like Ren Wanding have noted, by entering the WTO China accepts principles such as judicial review of government policies and decisions; publication of laws and regulations; and irrevocable openness to the outside world. Likewise, some specific commitments -- opening the telecommunications and Internet markets; allowing Chinese people to trade free of government permission -- will help to promote freedom of information and contacts with the outside world. Over time, this can have profound and positive effects. As Mr. Ren put it:

"Before, the sky was black; now it is light. This can be a new beginning."

And internationally, this agreement will mark a qualitative advance in our work to strengthen China's stake in stability and peace in the Pacific region. China's development of trade and investment ties with its neighbors -- Japan, South Korea, Southeast Asia -- is inseparable from the transformation of its foreign policy from the revolutionary era of the past, to China's present willingness to work with us in such critical areas as the Asian financial crisis and the Four-Party talks in Korea. WTO accession will accelerate this process -- complementing our security policies in the Pacific in the same way it will complement our goals in human rights.

2. Integrating the Least Developed

At the same time, as new members are admitted, we will seek the full integration into the trading system of the least-developed nations -- those most deeply afflicted by poverty, hunger and isolation from the world economy.

Our Administration has taken up this challenge in areas well beyond trade. This fall, President Clinton challenged the Congress and the world to forgive 100 percent of the debts owed by least-developed countries, when debt relief will help finance basic human needs. And Congress has made a strong beginning. But the WTO has a fundamentally important part to play. These nations need enhanced market access, better targeted technical assistance and capacity-building to implement the commitments that help them grow. We are working jointly with the European Union on an initiative along these lines, with the benefit of advice from a number of African and other nations. This will complement the strong program we have already put forward:

-- We have broadened our own market access programs, first by expanding the duty-free GSP program, and now through the more ambitious legislative proposals we have put forward for Africa and the Caribbean Basin. We will go on to special tariff commitments in the new Round, to which both developed economies and advanced developing nations should contribute.

-- We have also introduced, together with Bangladesh and four African nations, a proposal to improve and expand the WTO's technical assistance programs, and are continuing our efforts to build capacity for the least developed countries in telecommunications, Internet capability, and other modern technologies. Likewise, we are working to improve the WTO's collaboration with other international organizations such as the World Bank and IMF [International Monetary Fund], UNCTAD [U.N. Conference on Trade and Development], the U.N. Environmental Program, and the ILO [International Trade Organization].

-- And we will ensure that while the negotiating agenda for the new Round takes the priorities of all nations, including the least developed, into account, it is also limited and manageable enough so that all WTO members can meaningfully participate.

THE 21st-CENTURY ECONOMY

Our third challenge is the revolution in science and technology.

And we are responding with a network of agreements that open markets in the key sectors of the 21st century, ensure the strong protection of intellectual property that facilitates research and creativity; and creates the modern regulatory structures that enable new ideas to reach the market swiftly and with strong protection for consumers.

In the past two years, we laid the groundwork for this in three historic agreements: the Information Technology Agreement, eliminating tariffs on $600 billion worth of trade in high-tech manufactured goods such as computers, semiconductors and others; the Basic Telecommunications Agreement, opening access to the $1 trillion-dollar [$1,000,000 million] world telecom services market; and the Financial Services Agreement, which covers nearly $50 trillion [$50,000,000 million] worth of financial transactions per year.

The next step is to ensure the unimpeded development of electronic commerce. Its use, first as new method of trade, can spur development in isolated regions, make economies more productive, and raise living standards for consumers. This will begin with our work toward consensus on "duty-free cyberspace" -- that is, extending the WTO's moratorium on the imposition of tariffs on electronic transmissions on the Net. We will build on this with work to address such issues as intellectual property protection, the proper treatment of digital products under WTO rules, and preventing discrimination against new technologies and methods of trade. And we will continue our extensive capacity-building programs to help developing countries gain the capacity to use the Internet, speeding their growth and technological progress.

At the same time, we will begin to consider the implications of biotechnology, which has revolutionized medicine and will soon do the same in agriculture. This is a complex issue; agricultural biotechnology d times raises consumer concerns which we must meet squarely. But it also offers potential benefits -- more productive farms, which reduce pressure on land and water; reduced use of pesticides; healthier produce, through reduction of fat content, addition of vitamins, or elimination of allergens -- which cannot be overstated. The task here is to develop a consensus for transparent, timely, and science-based regulatory procedures which will both address public concerns and allow us to enjoy the benefits of these innovations.

A BETTER WORLD

And our fourth challenge is to address the issues of the quality of life: the intersection of trade, environmental protection and core labor standards; the demands of democratization.

Americans expect that with economic growth will come a rising quality of life: healthier air and water, safer factories, institutions that are open to public participation. And we are right to expect these things. The high standards we have set in these areas, in fact, have greatly improved American domestic policy. As our economy has grown, we have adopted environmental policies, workplace standards, consumer protections and other measures, which mean that a more prosperous nation is also a healthier and safer nation.

These are also questions that arise in the world economy. And a more educated world public, with access to modern technologies, expects us to address them. And our trade agenda responds.

1. Environment

With respect to the environment, we can build on our experience at home: as our economy has grown from $3.7 [$3,700,000 million] to $8.8 trillion [$8,800,000 million] over the past twenty-five years, we have developed modern environmental policies of pollution prevention and cleanup; protection of endangered species and biodiversity; sustainable resource management; and consideration of environmental effects during policy decisions that have significantly improved America's air, water, and public health.

We begin with a fundamental principle: as we open trade, we will maintain the highest standards of environmental, public health and consumer protection, consistent with our commitment to science-based regulation. The WTO recognizes, and has since 1947, the primacy of this right for all nations. And based upon this, we will ensure that our participation in the Round helps us to create a healthier as well as a more prosperous world. The President's signature of an Executive Order requiring early environmental reviews, and the release of the White House Policy Declaration on Environment and Trade, give us a systematic basis on which to proceed.

We will begin with an early environmental review of the Round's negotiating agenda, and work toward increased collaboration between the WTO and the U.N. Environmental Program. And in the Round, we will seek a series of measures that contribute both to a more open trading world and better environmental practices: the opening of trade in environmental goods and services; the elimination of agricultural export subsidies; and the elimination of fishery subsidies that contribute to overcapacity. As we do so, we will use the WTO's Committee on Trade and the Environment to identify and consider the environmental implications of the negotiations as they proceed.

2. Trade and Labor

The WTO can also help to strengthen respect for internationally recognized core labor standards. Here, again, our record at home shows that a growing economy goes together with rising labor standards; to choose just one example, as manufacturing production has doubled since 1970, the number of workplace deaths has fallen 60 percent. And common sense indicates that when children spend their days in sweatshops rather than in the classroom, prospects for future national growth and competitiveness in a high-technology world recede.

Here, we begin at the very beginning: the WTO, in a formal sense, does not recognize that links between trade and labor exist. This is not a position which can endure: it is intellectually indefensible, and it will over time weaken public support for the trading system. Our task, therefore, is to ensure that the WTO recognizes that links between trade and labor policy do exist, and discusses them in a serious manner.

Thus we are not only seeking closer collaboration between the WTO and the International Labor Organization, but also creation of a Working Group on Trade and Labor to examine seriously, in cooperation with institutions like the World Bank and the ILO, questions such as safety nets, the relationship between trade and internationally recognized core labor standards, and the best means of adjustment to heightened competition. This is a very high priority for our Administration, in its own right and as a matter of the trading system's foundation of public support in the future.

3. WTO Reform

And we are working toward reform and opening to the public of the WTO itself. The case for this is fundamental. At home, our government has succeeded for two hundred years because it is open and accountable; if international institutions are to succeed, people must likewise see them as open and accountable. This has always been true, but it is more urgent than ever today, as improving education and modern telecommunications open institutions to ever greater scrutiny and debate.

The WTO does not yet fully meet this test, and that is, ultimately, a challenge to its future. Thus we are working for greater transparency throughout the system, through the progressive attainment of some practical goals: ensuring rapid release of documents, enhancing the input of citizens and citizen groups; providing the opportunity to file amicus briefs in dispute settlement proceedings, and opening those proceedings to public observers. These are the measures which create the foundation of public support for the institutions of government at home; and they will do the same for the institutions of the trading system.

CONCLUSION: THE MINISTERIAL AND THE YEARS AHEAD

Prosperity and growth; peace and development; scientific and technological progress; a better world. For fifty years, we have led in the creation of a worldwide trading system that helps us realize these aspirations. It has been an era of great vision; and achievement to match that vision. And in Seattle, as we close the book on these decades, we can open a new era whose accomplishments build upon and transcend those of the past.

An era in which peace strengthens, poverty and hunger recede into the past, and the world enjoys more security in the present and better hopes for the future.

In which nations grow more fully accept the principles of open markets, the rule of law, and peaceful settlement of disputes.

In which factories are safer, children are in school rather than at work, the air and water are clean and our natural heritage flourishes.

And we build a system of international laws and institutions that are transparent and accountable; that meet the standards of a more democratic and open world; and that will endure.

Thank you very much.

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