SUNS 4502 Friday 3 September 1999

Trade: Moore attempts to bury campaign fallout

Geneva, 2 Sep (Chakravarthi Raghavan) -- The new director-general of the WTO, New Zealand's Mike Moore sought at his first press conference today, to put behind the effects of the "bruising" election campaign that pitted him against Thailand's Supachai Panitchpakdi, and the US which pushed Moore's election against a
large number of major developing countries.

Moore, who assumed his 3-year term of office Wednesday and issued a statement calling for market access for the least developed nations, attempted at his press conference to portray himself as the WTO leader of all the 134 members.

Coming as he does from what used to be called (with Canada and Australia) as the "white British commonwealth", Moore projected himself as the "first non-European," and tried to distance himself from the fact that he was the US candidate in the year- long election campaign to replace Renato Ruggiero.

"I was nominated by New Zealand and supported by Uruguay and Nigeria and several small nations," Moore said in response to a question as to how he planned to get over his image, in the words of the London Economist, of the perception of being "an American poodle."

This was Mr. Moore's first official press conference after he took over, though during an earlier visit to Geneva (after election and to sign the contract), the WTO press office had arranged a luncheon for Moore to meet with some selected media representatives, mostly those "friendly" to the WTO and its press
office.

Moore sought the understanding and support of the media over the next few critical months for the WTO, and proclaimed his objective as one of achieving "a balanced outcome at Seattle, and to represent the legitimate needs of all members."

He acknowledged that unlike in the case of the Uruguay Round which was launched and conducted amongst much "public apathy", times had now changed and they could not hope to have a similar situation at Seattle and beyond. The round to be launched at Seattle would have both positive and negative outcomes, and "we
need to develop new skills to explain what we are doing."

He turned away some critical questions about what the WTO could do, and the issues about its lack of democracy and transparency of decision-making, that surfaced during the election process, by talking of the WTO as an organization based on sovereignty of nations and run by ambassadors as representatives of sovereign countries and sovereign governments.

In an initial statement Moore spoke of the WTO's need to achieve higher living standards everywhere, and trotted out the by-nowshop-worn dogma, if not a slogan, that "open economies have delivered rising living standards to people."

[This dominant theory and view at the time of the Uruguay Round and its conclusion have not been borne out.

[In the hey-days of the neo-liberal economics of the late 80s and early 90s, the World Bank in its 8-volume study that provided an argument for its "Washington Consensus" had come out with a policy conclusion that "open economies" and free trade and free markets produced development and growth.

[But that study was shown by several economists to be faulty, both in that the yardstick to judge "openness" had not been applied equally across all the countries studied, and that the conclusions were not borne out from the facts of country experiences.

[The World Bank itself has since moved away from these claims.

[Since then, several studies have brought out that historically, both in Europe and the United States, development and growth came first, and then only came liberalization and drive for free trade. And the present developing countries (then part of the colonial empire in Asia and Africa, and nominally independent,
but colonial-type economy in Latin America) had an arrested or thwarted industrial revolution.

[More recently, other studies have found there is no empirical evidence of sustainable growth and development in the developing countries, as a result of 'trade liberalization and investment
liberalization'.

[Two papers, both issued by the US National Bureau of Economic Research (one by academics Ann Harrison and Gordon Hanson, and another by academics Franisco Rodriguez and Dani Rodrik) have expressed some scepticism about the assertions and claims in the policy advice to developing countries from the World Bank, IMF and the OECD (and now the WTO) that liberalizing international trade and lowering tariff and non-tariff barriers promote growth.

[While making clear they were not suggesting protectionism produces growth, Rodrigues and Rodrik have shown that facts do not bear out some of the conclusions and assumptions about liberalization producing growth, and that many questions remain.

[Harrison and Hanson have brought out that studies linking trade reforms to long-run growth are "surprisingly fragile". Referring in particular to the oft-quoted study by Jeffrey Sachs and Andrew Werner, Harrison and Hanson show that the measure of openness used by Sachs and Warner "fails to establish a robust link between more open trade policies and long-run growth," and a second puzzle "is the small impact of trade reform on employment in developing countries." Also, they point to the "puzzle", from the Mexican experience, of the relationship between trade reform and rising wage inequality.

[Without long-run growth and rising employment, the objective of raising living standards, held out by Moore, may be a mirage.]

Neverthless, Moore spoke of one-third of US jobs now coming out of the export sector.

Sidestepping too the analytical literature that it was the economies of East and South-East Asia that had liberalized trade and investments that were hit, while relatively more closed economies like India and China weathered the crisis, Moore asked: "imagine what would have happened in Asia if markets in the North
had closed or shut down?"

Moore acknowledged that some of the criticisms against the WTO were justified, but said that many others were wrong.

He spoke of the needs of the least developed countries, and some 30 WTO members who could not even afford to have an office in Geneva, and about providing technical assistance to assist all these countries. He stressed the importance of market access, but said this alone with not enough and they needed infrastructure
and investments etc - areas where, he said, the WTO would work in concert with UNCTAD, World Bank and other institutions.

He also spoke of the need for the Seattle Ministerial Conference to "reshape" the organization to reflect reality of its membership, but ducked an invitation from a questioner to spell out his own vision of a reshaped organization, arguing that the WTO was an organization of sovereign governments and it was they
who had to set out the mandate.

Moore acknowledged that the issue of genetically modified food and products was a major issue, since GM foods had enormous implications, particularly since science was moving faster than ethical or legal capacity of governments to grapple with them.

On NGOs, Moore noted that the WTO consisted of sovereign governments, represented by their ambassadors.

He cited the example of India undergoing a democratic election where the government would have to win 350 million votes, and having an ambassador representing his country's views.

"NGOs have a role to play, but this is an organization of sovereign governments," he said.

On the social clause, Moore referred to the Singapore declaration instructing WTO to work alongside the ILO. As in other areas, there were coherence issues and ministers had instructed WTO to do some work, he said.

Asked about the campaign in France against Mcdonald's restaurants, Moore said there was alarm and concern among producers and consumers, and supported peaceful demonstrations of people to make their views known. But it was wrong to portray the problems as due to the WtO. Referring to forecasts of NGO
campaigns at Seattle, which he said was a democratic right, Moore said those who would be marching and demonstrating at Seattle were those who want to protect the markets of North America and Europe against imports from the developing world. The marches would be against the Third World.

As for his deputies, Moore said the General Council would have to decide on the number of his deputies.

Though during his election campaign, he had disparaged Dr.Supachai Panitchpakdi, with whom he has now to share a split term (as a result of a WTO General Council decision), Moore praised Supachai and his abilities and wisdom and said he would consult him about the deputies.

The Council decision giving the term to Moore has in fact mandated him to do so.

Moore also hoped that China would soon become a WTO member, and hoped that the meeting between the Presidents of United States and China at the forthcoming Auckland meeting of the APEC would be able to make progress on this issue. But it is for the WTO members to decide about China's accession and how and when this should happen.