Mr. Chairman,

Distinguished Participants,

Ladies and Gentlemen,

            It is a pleasure to be invited to participate in the prestigious David Finch Lecture Series.  It is also a great honour to stand among the rows of distinguished guest speakers and eminent figures, all renowned in the international community.

            I would like to take this opportunity to share with you my thoughts and reflections on what has been assigned to me which is Global Trade Liberalisation.  To me, the topic denotes coordination and coherence made concretely possible by the World Trade Organisation.

I

            We are fully aware of the fact that the world in its economic history has evolved through periods of flourishing and depressing growth amid the increasing pace of internationalised markets.  To some countries, greater trade flows have apparently brought on gains, including greater per capita income, and higher export earnings.  To a vast number of countries, stagnant production, poverty and unemployment prevail despite strong trade activities.  This implies that trade liberalisation is confronted with global poverty and unemployment – indeed a challenge to the policymakers and global organisations.  Multilateral trade negotiations have to forcefully work, in the forthcoming decades, on these tough and persisting issues as the world economy witnesses rising unemployment and technological disparities now widely known as the digital divide.  Obstacles and barriers to trade, especially those against the poorer, must receive closer and greater attention on the global trade tables to ensure that open trade can concretely – not potentially nor ideally – benefit many economies with limited opportunities in the direction of free trade and efficient production.

Eric Hobsbawm, an outstanding historian, used to say that economics has always been the victim of history. Economists would generally not object to certain consideration of history but it is not always easy to fit history into economic analysis.  Hobsbawm’s argument implies that: “ Divorced from history, economics is a rudderless ship and economists without history have not much idea of where it is sailing to^.”(1) Although I do not intent to have the pretension of taking on the role of an economic historian, I would rather suggest we take a cursory glance at a recent history of our subject matter.

Although trade was mentioned in the earliest economics literature as a means to create economic value, economic history is littered with cases of trade distortions while economies develop. In colonial days trade was rather free, as it was more or less under the control of the patronising powers. But among major economic powers, mercantilist regimes were the order of the days. When the post World–War planners began to draw lesson from the inter-war history, one high-ranking US official (Secretary of State Cordell Quill) actually indicated that the fundamental causes of the World Wars lay in economic discrimination and trade warfare. It was noted that at the time, with the rivalry between the Treasury and the State Department, Treasury had the upper hand because Morgenthau was a close friend of President Roosevelt. Due to this relationship, primary was given to the financial side of post-war planning and we ended up with an International Monetary Fund (IMF.) and not an International Trade Organisation (ITO). ⁽²⁾ Pending the adoption of the ITO, the GATT was established in 1948 as an interim framework of commitments by twenty-three nations.

In the seven GATT rounds of trade negotiation, mainly among the industrialised countries, preceding the Uruguay Round, tariffs on manufactured products were reduced substantially from an average of 40 percent in 1948 to about 6 percent in 1980. But by then the issue of imbalance of burdens and benefits have already been raised by various parties on behalf of the developing countries, urging the industrialised countries to take immediate action on three major topics which are still being debated today.   These are:

1)      The lifting of restrictive measures in consistence with GATT, mainly the wide-ranging quotas.

2)      The request for utmost restraint in the application of countervailing, and antidumping procedures.

3)      The liberalisation of highly restricted import regime of textile and clothing.

History therefore tells us that the process of trade negotiations has been driven strongly by political willpower, split between the balance of benefits, the integration of the developing economies into the world trading system, and the urge to make headway with new areas of liberalisation. The proponents of a new round should therefore not be disheartened by the happenings at Seattle. They only have to remember that the proposal of the last round, the Uruguay Round, was made way back in 1983. At the Williamsburg, Virginia economic summit in May 1983, the United States proposed a joint call for a new GATT Round, but the leaders could only agree to continue consultations on proposals for a new round. And as everyone now knows trade ministers signed the final Uruguay Round agreement at Marrakech, Morocco in April 1994, exactly eleven years from the conception of the idea.

II

In the meantime the management of the world trading system has become more complicated because of the unstoppable process of globalisation. In the new global electronic economy fund managers and international investors can easily move vast amount of capital in no time, affecting sometimes even the seemingly strong and sturdy economies. Financial dislocations can therefore easily impinge upon the flow of trade and, as we have seen in Asia, a financial crisis could easily disrupt the burgeoning trading activities. Professor Anthony Giddens in his book
 “ Runaway World” remarks that we are the first generation to live in the global cosmopolitan society whose contours are just dimly apparent. He goes on to say: “ This is not, at the moment, a global order driven by collective human will. Instead, it is emerging in an anarchic, haphazard fashion, carried along by a mixture of influence. It is not settled or secure, but fraught with anxieties, as well as scarred by deep division.” ⁽³⁾ We seem to have come very far, but it is still doubtful that we have achieved enough to know where we are heading.

To be able to make some sense of this confusing situation, I propose to discuss our subject matter touching upon the following
three issues:

            One, “WTO working for unified diversity.”

            Two, “WTO and the role of core groups.”

            Three, “WTO and a braintrust.”

Allow me to elaborate.

            Trade liberalisation has created a drift between big and small, rich and poor nations.  Economic wealth is more often than not hard to reach.  Worse yet, the locals in different corners of the world begin to cast doubts on their national economic sovereignty.  This fear of theirs becomes stronger by the day.  And this apprehension is valid. 

Each and everyone here realises that the WTO encompasses countries of different sizes, large and small, with different levels of economic development.  Most developed member countries have not only abundant financial and technical resources but also effective and well-established social safety nets which play a role in retaining their displaced workforce resulting from the process of trade liberalisation.  However, these luxuries are no where to be found in both the developing and the less-developed countries.  Many of these less fortunate economies do not have the necessary financial resources, technical capacity, and political strength to sufficiently adjust themselves to the greater opening of their markets.  Trade liberalisation in these countries will be apparently beneficial if accompanied by more open market access abroad.

Very importantly, domestic structural adjustment is required for welfare improving outcome. Adjustment toward greater specialisation and more efficient mode of production does imply that highly protected import-competing sectors have to decline resulting in unsatisfactory outcome of rising unemployment as export sectors may not expand quickly and substantially enough. Technical adjustment assistance is therefore very crucial in accompanying trade liberalisation measures for those who lack financial resources and technical capabilities.  Likewise, given inadequate resources and manpower to carry out in-depth research and analytical work on the economic and social effects of negotiating issues, developing countries and least – developed countries  (LDCs) are often understandably unsure of the possible implications of trade liberalisation.

History does not help either.  The outcomes from the Uruguay Round have not given commercially meaningful benefits to developing countries as promised.  In fact, some countries have made complaints that they are worse off after participating in the Uruguay Round and the problem of marginalisation has multiplied in the case of LDCs.  A case in point: the market access for agriculture and textiles & clothing in the industrialised economies has not yet materialised.  By and large, the liberalisation in textiles & clothing has not been fully implemented in both prints and spirits due to the back-loading practices of the developed countries.  Moreover, it is apparent that the distorted agricultural policies of export subsidies and domestic support have continued to be widely practised among the more advanced economies which, in turn, have prevented the developing countries from competing in the global market.  Indeed, these distorted trade practices have obfuscated the attempts of developing countries to achieve a comparative advantage in the sectors where they have substantial interests.

In addition, these uncertain outcomes combined with the uneven distribution of benefits from the Uruguay Round have caused serious political backlashes in many developing countries and LDCs.  For example, the lack of substantial short/medium term benefits from market liberalisation has made it difficult to solicit political support from the general public and the parliament in the passage of certain legislation in order to comply with multilateral agreements and commitments.  In addition, the uncertainties associated with greater market opening have often times been used as a convenient excuse to rally against liberalisation efforts by pressure groups such as environmentalists and labour unions, as well as those who needs to shield themselves from foreign competition.  They steadfastly maintain that the benefits from trade liberalisation do not justify the costs.

III

With the new round of WTO possibly being a “development round” and with developing members likely to play a much greater role in the WTO in the near future, we may have to give some thoughts on the future of the WTO in the realm of the possibility of accommodating 160-170 member countries in the next three to four years, many of which are the “have-nots” with cautiously negative sentiments with regard to multilateral trade liberalisation.

            It is to be expected that the WTO membership in the foreseeable future will not be able to accept the arrangement along the same line as the World Bank and the IMF which have respectively the Development Committee and the Interim Committee as their executive boards. These boards have been instrumental in providing for greater efficient coordination and coherence of major policies. We may, however, have to anticipate the manageability of the WTO process with such executive board working on behalf of the membership. Several ideas have been floated in this respect. Prime Minister Tony Blair has already suggested the appointment of a group of eminent persons to advise the General Council on the future path of the WTO. Back in 1983 Director-General Arthur Dunkel established a panel of seven distinguished persons to develop a report on problems affecting the international trading system. The panel, representing industrialised and developing countries made fifteen specific recommendations to strengthen a more open multilateral system as a counter-measure to the crisis prevailing in the trading system at the time. We should not preclude the possibility of the need to resort to such a panel to help us resolve some of the threatening divide in the pending trade and non-trade issues facing the WTO at present.

                        Global trade liberalisation that requires deeper integration of economies can give rise to friction not solely related to competition or protection but to clashes between distinct rational systems as alluded to by a former Director General of the WTO, Renato Ruggiero, in his essay in honour of Arthur Dunkel, another Director General of the WTO. He shows distinct concern for the consequences of the integration process: “As integration moves deeper inside the border, the policy debate in shifting away from traditional argument over tariffs towards non-tariff barriers related to fundamental difference between economic systems, investment rules, anti-trust and competition laws, taxation, and labour, environmental and cultural policies. It is precisely because these issues involve non-trade goods and cut deeply into traditional nations of sovereignty, that they could prove more difficult to be solve.” ⁽⁴⁾

            In view of such concerns, the Economic and Social Commission for Asia and the Pacific (ESCAP) has decided that the theme topic for the fifty-sixth session this year should be “Development through globalisation and partnership in the twenty-first century: On Asia-Pacific perspective for integrating developing countries and economies in transition into the international trading system or a fair and equitable basis.” Quite a mouthful title which truly reflects the need of the day. The Commission reports that developing countries are sceptical of the ability of WTO rules to ensure their fair share in world trade because of these general experiences.  First, ESCAP claims that outcome of WTO trade negotiations has favoured developed countries much more than developing ones. The Commission refers to the example that while negotiations have been completed with regard to telecommunication services, information technology products, and intellectual property rights, developing countries are still waiting for the benefits of free trade in labour services, primary products and textiles and clothing. Second, while the GATT/WTO rounds have mainly included negotiation on traditional barriers such as tariffs and quotas, they have not been able to pre-empt the emergence of new forms of trade barriers that obstruct developing countries access to markets in developed countries.   Third, participating effectively in WTO negotiation, bringing cases to the Dispute Settlement Body panels and implementing trade agreements involve costly activities, which favour richer countries.

The WTO must bend backwards to strive for “unified diversity.”  To be able to achieve any progress towards a new round, the WTO process would demand a fine balancing act to engineer coordination of negotiating positions and to forge a certain coherence of policies, particularly on trade, finance and development. Instead of adopting a negative approach of merely blocking any proposals as in the past, developing countries should be better prepared, as witnessed at the Seattle Ministerial Conference, to put up their own positive agenda. To serve the purpose of our further discussion on the elements of coordination and coherence, let me present a full picture of the instructive set of propositions raised by ESCAP. The following is a list of issues on which the global trading system may have to build a consensus to achieve a more level playing fields for all parties concerned ⁽⁵⁾:

1.        The Dispute Settlement Mechanism should be brought within the financial reach of all WTO members, say, by creating a fund for legal assistance to LDCs and developing countries with annual per capita income below 1,000 USD.

2.      Non-binding special and differential provisions must be implemented in letter and spirit while transitory periods are to be extended in sectors where developing countries have severe difficulties in meeting deadlines.

3.      Reduce tariff peaks and tariff escalation on exports from developing countries. All countries may also need to review the use of anti-dumping measures as well as the methods adopted for tariffication of agricultural products.

4.      The liberalisation of trade in agriculture and textile/clothing should be implemented according to the true spirit of the agreement and in the most meaningful manner.

5.      Expedite the harmonisation of Rules of Origin and provide for flexibility in the application of technical and SPS standard for developing countries exports.

6.      Expand developed countries’ commitment on the movement of natural persons under the GATS. By the same token, it might be needed for developing countries to liberalise their commitment, especially in infrastructure-related sectors.

7.      Restore the balance between private profit and public goods in TRIPs  by reducing the period of exclusive ownerships and create an institutional  mechanism  to oversee the actual transfer of technology from developed to developing  countries.

8.      Eliminate the "WTO plus” conditions for accession and extend the S&D (Special and Differential) provision automatically to developing countries in the accession process.

9.      Incorporate free market access for exports of LDCs as a binding commitment in WTO schedules and incorporate debt relief into the integrated framework for LDCs.

10.  Increase technical assistance to enable developing countries to improve their capability to comply with and benefit from new WTO rules and participate effectively in the WTO dispute settlement process.

IV

There are plenty of criticisms as said earlier including those related to the WTO’s decision-making process in the wake of Seattle.  The Organisation was accused of being secretive and leaving its own members from developing countries and LDCs out in the cold.  The WTO certainly needs to address these concerns and should strive to make the process as transparent and as inclusive as possible.  A radical reform might not be necessary for internal transparency, but rather some fine-tuning, while the practice of decision-making by consensus should be maintained.

Developed countries cannot expect to hold their exclusive meetings and draw up their own agenda as fait accompli, then try to force upon LDCs and developing countries to accept it afterward.  The less fortunate countries must be on equal footing in their full participation in the negotiations and the decision-making process, which will enable them to voice their needs and concerns. Member nations must work wholeheartedly together by allowing ample room for contrasting views and more transparent rules and conducts.  It is only through this modality that we can achieve a free and fairer global trading system.

The green room process, wherein twenty five to thirty member countries were invited into a room to discuss certain issues, had been singled out as one of the major problems in Seattle multilateral negotiation process.  Many developing countries and LDCs had to wait outside and they were upset because they were not included in the decision-making process.  Indeed, there are ways to improve this scenario and defuse the resentment.  For instance, there should be more briefings or other informal meetings immediately after the green room session.  This will allow countries that are not invited into the green room to be better informed of the issues under discussion. Undeniably certain means of communication between green room meetings and the General Council should be established so that open and full participation by all parties concerned can be guaranteed while maintaining the manageability of the green room process.

The Director General of the WTO and the Chair of the General Council should also increase their consultations with members.  The participation of members in informal groups is an integral part of the consensus building process.  No doubt, the new technologies (including video conferencing and information technology) could be used to keep the non-resident representatives abreast on the issues.  As such, the informal open-ended meetings should be held more frequently.

The WTO is responsible for the promotion of global trade liberalisation while trying to provide a level playing field for all members.  A serious problem encountered by most developing countries and LDCs is obviously the lack of resources.  The inadequacy of human, financial, and institutional resources has deterred developing countries from effectively participating in the multilateral process.  As such, it must be strongly emphasised that more technical and financial assistance must be provided for the capacity and institution building in developing member countries.

It is of critical importance to integrate the majority of the membership of the WTO which are mainly developing countries into the mainstream of world trading system through the process of institution and capacity building. Stephan Haggard defines integration as “ The fundamentally political process of policy coordination and adjustment designed to facilitate closer economic interdependence, and to manage externalities that arise from it.” ⁽⁶⁾ Haggard goes rather far in suggesting the contentious three issues as targets for “deep” integration that might be on the agenda of international negotiations. They are: (1) differences in policy measures relating to foreign investment,  (2) differences in national regulation regimes with respect to financial and industrial sectors, and (3) differences in national, corporate and political structures in so for as they are perceived as restraints on trade and investments.

Whether developing countries would fully agree or not with such a full agenda, it is nevertheless true that in order to gain benefits from being part of the global trading regime some reforms and institution building in these countries will be needed. These should basically include the training of administrators and policy-makers at various levels, legal reform that should span from bankruptcy, intellectual property to financial and labour laws. T.N. Srinivasan even goes further to suggest that “Greater transparency and insulation from politics of decision making on trade and foreign investment issues should be achieved by establishing technical and quasi judicial bodies for making recommendations to the government on them.” ⁽⁷⁾ He however does not agree with some suggestion that the centralisation of economic decisions in a single agency like Japan’s MITI (Ministry of international Trade and Industry) is likely to be of help in most developing countries.

In looking towards the need for institutional reforms we should not lose our sight of the fact that while enhancing the market mechanism, there are still existing inequalities at the national and global level that may be aggravated by unfettered market forces. This is the point repeatedly emphasised by the Nobel laureate Professor Amartya Sen as follows:  “What is needed is not a rejection of the positive role of the market mechanism in generating income and wealth, but the important recognition that the market mechanism has to work in a world of many institutions, provided by democratic practice, civil and human rights, a free and open media, facilities for basic education and health care, economic safety nets, and of cause, provisions for women’s freedom and  right – a neglected area which is only now beginning to receive the attention it deserves.” ⁽⁸⁾

At the global level the search for a balanced institutional architecture should also take into account the changing circumstances, as most of the key international institutions are now older than fifty years. Professor Amartya Sen has also made a significant statement on these particular issues: “ There is also a related point of great importance which John Kenneth Galbraith has made very forcefully. The role of institutions has to be assessed in terms of the countervailing power they exercise over one another. Asymmetric power in one domain can be checked by a different configuration of forces in another domain. Distribution of power in the world relates closely to institutional plurality. This applies even to the institutional basis of world trade and finance, which includes, among other arrangements such institutions as the World Trade Organisation, the World Bank, the IMF, and so on. It is necessary to re-examine the balance of power in the running of the different institutions that make up the global architecture.”

V

We should realise that increased integration of developing countries into the multilateral trading system would not only contribute to their growth and development but also lead to the global prosperity for all members combined.  Needless to say, developing countries and transitional economies account for almost four-fifths of WTO members and thus deserve a fair share of benefits from multilateral rules and mechanisms.  The WTO must be able to prove to the world that the multilateral trading system, which is based upon the WTO rules, can contribute to lowering the income inequality and yielding sustainable development.

The World Trade Organisation was founded in 1995 as a legally binding institution, which provides the specific forum for multilateral trade negotiations among its members. Its main goals are to promote free and fair trade, namely, lowering tariff and non-tariff barriers and to provide transparency through notification requirements and predictability of trade flows through the binding commitments.

However, the WTO as well as other international institutions of similar status does not lay claim to being perfect in every way. Many of its shortcomings surfaced during the third MC, and it will definitely further complicate the situation by prematurely bringing non-trade issues on board.  Clearly, the developing countries and LDCs have already voiced strong opposition to this proposition.  If the advanced countries, for example, insist on including the labour issues in the trade agenda, it may altogether jeopardise the chance of launching a new round of multilateral trade negotiations.

Instead, the WTO should channel its energy and effort into improving its capability to handle trade-related issues and using trade as a means for development.  In this regard, core group(s) of countries should be formed on an informal and flexible basis.  For the sake of effectiveness, the optimal size of a core group should be limitd to 15-20 participating nations, something close to a G-15 formula used at the IMF.  The selection of participants may vary according to the prevailing issues and thereby the mix should be relatively flexible.  Rigidity is discouraged and monopoly rents consistently attached to particular members should also be avoided.  It should lead to a total goods mix and greater participation among member nations.  Given that trade issues are the prime responsibility of the core group, it is expected of the group to be engaged in the discussion of these issues among group members with an eye toward building the consensus around them.  With the core groups being able to provide a unified lead in the dialogues and to be more concrete and focused, mutual understanding and constructive deliberations in the WTO General Council could be achieved. The core group of course should not in any way dominate the full and open discussion in the Council. Its tasks are mainly to narrow down the negotiating position differences and to focus on key issues of wide disparity in benefits and to keep the process of constructive and concrete negotiations ongoing in the absence of the General Council meeting.

  These core groups can be viewed as facilitators to particular issues of trade talks.  At the same time, they must conform to the principles of openness, non-discriminatory and transparency.  Through this informal plus flexible arrangement, it is to be hoped that WTO will be able to yield practical solutions together with productive cum sustainable trade liberalisation programmes.

For concrete consideration of non-trade concerns, these should be the assignment to the competent and relevant organisations, for example the International Labour Organisation (ILO) in the case of core labour rights.  The Singapore Ministerial has supported this principle since 1996.  However, there can be a compromise solution by convening a single high-level dialogue on trade, development, and labour issues with the following conditions.  It must be held outside the WTO framework in a non-binding manner and only on a one-time meeting basis. UNCTAD has already been suggested as probably the most neutral institution to host such a high-level dialogue. As regard environment, there is an ongoing work programme under the WTO Committee of Trade and Environment whose consideration of the nexus between trade, environment and development should be given support. WTO should seriously help facilitate its member countries to improve their labour and environmental standards by using purely positive trade incentives and rejecting the destructive trade restrictive measures to penalize violating countries. To promote coordination coherence in all these policies, carrots should be the correct means of operation rather than sticks.

The dichotomy between trade and non-trade issues is a complex issue and cannot be easily simplified.  The attainment of concrete results out of trade talks is by no means easy as various existing controversies involving non-trade issues and domestic policies, which are difficult to draw the lines these days.  Yet, separating hyperplanes between trade and predominantly non-trade issues and between international and domestic policies are well – nigh inevitable.  In this connection it may be most appropriate to bring in a new actor which is the financial system to elucidate this point.

VI

Under the new century of globalised capital markets, it is of great importance that trade liberalisation programmes in particular economies are to be viewed in light of the liberalisation in financial markets.  Literature debates are on, though, whether or not financial liberalisation can supersede trade liberalisation.  This relation between trade and financial architectures is another coherence issue that we should pay attention to.

Over the past twenty years, we have seen many countries’ effort to implement trade and financial liberalisation according to the recommendation of economic theories. It is also widely believed that liberalisation will help countries achieve faster growth and reduce distortion in the market economy.  When it comes to financial liberalisation, a static analysis suggests that cheaper financial costs due to greater competition from foreign financial services will cut down production costs of the overall production economy, thereby leading to welfare gains. Some economists believe that this is true no matter where we are in the process of trade or financial liberalisation.

Nevertheless, we should be aware that liberalisation in financial services is simply not a “one size fits all, ” measure i.e., generic strategy that is the solution to all our problems.  There is no guarantee for automatic positive results. Financial flows certainly have special characteristics. Some of them are of very short-term nature and have great impact on sensitive asset prices and country risk. While financial flows can be highly volatile and move extremely rapidly, tradable goods markets cannot adjust sufficiently fast to prevent exchange rates and other asset prices from overshooting their long-term equilibrium values. With massive financial flows overinvestment can easily arise even in the non-productive areas, which can in turn lead on to a sudden emergence of a financial crisis.  Substantial volume of literature has been devoted to these issues and particularly convincingly by Guillermo Calvo and Jeffrey Sachs among several others. ⁽⁹⁾ When financial liberalisation is done before supervision and prudential regulations are in place, it is a sure recipe for a disaster.  The Asian financial crisis in 1997, the Mexican crisis in 1995, the UK crisis in 1976 are conspicuous testament to that conclusion.  It is arguable that financial globalisation lends itself to render unguarded financial system susceptible to modern crises as demonstrated by the writings of Charles Wyploz: “The combination of financial regulation, contagion and erratic market behaviour suggests that financial markets are not the epitome of perfection that they are often made to be.” ⁽¹⁰⁾

Overhasty and rapid financial liberalisation can therefore be counterproductive and lead to the weakening of financial systems. Financial flows, particularly those with short-term maturity, may provide high returns, but are also associated with greater risks.   Liberalisation of the financial sector should therefore be gradual and executed with great prudence and circumspection.  Developing countries should not be forced against their own will to engage in an undersupervised liberalisation effort without global mechanism to promptly and effectively rescue them from any possible financial collapse.

In order to have successful financial liberalisation, we may need more than political will.  Sound macroeconomic policies, healthy banking system, right timing, adequate supervision and regulation are all the prerequisites.  The sequencing of liberalisation process is also very important, as earlier suggested by Sebastian Edwards in the late 1980s.  In other words, there should be some coherence between trade and financial liberalisation programmes for one to be supportive of the other.  It may be wise to have domestic financial liberalisation (namely, abolition of controls on interest rates and credit allocation) done well before international financial liberalisation (that is, the elimination of capital controls and restrictions on the convertibility of domestic currency into foreign exchange). Trade liberalisation has to move along and it is best to have both trade and financial liberalisation proceeding together in reasonable speed. Sufficiently open trading regime and efficient product markets can help prevent an adverse impact of excessively volatile financial flows as we are seeing today.

Developing countries usually do not have solid foundations for financial regulation and therefore are more vulnerable to abrupt changes.  They should try to insulate themselves from the dangers of short-term capital by adopting policies to attract long-term capital inflow in the form of foreign direct investment.  It may be most prudent for them not having fully open capital accounts too early in the day.  This safeguard mechanism should reduce their exposure to a financial crisis when it occurs.

It goes without saying that the IMF, the World Bank, and the WTO must co-ordinate more closely to ensure that their policies are cohesive and supportive of each other.  Of equal importance, the linkage between trade and finance should be studied and carefully analysed to shed more light on the contemporary issues.

In fact, the linkage between the trade and finance in this globalising world is indeed very close.  We cannot really solve financial problems without a thorough investigation into trade problems and solutions.

This is where WTO can step in and fill the void.  It should seek an additional support of a brain trust engaged in research activities.  The emphasis should be put on scientific examination and analyses of plausible areas that might be of hindrance to trade liberalisation process and on contentious issues that can be better served with a neutral study.   Along the line, policy research must be harnessed so as to generate objective understanding, conceptual ideas and guidelines for trade dialogues.   The research think tank can also help to objectively examine any outcomes of trade negotiations and practices. Special reports and various seminars on trade problems and issues facing our world trade system can be instructive to members and non-members alike. They can be equipped with the facts and rationales to enhance their capacity to participate in the multilateral process.  The publication of a World Trade Report along the same line as the World Development Report of the World Bank could help create the right understanding of some pending and novel trade issues.

            It is interesting to note that in order to strengthen the cause of free trade more exhaustive analysis of trade statistics to determine the costs of protection and the benefits of free trade is desirable.  In analysing the political economy of the world trading system, Hookman and Kostecki point to the need of such analysis to be done by a third party and not by the WTO itself: "Much more needs to be done in analysing these data, determining the costs of protection, and publicising the magnitude and incidence of these costs.  It is a truism that to reduce protection and protectionist pressures those negatively affected needs to be aware of the costs of such policies.” ⁽¹¹⁾ This is not necessarily a task for the WTO Secretariat and the absence of such analysis is not necessarily just a cause for criticism.  Indeed, a case can be made that it should not be done by the Secretariat. The WTO is a negotiating forum in which governments attempt to reach agreement on specific issues.  Each government pursues its self-interest.  Even if no overt attempts are made to influence the outcome of analysis undertaken by the Secretariat, WTO members can be expected to contest the results of analysis that is not to their liking, and Secretariat staff may have a natural tendency towards engaging in self-censorship.

Analysis of the data collected by the WTO Secretariat is more suitably done by an independent agency.  To safeguard the multilateral trading system, the results of analysis of the costs and incidence of protection and related regulatory policies should be fed into domestic political markets. Discussing these in the WTO Council meeting will have little impact.  The clients for the analysis are not governments, but the constituencies in individual countries who are negatively affected by policy.  The sense of this agreement is that to achieve coordination and coherence, the WTO may have to play the role of a coordinator itself rather than having to perform the task.  Such an analysis could be done through arrangements with educational institutions or through parties that have most to gain such as exporters and consumer organisations.

VII

The success in forging coordination and coherence depends on the public understanding of the WTO activities. Although the problem regarding external transparency of the WTO is not as acute as that of internal transparency in the WTO, there may be room for improvement.

Today, the public near and far would like to see the WTO more open and more accountable.  We must realise that the success of the WTO will partly depend on their support.

The NGOs could provide valuable inputs and share their thoughts and the subjects of their prime concerns.  There are however many stages where interest groups and stakeholders can effectively participate in the formation of their government’s trade policies.  In addition, the WTO has held a number of different symposia with NGOs.  At Seattle, for instance, a symposium was held immediately before the opening of the third MC wherein 672 accredited NGOs participated. Strong dynamism of NGOs makes them increasingly influential in all areas, and they should be given appropriate role to play in the constructive formation of our New World Economic Order. As globalisation takes hold, the expansion in the WTO is scope push the multilateral trading system into a central role of global governance. This may prompt a closer consideration of the involvement of interested stakeholders in the WTO process. There are existing accreditation schemes and arrangements for NGO participation in international bodies.⁽¹²⁾ However, in making the WTO process more open for civil society, the special characteristics of international trade agreements, which are binding and legally enforceable, should require treatments that are arguably uncomparable to other international organisations.

Moreover, greater effort should be spend on making information readily available for all interested parties.  In this regard, the WTO should expedite the derestriction of its documents and most information should be more available online.  All of these steps will render the civil society better informed of WTO negotiations and operations.

Coordination and coherence are not exclusive to those WTO outsiders.  Our global economic stability and growth in the 21^st century hinges upon the greater coherence among “The Big Three,” namely, the IMF, World Bank, and the WTO.  As Stanley Fisher, the former Deputy Managing Director of the IMF, once said  “For the IMF, World Bank, and the WTO, the challenges facing the world economy are to keep the good things going and take care of the countries that are falling behind.” But the true challenge is rather how. To achieve our ultimate goals of the better future for the world economy and the people, missions carried out by WTO and other global institutions can not be fulfilled without concrete steps forward in the arena of co-operation and coherence. We all have to devise every possible means to share in our monumental tasks of making trade and finance work for development. We can negotiate our way to further liberalise trade. But it would be certainly more efficient and less tedious of we can start by enhancing coordination and coherence in all our functions within the WTO, among the member countries, among the major institutions and in our national and international policies. This may sound like wishful thinking, but at least we can start by working seriously on the thinking part.

Thank you for your attention.

ENDNOTES

(1)        Eric Hobsbawm, On History, A bacus Book 1998,   p.139.

(2)               Richard N. Gardner," Bretton Woods" , Milo Keynes (ed.),  Essays on John Magnard Keyns, Combridge University Press, 1975,  pp. 202-215.

(3)               Anthony  Giddens, Runaway World, Routledge, New York, 2000, p.37.

(4)               Renato Ruggiero, "Whither the Trade System Next?" , in Jagdish Blagurati, Mathios Hirsch (eds.) , The Uruguay Round and  Beyond : Essays in Honour of Arthur Dunkel, (Springer - Verlag Berlin, 1998), p.133.

(5)               Economic and Social Commission for Asia and the Pacific, Development Through Globalisation and Partnership in the Twenty - First Century, United Nations, New York, 2000.

(6)               Stephan Haggard, Developing Nations and the Politics of Global Integration,  Brookings Institution, Washington D.C. 1995.

(7)               T.N. Srinivasan, Developing Countries and the Multilateral Trading System, Westview Press, Boulder, 1998.

(8)               Amartya Sen,  “Freedom's Market”, The Observer (25 June 2000), p.29.

(9)               Guillermo A. Calvo, “Capital Flows and Capital-Market Crises: the Simple Economics of Sudden Stops,” mimeo, University of Maryland, July 1998; Jeffrey Sachs, Aaron Tornell, and Andres Velasco, “Financial Crisis in Emerging Markets: the Lesson from 1995,” Brookings Paper on Economic Activity, August 1996.

(10)       Charles Wyploz, “Globalized Financial Markets and Financial Crises,” Graduate Institute of International Studies, and CEPR, Geneva and London, 1998.

(11)       Bernard Hockman and Michel Kostecki, The Political Economy of the World Trading System, Oxford university Press, Oxford, 1995, p.53.

(12)       International Centre for Trade and Sustainable Development: Accreditation Schemes and Other Arrangements for Public Participation in International Fora, November 1999.