[This is the text delivered to the group of accountants in Sydney on May 21.]
First of all, I’d like to thank all of you for coming here today, and I’d like to apologize for a rather sudden change in the program, consequent upon a rather dramatic development in Geneva yesterday.
I originally intended to transmit today an upbeat report on some new technologies that affect agribusiness in a global sense, transforming the landscape for those of us with special interests in the Third World market; instead, I find myself the messenger of some rather discomfiting news that affects every one of us in a very profound way, and that augurs a veritable sea-change in our relations with our trading partners, our political influence groups, our human-resource constituencies, and within our own organizations. For some of us, this change may be painful.
The news I have just received from Geneva, and that I will be communicating with you today, is not really news to those of us who have been working at the WTO during the past several months.
As long ago as September, shortly after the events in New York, a rather unprepossessing proposal emerged from a meeting at Lausanne Street, a proposal to reevaluate some of the foundations of the WTO—much as an increasingly vocal number of critics had been suggesting over the last several years.
While all of us present initially felt that such a reexamination of principles could only be salutary for the organization’s vitality, the developments since then have surprised all of us.
The organization quickly divided into two camps: those who felt that the charter definitions of the WTO, and those of GATT, were essentially sound and needed only minor “touching up”; and, on the other side, those who felt that these principles in themselves were unsound, and that the organization in its current form was essentially unsalvageable.
I myself sided with the former camp, those who believed reform was desirable and sufficient. When I first came to the World Trade Organization in 1996, I did so out of a profound belief that the surest path to world peace lay in prosperity, and that the surest path to prosperity lay in the liberation of trade. Was it not true that an entire century nearly free of major wars had been characterized by a freedom of global trade that has never been equalled? The 19th century’s peace, I felt, could live once again.
I had always felt very strongly—ever since high school, in fact--that a marketplace of free endeavour, liberated from the repressive forces of government regulation, was the way to a happy society. In my high school economics class, I remember watching over the course of the year the ten-part series in which Milton Friedman expounded the principles of “laissez-faire” economics. Around the second week of this class I can remember telling my parents they shouldn’t lend sugar to the neighbors, since doing so interfered with the market: everyone for themselves!
My competence at this kind of argument increased greatly at university, where I studied exactly how a marketplace of goods and ideas, maintained through the free play of natural human forces, could bring stability to human society. I became ever more adept at the arguments showing that when entrepreneurs compete on level playing fields, striving after profit and only after profit, the public realm benefits, as do the poor.
I was at times aware of cracks in this picture, but like the economists I studied with, I felt them to be due to insufficiently applied principles of free trade. Sure, inequality was momentarily growing—but this was a phase through which the world would transition to more equitable distribution through the help of a well-oiled marketplace. Growing poverty, similarly, was a temporary symptom that would vanish in time. And the entrepreneurial playing field, while favoring megamergers and an ever more restrained economy that favored the already powerful, would eventually loosen up in accordance with theory.
It was therefore a very considerable distance I had to travel in order to accept that these problems were not just going to go away—and that the errors might not be so much temporary glitches in the theory of laissez-faire, as fundamental mistakes in that theory. But as more and more of my colleagues crossed over into the camp of those who felt this way, and who felt that the WTO was therefore unsalvageable, I too became overpowered by doubt.
Unfortunately, the events of the months following the first meeting helped the naysayers buttress their arguments. The demise of Enron, for example, happened to coincide with discussions about whether the entire system upon which we rested was a mere house built of cards. And as we studied more and more deeply the reality that we had helped shape, the most dismal conclusions became all but unavoidable to the majority.
I myself was one of the last to join this majority. I still believe that the WTO was founded with the poor of the earth in mind, upon the principle that a free marketplace benefits all, leading to prosperity for everyone including the poor. Concern for the interests of the poor are what led me to pursue this line of work in the first place.
But this concern has always dominated for me over my devotion to any particular interpretation of free trade methodologies—which is why today, I am at peace when I announce to you what I learned yesterday. The WTO will be issuing a public statement by the end of the week, but the die has been cast. As of September 2002, having seen the effects of policies whose only intent was to bring greater prosperity and peace, the World Trade Organization in its present form will cease to exist.
Over the next two years, we of the WTO will endeavour to refound our organization along different lines, based in a different understanding of the purposes of world trade.
The new organization will have as its foundation and basis the United Nations Charter of Human Rights, which we feel will be a good start to insuring that the organization will have human rather than business interests as its bottom line.
As of September, agreements reached under the WTO will be suspended pending ratification by the new incarnation of this organization, which we are tentatively calling the Trade Regulation Organization.
Many agreements will, we are confident, be re-ratified within the new framework, but there are of course no assurances. The TRO agreements presumably will be examined not only individually—for ethical qualities, etc.—but also within a global picture. Even some seemingly benign agreements may not be appropriate under certain conditions, for example for those countries at the very start of a long process of emergence from poverty.
I advise all of you who depend upon such agreements to examine them over the next three months with human rights and public prosperity issues in mind, as a way not so much of second-guessing the new structure, as of preparing for the worst while expecting the best.
Now I know this news will profoundly shock many of you. I know that it still shocks me, even though I have had many months to prepare. These were months in which I learned many things that I did not know, or did not fully understand—things that have profoundly altered my vision of the work that we have done, and that have led me to accept that our policies have, overall, had exactly the opposite effect as that which we originally intended. Understanding the extent of our error has brought me peace with this difficult decision.
I have come to understand the implications of things I knew, but did not fully absorb, before.... For example, that the number of people in the world living on less than $2 per day has increased by 50% since 1980—during the very period most heavily liberalized....
[Here, Andy reads ad lib from a facts sheet (www.gatt.org/trastat_e.html) for about 20 minutes.]
I’m sorry that I cannot provide a great deal of detail on the outlines of the new Trade Regulation Organization. This is where the real work begins, of course. In a way, we at the WTO have been experts in the problem; becoming experts in the solution will require a difficult transition.
We do know that that the TRO will be founded along the lines of the U.N. Declaration of Human Rights. We know that the the bottom-line goal of the TRO will be to harness world trade so that it benefits human beings—unlike the WTO, whose bottom-line goal has been to allow corporate commerce free reign regardless of immediate consequence; with the TRO, immediate consequence will be, in a word, consequent: since we have seen what overheavy reliance on theory can result in, we must orient ourselves in the future to rely primarily on the facts as the facts appear to us.
There are countless signs in the world today showing us the problems with our approach to trade. We at the WTO are reacting to these signs by refounding our work upon new principles—human rather than corporate ones.
All of us must find the heart and the courage to find his or her own way of doing something powerful on behalf of the powerless, and if necessary to change our directions, despite the long accumulation of momentum and merit that makes it a difficult move for all of us with a stake in the world as it is today. I ask all of you, come join us in this long road of struggle, in this effort to transform world trade into an asset for all human beings, rather than a liability for many or most of them.
As we eat/finish our meals here today, let us not forget the starving, nor ignore the devastating impact many of our policies have had on the ability of poor populations to eat anything at all.
But as we eat, let us likewise not find a frog in our throat; let us maintain an appetite through the secure knowledge that we have the desire, the ability, and the public support to improve living standards for the poor of the world and for everyone—through decisions we make today, tomorrow, and far into the future.