* * * * *
* developments logo *
The international Development magazine
DFID logo
Clare Short The World Trade Organisation Symposium was held in Seattle at the end of last year. Clare Short, UK Secretary of State for International Development urged the WTO to make this round a development round. This is the speech that she gave to the assembly.

It is striking how many lobbying groups and trade unions have come to Seattle. They understand that history is moving under our feet. Globalisation is a new historical era. Capital now moves in vast quantities and at great speed across the world, taking knowledge and technology with it. And rapid information flows and new technology bring us closer together. We are now more interdependent than ever before. Crises in one region can affect the global economy as a whole.

Globalisation is generating great wealth. This could be used to massively reduce poverty worldwide and to reduce global inequality. The world’s richest 225 people have a combined wealth equal to the annual income of the poorest 47 per cent of the world’s people. We must try to manage this new era, in a way which reduces these glaring inequalities and that helps to lift millions of people out of poverty.

One in four of the world’s population (two-thirds of them women) lives in abject poverty – without access to adequate food, clean water, sanitation, essential healthcare or basic education services. That’s 1.3 billion people whose lives are blighted by poverty, robbed of their dignity, deprived of the opportunity to fulfil their potential.

This is both the biggest moral issue facing the world and the greatest threat to the future security and stability of the planet. So many of today’s problems – war and conflict, mass migration, environmental degradation – are rooted in poverty and inequality.

Over the last few decades, we have learned a lot about what works in development. The poorest countries need faster economic growth than population growth – or poverty grows invincibly. We must harness the private sector both domestically and internationally to generate investment and growth.

To do this we need sound regulation of banks, action against corruption and proper enforcement of contracts. We need effective government systems that provide education and health care for all their people. And to get such a government we need democracy, and respect for human rights and core labour standards, so that the voices of the poor can be heard and their needs respected.

We also know that to achieve sustainable development, poor countries need to attract greater flows of private investment and they need to expand their trade. Protectionism and autarky have been tried and failed. Far from reducing poverty, these approaches increased the numbers of poor and worsened their plight.

Only with increased investment and trade do poor people get access to the basic necessities that we take for granted – like clean water, sanitation, electricity, telephones and transport systems.

The evidence is clear. Since the 1960s developing countries as a whole have grown nearly four per cent per annum, faster than the three per cent per annum achieved by industrial countries. Developing country exports have grown by six per cent per annum, and their share of world exports has risen from 19 per cent in 1973 to 23 per cent today. For example, Bangladesh been very successful in diversifying its exports, and now has a considerable export trade in manufacturing.

This growth in developing country economies would not have occurred – or would have been much slower – without the steady opening of international markets and the reduction of trade barriers. But, more is needed. This is why the negotiations that will continue over the next three years will have profound implications for the world’s poor. If they go well, we can start a process that brings real development benefits to the poorest countries. If they go badly, then the interests of the world’s poor may be marginalised. There is one thing on which we should all be absolutely clear. If there is only a very limited round – as is urged by some – the result will be an enormous lost opportunity for developing countries.

The task for all who care about international equity and the elimination of abject poverty is to make the next trade round a ‘development round’. We need a round that will increase trading opportunities for poor countries and increase their capacity to take advantage of these opportunities.

I want to suggest four things that need to be done to make the next trade round work for the world’s poor.

Making the next round a development round

First, we need a broad round. At present, the only issues definitely included are agriculture and services. Some developing countries would gain from liberalisation in these areas but many would not. With a broader range of issues, many more developing countries could benefit. For example, poor countries could gain greatly from a reduction in non-agricultural tariffs and from the removal of tariff peaks.

If the round has a limited agenda there are real dangers that developed countries will strike deals between themselves, outside the WTO, and the poorest countries will be left out.

Negotiations on issues such as investment, competition and public procurement could also bring significant benefits to poor countries. I remain convinced that a negotiated investment agreement reached in the WTO – where three-quarters of members are developing countries – could help developing countries to attract the investment they desperately need.

A broad agenda will also provide the opportunity to discuss the link between trade and protection of the environment – an issue which is rightly of concern to many people. Many developing countries fear that environmental campaigners who live in countries that create most of the pollution want to impose rules that will obstruct their development. In reality, most developing countries have signed up to multilateral environmental agreements.

And many stand to suffer serious consequences from global environmental problems, not least the rise in sea levels resulting from global warming. A comprehensive round gives us the chance to explore whether we can agree mutual recognition of multilateral environmental and trading agreements. I think it is important that we should, but we need to build trust in order to do so.

Second, we need developed countries to take seriously the specific trading needs of the least developed countries. Firstly, we should all commit to duty free access for exports from the less developed countries (LDCs) by the end of the round. The 48 LDCs are the poorest countries in the world. Together they make up a mere 0.4 per cent of world trade. Agreement on this is a test of whether the wealthy countries want to give a fair chance to the poorest.

Developed countries should also practice what we preach. We must address our own protectionism and be prepared to open up the sectors that matter to developing countries – like agriculture, textiles and clothing.

But some of the barriers that the poorest countries face are imposed by other developing countries. As much as 40 per cent of developing country trade is with other developing countries. They would all gain by reducing tariffs.

Third, much more needs to be done to strengthen the capacity of developing countries to negotiate, to implement agreements and to take advantage of the agreements reached.

This is extremely important. Over the last two years, my Government has increased its work in this area. We strongly support the European Union proposal for a milestones approach, which offers countries support and assistance tailored to their needs. The meeting this week should make a clear commitment to capacity building for developing countries, both during the negotiations and beyond. And it is important that we work with developing countries so that they have capacity to take advantage of better trade access.

Fourth, we need to be clear about the concerns of developing countries on issues such as trade and labour. We all want to see an end to child labour and to secure adherence to core labour standards across the world. But trade sanctions – the remedy some propose – would make the situation worse not better.

Child labour is a development problem, not a trade problem. It exists in all poor countries. Only five per cent of child labourers worldwide work in the export sector. Trade sanctions against countries where child labour is prevalent would simply harm the poorest countries and force children into still worse forms of employment. And sanctions do nothing at all to address the 95 per cent of child labourers who work in the non-traded sector.

That’s why the issue of child labour is best addressed directly. Through our development efforts we can and should, create conditions that help children to move out of work and into school, as well as increasing opportunities for their parents so that they are no longer so dependent on their children’s income.


Lastly, I want to say something about the World Trade Organisation itself. In some quarters the WTO has become the institution that people love to hate. A lot of this criticism is misplaced.

The WTO is an intergovernmental organisation, created by its members and accountable to them. Developing countries are in the majority of its 135 members, each of whom has chosen to join. And a further 31 countries are waiting to accede.

Of course, the WTO still bears the heavy imprint of the much smaller group of mainly northern countries which founded the GATT* . And it is true that the WTO should be more transparent and its rules easier to apply. Our job should be to make those rules fair and accessible to the poor. Not to undermine the WTO so that we go back to a system where the rich and powerful bully the rest.

My Government has been a strong advocate for the creation of an Advisory Centre on WTO Law – a body to assist poorer countries to use the Dispute Resolution Procedures of the WTO if they want to take a case under the rules. I am extremely pleased that this is to be launched. This will help to ensure that the poorest countries can exercise their rights in the rules-based system.

I would also say that those who make blanket criticisms of the WTO are working against, not for, the interests of the poor and the powerless. International trade can be unfair and exploitative. The strong can deceive and defraud the weak. That is precisely why we need an institution like the WTO which is membership-based and rules-based – to prevent fraud, monopoly, predatory pricing and other abuses. Just as we need rules on these issues at the national level, so we need them at the international level.

My conclusion is that we face a serious test. The fundamental question is: “Do we want a fairer international trading system that brings real benefits to the world’s poorest people?” In my judgement, all those who do should favour agreement at Seattle to a broad based negotiation – to make sure that developing countries derive real benefits. But if the door is slammed shut here in Seattle, then developing countries are likely to lose out, and to lose the opportunity to make real and lasting progress in the reduction of poverty. I appeal to all who have come to Seattle to lobby – not to let this happen.

*The General Agreement on Trade and Tariffs.