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The Elliott School of International Affairs
The George Washington University
October 24, 2002

The WTO and Globalization's Implications and Limitations

By Mike Moore

(Harry Harding, Dean of the Elliott School of International Affairs introduced Mike Moore.)

Thank you very much for that introduction. It's true; I have a bright future behind me. You missed a couple of points. I was also the youngest Member of Parliament elected in my country. I quickly became the youngest ever defeated. I was the shortest serving Prime Minister in New Zealand's history.

I'm here today to share some thoughts about globalization and what it means. I shall give my basic argument, my case, then explain how I got to those positions and then suggest what I think we might do. We live in an interdependent world, which is not yet integrated. We all depend on each other. We've learned that no country can be safe; no country can enjoy clean water or clean air. We can't even run a tax system or an airline system, or manage fisheries, or parks, or save our bird life without the cooperation of others.

So we're interdependent, but not yet integrated in the political sense, with the institutions in place to work in a cohesive way to achieve the results that the people and public demand. Recent events, such as terrorism throw even more urgency into a very vulnerable squeaky gearbox that drives the motor and regulates our modern world.

So what is globalization? Is it new? Is it wrong? Is it unfair? Can it be stopped? Should it be stopped? And how do we manage it? Well I'm a fourth generation New Zealander, I'm a Pacific Islander, and a native of the Pacific and so perhaps from my vantage point of history and geography, I see the world a little differently than others. I'm a first generation New Zealander who has not served his country in uniform. Public service and politics to me has been an extension of that service and duty.

When it's dark, and I'm in Europe, in a nightclub, if you've had enough beers I could pass for a European. But I'm not. I like to tease European friends that the great tribes of Europe have been a menace to world peace enduring hot and cold wars for generations. But there is another Europe, which subsequently, in the Age of Enlightenment, has inspired the world with the notion of nation, liberty, fraternity, equality, democracy, the rule of law, and science.

Nearly two centuries ago, Sir Henry Maine wrote, "War appears as old as mankind, but peace is a modern invention." Immanuel Kant wrote earlier of a "league of nations that constructs lasting peace." The U.S. Constitution, that everyone here is so proud of, was the boldest expression of the Age of Enlightenment, influenced as it was by progressive thinking from the coffee shops of Paris, the Magna Carta, the bill of rights, trial by jury, and accountability. Expression was given to the radical idea that patriotism was to be based not on the divine rights of kings, not even only on the will of the people, but instead on ideals and principles that had universal applications.

The post war international architectures were extensions of these ideals. That's the moral, intellectual and political ideal that has given us the institutions whose job it is to grapple with these global problems.

Now across the Atlantic, we're seeing a common European State emerge and evolve. I won't feel completely content until I see a Europe, united by democracy and free institutions and free trade, reach the Pacific.

The world has changed dramatically in a single lifetime. You'll recall the great speech that Winston Churchill gave at Fulton, Missouri. He talked of the Iron Curtain descending from the Baltic to the Adriatic. Only a few weeks ago when I was in D.C., I read that seven nations from the Baltic to the Black Sea will join NATO, unthinkable only a decade ago.

So now we're talking about a united Europe, these magnificent and noble goals. Where Europe is united, people exchange ideas, commerce and cultures. Europe is at peace and a force for good. Where old tribal instincts take over, you can see in the savagery in the Balkans and the pains of the ex-Soviet economies at the moment.

Is globalization new? Not at all. Historians and economists will argue that the world of the late 1800s and early 1900s was more tightly integrated through trade than today. There was certainly a greater movement of people. Cotton was introduced into world trade from India as early as 1600. India was probably the world's largest exporter from around 1500 to 1700. Those modern trade routes brought papermaking from China to Europe and Greek medicines and ideas back into Europe, as Europe had lost them during the Dark Ages.

The French Sun King Louis would drink coffee from Vienna served on Chinese porcelain sweetened with sugar for dinner. To end his evenings, he'd smoke Virginia tobacco. A lot of French noblemen drank the Aztecs' cocoa and chocolate, and the English people preferred Indian tea.

In 1840, a French diplomat, wailing about the invention of the rail, telegraphs and steamships, said, "distances will disappear." There will not only be commodities which travel, but also ideas which will have wings. When fiscal and commercial barriers are abolished between the states -- as they had been between provinces of the same state -- different countries with daily relations tend to unite people. How will you be able to revive the old mode of separation?

Harry Truman once said that the only thing new was history he hadn't read. What is new is the accelerated speed of change, and the fact that people are now able to observe and judge changes as they take place. And that is a healthy thing. The varied forces of information flows and openness are the same ones that empower critics to mount antiglobalization.com campaigns. The irony of that is lost on some.

Reaction and protectionism is not new either. Britain's canal proprietors organized against the new threat from the railway, but what have we learned? That countries that are more open to trade grow faster than those that aren't. It's positive -- better jobs, hospitals and better schools. Thirty years ago, Ghana had the same living standard as South Korea. Seoul changed hands four times during the War. In 1945 the North had the richest and most industrialized part of the Peninsula. South Korea's GDP per capita did not reach 100 U.S. dollars until 1963. Now South Korea is in the OECD, and the other half is in prison. South Korea repaid its IMF loan and its banks' bounce back was impressive. South Korea's living standards are now equal to Portugal's; and look how Portugal's living standards have surged forward since they got rid of the fascists and joined a wider Europe.

I was reading an obituary of a Taiwanese businessperson who, in his last report to his country boasted this: that when he started his business 45 years ago, he was paying his workers $7.50 per month. They were now getting $7.50 per hour.

In Malaysia in 1960 you had the same income as in Haiti, the poorest Caribbean nation. Burma and Thailand's living standards were about the same after the Second World War. Now the average Thai is 25 times better off. Just 30 years ago, Japan was a developing country. Take a look at the Baltic States before the Soviet experiment. They had living standards were equal to Denmark. The Czech Republic's living standards were close to France before the War. And the Argentines had a higher living standard than Canada, or New Zealand or Australia in 1900. Guess what went wrong?

History has always been about the movement of people, ideas and products. In more primitive times, globalization was aggressively fueled by nationalistic and religious expansion. The age of discovery, bracket the age of empire, stressed, exploited and enslaved people worldwide. We've seen successive empires of faith, going back to before the Crusades. Those who resisted the Crusades fought with swords caste in India, with ore mined in Tanzania. When the order went out to mobilize for the Great War in 1914, the Ottoman Empire's instructions went out in 14 languages. It is ironic that some of the most strident critics of globalization come from the same churches who send missionaries into the field to globalize their faith and to harvest recruits, are joined now by old time Marxists, whose children sing The Internationale and march against globalization.

For the past 50 years, international politics was dominated by the Cold War, which intellectually corrupted and distorted our vision and the work of our global institutions. That war was a vital war to be won, and it was won. But the Cold War perverted the de-colonization process throughout the world and as emerging countries were courted, economies, politics and cultures were transferred and transformed. Now the surrogate battlefields in this old cold war have passed and we're moving I think to more ancient rivalries between and inside cultures.

Globalization is not an aberration. The aberration was how world trade was stopped in its tracks as a response to the Great Depression and just before that the Great War. And we know that Great Depression was made deeper and more prolonged and more lethal and more painful because of the outburst of protectionism and economic nationalism. The Smoot Hawley legislation in the U.S. caused an economic retraction of 40% of its trade in the two years after it was passed in 1930. Between 1929 and 1932, world trade volume fell by 26%, and world industrial production fell by 32% because of widespread protectionism.

So there it is, you have country after country adopting beggar thy neighbor policies to competitive devaluation, so that by March of 1933, the volume of international trade fell by more than a third from its 1929 levels. The effects of the vicious Versailles Treaty provided further justification for future European nationalism and vicious tribalism. From all of this came the twin tyrannies of the last century: Fascism and Marxism, both protectionist, nationalistic and murderous.

But, unique among the species, we learn and we adapt, and we improve. Even before the second war had ended, people got together in this city and up the road, to construct the postwar architecture. They decided that they had the Marshall Plan, the mirror opposite of Versailles. It was the first time in modern history that the victor decided to rebuild the institutions and reconstruct the land of the vanquished.

And then they decided to put together the United Nations to handle political things and the World Bank for development issues and the IMF to handle political and economic issues, and what eventually became the World Trade Organization.

So can globalization and history be stopped? It can be stalled: Hitler and Lenin could not stop it, those old populist, nasty, nationalistic, anti-foreigner types pop out occasionally. You can't blame the people, because sometimes the critics are correct. The trading system is unfair. There are injustices.

It might be a political contagion in some parts of this hemisphere, because the oldest trick in the book is to blame others. It's the IMF's fault, it's the World Bank's fault, it's the WTO, it's gringos, it's communists, it's unions, it's capitalists, it's the Vatican, it's the Masons. The populist politicians on the left and the right try this. But it's only successful when other systems fail. But I think that occasionally it's time to stand up and to give some hard facts because too many people believe that things have never been so bad. That just is not true. Let's go through some figures and facts.

Life expectancy: The average American didn't live to be 50 years of age 100 years ago. About 80% of American farmers 100 years ago, did not have electricity. Now, 85% of the world's inhabitants can expect to live to at least 60 years of age. In the last 20 years in low-income countries, life expectancy has increased by six years to 59 years.

Have a look at other areas where you must judge human progress. Infant mortality in developing and very poor countries: 50 years ago, about 20% of all children did not survive. Now it's under 6%. Thirty years ago, nearly 35% of the population of developing countries was affected by hunger. That's down to 18%, and that's far too many. Global food production has doubled over the past 50 years, and in the developing countries it has tripled.

In East Asia six out of ten people lived on a dollar a day in the late 1970s. It was down to less than two out of ten by the mid-1990s. Over the past 50 years, several billion people have been lifted out of extreme poverty.

Another measure of human progress: the literacy rate. Seventy-five percent of people in developing countries two generations ago were illiterate. That's down to 20% but still too many.

So history teaches us something. I believe it's this: The more open a society, the better results for the people. There's never been a famine in a democracy. Democracies don't go to war against each other, they have better environmental, social and economic outcomes.

So progress has been measured on these indications I've explained to you. What do we have to do to lift people's living standards to give them a greater opportunity? It is a basic right of people to replace and correct market failure and political failure by their leaders. This means the rule of law, political rights, property rights, a free and fair media, an active civil society and honest and capable public service, legal systems, honest tax systems, and religious tolerance get the best results.

The last 50 years taught us that the rule of law is critical to create successful nations -- if you think about it, it took the nation state hundreds of years to develop this kind of body of law. It is thus that much more difficult for us to develop this body of law internationally. But we need to build on the pillars created by our fathers, because that's a solid foundation: the IMF, the Bank, the United Nations, and the WTO.

And universal values of human rights and human dignities become far more acceptable than globalized rights, and globalized freedoms. And in this changing world, in this new concert of nations, we should remember that just because each player of an instrument plays together in an orchestra, this no more means the abolition of the violin or the piano. And that democratic regionalism and democratic internationalism does not mean the extinction of domestic municipal democracy or the nation state.

So where does the WTO fall into this, as being one of these pillars? Well, everywhere in the world I go, the WTO is seen as a capitalist American plot, except in America. What are the core principals? What was haunting post-war statesmen was the thought of hostile trading blocks. Haunting them were the lessons of the Great Depression.

One of the core principles of the WTO is most favored nation status. I negotiate something for my country; it ought to be universally applied. Consensus governs -- everybody must agree. I always joke, the WTO is 144 countries and there are 144 handbrakes, and only one accelerator, which you're not allowed to use without consensus. It's a bit like one of those Laurel and Hardy movies where they're climbing up a hill and the steering wheel is up here. But we do our best. It's our great strength and weakness.

And far from being the least democratic of the international institutions, I'd say the WTO is the most democratic in that congresses and parliaments must ratify treaties and agreements reached. There are also some political systems where you have to even get permission from a congress or a parliament to start negotiations. And when is the last time parliament or congress voted on a decision made by the Bank, the Fund, or the ILO, or indeed, the United Nations? And what's fundamentally important about the WTO, and I think why we attract so much attention, is the binding nature of our disputes settlement system. It's the jewel in our crown.

And good people say, what kind of world is this where you can have binding disputes systems on trade, but not on human rights, labor rights, gender, the environment, animal rights, vegetarian rights, every other right? That's a good question. It's not a question the WTO, in my view should, or even try to answer. And the very critics of the WTO want to push things into the WTO, which would make it a menace. It would create a world organization with far too much power.

The dispute system is unique. Where else in the international architecture can the smallest country take the biggest country into a system, knowing that in the end this panel system adheres to the principles. Their findings will be binding after going to the WTO's appellate body.

It's an unfortunate fact of life and I think a dangerous fact of life that too many people tend to judge themselves by how they relate to America. I think it's immature and silly and it's a big, dangerous game. But if you go through the disputes, America wins most of them with more lawyers than the rest of the world. But Costa Rica, defeats America on a panel decision on underwear. Eventually New Zealand and Australia win on a case of sheep. These are important decisions; it's about the rule of law, which is another word for civilization.

The system may take too long, it does -- the remedies available may be blunt and crude and ironically trade restrictive, not open trade. It is true that the smaller guy finds it more difficult to get into court than the richer guy. However, uniquely, we establish, not in the WTO, but outside it, a legal advising service for the smaller and poorer countries to get some assistance in terms of a legal remedy. This was resisted by all sorts of good guys. Of course the system isn't perfect. We've got 30 countries that are members of the WTO, who have no offices in Geneva. How can they sit down and negotiate equally? Well, they can't.

We've got to get over that small countries will always be small countries. New Zealand will never have as many staff in our missions as Canada or Australia. We just have to be smarter and work harder, and that's not that difficult. I'll make fun of our friends, because I know there are a few of them here.

But we have at the WTO, unique amongst institutions, set up online. We have special weeks where we fly in senior officials from non-resident countries. It doesn't happen in any other international institution. Our non-resident policy to help them with capacity building is working and now mainstreamed into our budget.

So what's at stake in this new trade round? Well, if we abolish all subsidies and all protection, which isn't going to happen, that could be worth about 3 trillion dollars to the world economy. That would be like adding another China to the world economy. If we get a third of the way there, it would be like adding another Canada to the world economy.

And what's in it for the poorest economies, the customers of the future? Well, if I take agriculture alone: rich countries spend a billion dollars a day subsidizing their food to make it dearer for their working families. How smart is that? I can understand subsidies that lower prices, but subsidies that go to the richest, still confuse me.

But if we manage to do something on agriculture that would return three to five times more to developing countries, five times more than all of the overseas development aid put together -- and what's important about that, it would be driven by the market, and it wouldn't be clipped and stalled by bureaucrats on the way through -- that's something worth fighting for.

Consumers in the United States and Europe are paying 50% more than they should for their sugar. Take the coffee industry. The figures are roughly these. The coffee market in the world is worth about 60 billion. The growers get about 5.5 billion. Ten years ago, the market was about 30 billion, and the growers got a third of that. What has happened? (And you're not getting your coffee any cheaper, either.) What has happened is that well meaning people, Americans, Germans, Europeans, decided that they would help Vietnam. And so they created a coffee industry there, which is now the second biggest producer in the world.

What has that done for Colombia? What has that done for Ethiopia, where 60% percent of their exports are coffee, getting the lowest real price in 100 years? And coffee is grown at the same altitude as heroin. You don't have to be a rocket scientist to work out what is going to happen there. The story of coffee is the same as the story of cotton, the story of sugar, all tragic and costly.

And then we have in this round, the issue of fishing subsidies -- 20 billion dollars. We are trying to negotiate those subsidies out. And why don't the rich countries end those subsidies, on agriculture that pollute the ground, and fisheries that pollute the water, and energy that pollutes the sky. I do not understand why some NGOs do not get up and fight this.

I can't understand why some NGOs don't get up and fight the aviation industry, on matters of environment, and on matters of efficiency. And I'm very disappointed this round that nobody stepped up to the plate with a decent aviation policy. Because if you're a grower of veggies and cut flowers in Kenya, you've got to get those products to the market overnight. If you're selling fish fresh in Japan, you've got to be able to get them there very quickly. We've all been in a situation where you're in Central America and you want to go next door and you go via Miami. Or you're in Africa and you want to go next door and you've got to go via Paris or London. Maybe we have to leave that for the Shanghai Round.

This round can be concluded on time: the resources are there, the time frame is there, and the personalities are in place. And I was rather proud and pleased that the transition for my successor was totally seamless. He was in our building three months before my time was up, he had staff, he had cars, resource flow and access to paper, because this was not a race, this was a relay.

Globalization has perhaps got its biggest lift in the last couple of years when China joined the WTO. This changes the world. If I had a choice personally, about the launch of a round, and having China as a paid up member, I would have gone to China.

There are 6000 books on the WTO in the Chinese language in circulation. If I'm really lucky there will be 6001 early next year when I publish my book. You judge countries by what they read. In China about three months ago, a very serious Chinese minister talked with me about the Russian accession. He said, well do the Russians understand capitalism? And I said, well there are lots of ex-communists there in Russia. They don't seem to have that problem in China anymore. He thought that was the funniest thing he'd ever heard.

The best selling book in China three months ago for about six months was "How to get your child into Harvard University." That tells you a lot about how serious people are. If you go to my country, the best selling book is a book about a rugby hero or a cookbook. That tells you a lot about my country.

All I can report to you on China is that it has changed well over 1200 rules and laws and regulations since its membership. They're serious; they want this to work. Chinese leaders have pointed out to me that this is the most important economic decision they've made since 1949. And China is under the spotlight in ways other new members are not, and it's very tough on them. Other countries have to have a trade policy review every three or four years. China has to have it every year, and there are tough conditions laid down.

But as important to me, are issues of security. Because I believe the development and growth, is a matter of security. One of the flash points is the Taiwan Straits. What's happening now, widely and gently without fanfare -- business representatives between Chinese Taipei and China are working on how they can increase tourism, travel and investment across that patch of water. And I think that in itself, is a valuable contribution.

So there it is. I'm extremely positive, because I know so many people, and have been inspired by so many things over the last three years. The global community is aware. Good decisions have been made. Doha was a major step for development issues. And in Monterey, the major players came down and committed themselves to ODA increases, committed themselves sufficiently to good governance. And in Johannesburg, we had a little difficulty. The biggest conference in history was twice the size of Alexander the Great's army and just as dangerous. But NGO's, governments, international institutions are all focusing on what is necessary.

I am not one who believes that trade, or free trade will somehow save the world. It will not. But it is part of that process. Ideas, parliaments, people, good governance, rule of law, property rights -- all of these things go into the mix to succeed.

And I share with you, finally, one experience I had as director-general. I had to go to Cambodia. I didn't have to go, I wanted to go. They are trying to join the WTO at the moment. So all these young patriots have come back to their country, Americans, Canadians, Australians, Europeans, and New Zealanders' accents, wanting to rebuild their country. That was inspiring.

As I flew into Phnom Phen at night I remembered that Pol Pot killed several million of his people; there were 60 graduates left alive by the end of his time. So I flew in at night-you think you're flying into some rich Australian's farm. It's dark and there are just a few lights here, there, and there, about 50 lights, you wouldn't know you were going into a great city. As you drove to the town, what were those lights? They were cyber caf�� lines, queues and queues of young people stretching around the block, wanting to have a go.

That to me is inspiring. That teaches me, that if we give these young people a chance, they'll do a hell of a lot better than my generation.

Thank you.

Question and Answer Session

Question:
Mr. Moore, I'm one of those dumb Canadians. I've been picketing and participating in the process and one of the comments that we frequently heard at trade negotiations was the so-called democratic deficit and giving more legitimacy to the WTO and other international institutions. Can you talk a little bit about how one makes international institutions seem to be more democratic from the perspective of global citizens? I know the governments themselves provide legitimacy to the WTO, but do you see any way to create a greater link with global citizens?

MM:
Yes, democratic deficit is one of those slogans, clich��s, which has a ring of truth to it. But let's get back to what the WTO is. It's an intergovernmental organization. Governments will make the decision about their negotiating position. The WTO doesn't. We're our own worst enemy by the way we manage a lot of the things we do. In my time, thanks to the Canadian Ambassador Marchi, we released a lot of our documents. We weren't releasing documents. It took six months to get them out. Well, one of the reasons it took six months is that their owners were so mean that it took six months to get someone to translate key documents. That's changed.

And I tried to build up something unique in international institutions by involving parliamentarians at a level that hadn't happened before. Parliamentarians have to ratify any agreement. So we had all sorts of meetings with parliamentarians, and I approached the International Parliamentary Union to act as an umbrella to do that. And as much as I could I went to parliamentary ways and means and congressional committees, making myself available to them.

We also reached out in a way that has never happened before to the umbrella organizations of the political parties, the socialist internationalist, the democratic union, and the liberal international. We tried to involve them. That was not without controversy. I wasn't allowed under my rules to have seminars without total consensus. So we had symposiums instead. And there were even those who blocked us trying to have the sessions with parliamentarians.

The argument against involving politicians was this: That if the result of all the structure we set up was only to replicate the debate at home, we haven't added much to it. If this is just a platform for aspiring presidents to come up and kick their own governments in the guts, what have we added to it? But I think we managed to do it with some style, and in the end the parliamentarians did not use it as a platform to attack their governments.

Through these seminars we reached out to NGOs, etc. We involved trade unions, which has never happened before. So I think we did do some good things. But, we ought to be firm about what we are. We are an international organization, who is the servant of the governments. We do not tell governments what to do. They tell us what to do. And we will be more humble about what the international institutions are; we are servants of government.

That is a cheap shot for some of those who say it's not democratic. I would say to those who have that distinction: you will not sit in on a negotiation. This is a government's job. When you can sit at the cabinet table on Downing Street or at the White House, at that point you can sit in on the negotiations. You have to have your influence in the creation of domestic policy. And sensible governments like Costa Rica and New Zealand have their committees involve civil society, and have all these people involved as they build up their national policy.

But, we could do a lot better and I think we have. Alas, there are those extremists who basically think they should be doing the negotiations, not the elected people.

Question:
I would like to return to your comments about trade and development and focus particularly on the membership within the WTO. I was wondering if you have any sense of the WTO membership, the percentage of developing country members, and their impact in the next 10 to 15 years on the focus of WTO as an institution, as well as on the global regime. (A portion of this question was inaudible but referred to the historical agenda of the WTO.)

MM:
You're quite right and there have been 80 new members since the Uruguay round, and they're all developing countries, and they've had a legitimate complaint. The truth is the GATT was a rich, white person's club. You had a handful of members of similar cultures, similar styles and experiences that represented who they were, and bluntly, the staff and the kind of people who joined, reflected that membership.

That has now changed. It's going to be more difficult and unwieldy. With 144 countries, reaching a consensus is extremely hard. My fear if we failed at Doha, was this: that if 95 percent or 98 percent of world trade wanted to go one way, pretend you have a situation where half-a-dozen countries that control 2 or 3 % of world trade can block you. If that had happened, we'd have been in real trouble. We would've had an extension of NATO plus Japan, plus China, kind of an OECD plus organization.

The interesting thing will be China. We've got another elephant in the living room. China and its role will be pivotal. It's interesting, there was a Wall Street Journal editorial about six months ago, which said that "wouldn't this be fascinating...if China was pushing for the new round and America was slowing it down." China has the most to gain from the new round. Two-thirds of all the benefits of industrial tariffs now go to developing countries and much of that will go to China. So, I think it's all healthy.

Will it be unmanageable? It will be very hard to navigate. Should we have a central organization, a central committee to help the negotiations? Well, we do that in a shadowy and informal way now, but it probably does eventually have to be captured in a better-managed system. I wrote a paper on it for the incoming guy and had a seminar based on my paper. I think we do need to manage ourselves better. But in the end, each country has to feel comfortable. Otherwise, their parliaments and congresses aren't going to accept the deal. This just gets hard, but the deal has to be wide enough to commit everyone.

Question:
You said perhaps rhetorically in your speech, why is it that the WTO has binding dispute settlements, when other international organizations like the ILO do not. I wonder if you have an answer to that question, is there something about the WTO model that is unique to the WTO for binding dispute settlements or could it be applied in other areas of international law?

MM:
I think it should be. What's happened, why have we had the ILO for 70 years, what more can we do, why can't we have binding disputes mechanisms elsewhere?

Now that would be very hard for some governments to accept. It may come as an enormous surprise to you, but a lot of governments are dishonest. It was a shocker to me, coming from a very honest little country. For example, when countries say that labor rights shouldn't be in the WTO, it should be in the ILO, and then they go to the ILO and stop it being there too. So we're dealing with some pretty sharp characters.

I think it is time to have a look at all the international agencies, frankly, I think we're all middle aged, at 50 years time, go for a check up, take a helicopter view of it all. What is UNIDO doing in Vienna? We know why it's in Vienna. Should it be folded in the UNDP? I don't know. Certainly the post-war architects did not think of the environment in the same way as we're thinking about it now. I cannot say for certain, but some very strange management and political decisions occur in international agencies. I think it's time to have a look at all the agencies and our mandates.

We, of course, are not a member of the UN family, not formally part of the family.

Question:
How do you respond to assertions that China's membership in the WTO has accelerated global retail price inflation and how do companies in other countries respond to pricing of (inaudible)?

MM:
Well, I think it's rather a good thing but the issue is a bit wrong. I'll give you a couple of figures from the Doha Development Round. The Doha Development Round is a poor person's round. For working families in the United States, for working families in Europe, this has meant a 10 pounds per week pay increase. For people in poor countries it means jobs, which now move to those countries. I think that's a good thing.

Now, I'll take you back to your question of China. If China had not joined the WTO, would those exports still have been coming in? They were coming in anyway. What does China get out of it? China gets the predictability, the certainty that they will have access to markets, that they will not be stopped for political reasons, and she has recourse to the dispute settlement mechanisms. She's not up against an annual review by members. What does the rest of the world expect to get from China? We now expect China to work within certain rules, copyrights, intellectual property rights, etc. I think it's a win-win for everyone.

The Herald Tribune about three months ago ran a story, where it said, wages have been so high in Shanghai that Unilever are moving further north. That's a good thing.

For some reason everyone attacks business people and investors. It's a fair target, I guess Nike's paying something like 3 or 5 times the average wage of Vietnam. It's causing terrible problems, because doctors are leaving hospitals, professors are leaving universities to get a job on the factory floor. That's not what we think when you read some of the banners that flutter outside. I think it's all healthy and good.

Question:
Turning to agriculture briefly, in light of the bill that President Bush signed into law, earlier this year raising agricultural subsidies, and in light of the tremendous reluctance of the European Union, not just France, but other countries, to cut back on their subsidies, what really are the realistic prospects for serious reductions in these subsidies and the harm that's being done to farmers in developing countries? And one more little point regarding China: How in the world are the small farms in China going to survive, given the new rules in agriculture, and given that most of them are very inefficient. How are we going to make any progress in this upcoming round?

MM:
Well, quite simply, unless there is major and substantial agricultural reform, this round will not succeed or go anywhere. The combination of the Latin Americans, Africans, and the Cairns group will ensure that this round will not succeed unless something substantial is done in agriculture.

The farm bill was a very high price to pay for trade promotion authority. But you got trade promotion authority. At a hell of a price, but you've got it. And President Clinton, with all of his political skills and genius, was unable to deliver. While people in Geneva were a little disappointed, they weren't angry. In fact it's one of those things; you've got to understand American politics. Within weeks of that decision, the U.S. negotiators at the table composed a very strong paper on getting rid of the subsidies. You've done it before with Japan in the Tokyo Round and the Uruguay Round.

Why do I think it would work this time? I think it will work this time because of the solidarity of developing countries on agriculture, and because you're going to get nothing anywhere else. Those days are gone. Also, because of the extension of Europe, there are more farmers in Poland than the rest of Europe put together. Agriculture is chewing up about 45% of the European Union's budget. With the extension of about 10 or 11 more countries, this will break the budget. With the Euro in place, governments cannot deficit budget to the same extent. So the pressure's really on them.

So I'm more hopeful than I've been in my lifetime that a deal can be struck. But it's only part of the deal. What will they want back? I'd say in agriculture the most difficult to navigate, is the European demand on geographic indicators. Basically, they want to own the brand name -- words like Champagne or cheddar. For European negotiators, this is very important, and we'll see what they're up to: Cognac, champagne, all those words. The Euros will, I believe, have to move, and by how much? Is it 5 years, 15 years or 500 years? It's in there somewhere.

Question:
I wonder if you think you could tell us if you think the WTO dispute body is the proper forum for resolving international tax disputes? Do you think the WTO rules on border adjustability of taxes should be changed? What should be the rules on border adjustability for direct and indirect taxes of exported goods?

MM:
First, I think the WTO works because it is a pretty slim and focused organization, and I would be very reluctant to see it move outside the trade arena. Maybe we do need a global understanding on tax at borders and elsewhere. Certainly, this new information age is making taxes a lot more difficult for governments to collect. But you're right, it's also bringing the issue of currencies up, of tax regimes. But I would be reluctant to see the WTO assume more responsibility.

I think our dispute system works well. We've never had a hint of corruption. With billions of dollars involved, it's a pretty clean citizen's system. There are those that say we should have more mediation powers. Well we have those powers now, as I've said. I'm being suspicious and very cautious about formalizing mediation, because that means the camera will follow the director-general everywhere. You can only mediate if both parties agree to the mediation. I can see some kinds of people in certain situations call for mediation knowing damn well that the other guy is not going to turn up. There are some things you don't want; you can't negotiate before a camera. And also, governments do things for political reasons, surprisingly enough. They take cases they know they're going to lose. This gets them away from pressure time in parliament. This gets them beyond an election.

.I'm going to share a story. New Zealand hosted an APEC conference. Now this is a big deal for us, right? We've never had such a big conference. We didn't have enough hotel rooms. We changed the law to allow some people to bring automatic weapons into New Zealand to protect their masters. So this was a pretty big deal, it cost us about 25 million dollars. We've only ever had one American president in New Zealand before; it was Lyndon Johnson wanting troops. He got them. I was protesting outside his hotel.

About three weeks before this important conference -- the election was three months away -- the Americans kicked us right where it hurts, in our sheep meat. And our Prime Minister of the day was caught having a free trade conference and the American position on sheep meat. Why were we paying all this money for what appeared to be on the whole a very fraudulent system? It was very hard for her; she could only say this is why we want this conference to stop this sort of thing happening here.

Clinton turns up. It was fantastic; in about 24 hours everybody in New Zealand thought he was a Kiwi who had spent too much time abroad. And only Clinton could get away with it. And I'm not a democrat, I'm a social democrat, so you can understand where I'm coming from. Clinton was caught on television in New Zealand and the television people said "Well, here you are, at a free trade conference on APEC, we're spending a bucket load of money, and you're cheating us on sheep meat. How rational is this?" And the president said, "Well, if I were you I'd take us to the WTO." I wish I'd been a journalist, I would have said, "well you've just said you've raped my daughter and you're telling me to ring the police."

Politicians will play politics with the dispute system. And that's not always a bad thing, it gets over an election, it's a safety valve, it's the most precious thing we've got. It works.

Question:
I am a student here at the Elliott School, and I wanted to thank you for coming here tonight. I just wondered what your thoughts and perceptions are on international companies such as Coca-Cola and Nike and their impact on globalization. And what role do they play in influencing culture?

MM:
Well, I think I know what you're getting at. Read that book, No Logos. Now I'm going to upset a few people. I think it's great. Here's the reality. Even the ILO will tell you, with all their research, that multinational companies pay more wages, their health record is better, their safety record is better, they are far better citizens. So putting Nike or Coca-Cola out of business helps no one.

And this idea of no brands, I think they've got it completely wrong. I wish I was 30 years younger, and could set up an NGO and start my political life again, because it's the brands that are going to give you the leverage for social change. Because what is a brand? It is a reputation. It takes you hundreds of years to get a reputation and you can lose it in five minutes. And what is going to happen, in the future NGOs and trade unions -- instead of organizing pickets as they did in my day -- will say, we'll pick you off one by one. You, Starbucks, must buy your coffee from minimum wage countries, then you'll lever it back to other competitors, and the political market will start to work.

I've come to some other radical conclusions too, which I never thought I'd say 20 years ago, probably not even 10 years ago. Imagine I'm in a country that's failed. I hear gunshots at night. Nothing works except I can get a cold glass of Coca-Cola. The road may not exist but there's a petrol station there. And I think this is great for those who believe in social change and want to help other people, that the synergies between the corporations and social good, is something you're going to have to look at in some countries that just don't function.

It's beginning to happen, isn't it? The Coca-Cola vending machines can look after condoms. It's beginning to happen. And companies, if you're digging gold out of Africa, South Africa, you're going to pay eight English pounds to every ounce, because of AIDS. If you're and employer, you're going to employ three people for every job because two will die.

The great corporations are now beginning to realize it's in their interest to have AIDS programs within their companies. Because if they don't -- and I've been telling them -- some government is going to tax you and the money is not going to be delivered to your workforce. You've got to do something about it. I think this is going to be one of the great changes in the delivery of social services in developing countries and failing societies, because one thing happens, these companies deliver.

The historical parallel is probably Victorian. Prince Albert died of cholera or typhoid from the Thames. In Victorian England, the wealthy had the big houses in Manchester. There was no safety in the big house, because if the maid came in and brought influenza, they would kill your kids. So what do you do, you invented municipal socialism, you have clean water, clean roads, you invented sewage systems. And I think the delivery mechanism in some failing and failed societies and economies will be the corporates. And that's why the global awareness stuff that came out of Monterey is fundamentally important.

And that may sound strange coming from an old labor person. But, I've probably seen too much. I've seen company give drugs away for nothing, yet they'd still steal them. The drug companies gave free AIDS drugs to an African country, which then put a tariff on these gifts.

Question:
You mentioned some (inaudible) countries, developing countries that historically benefited from free trade: Japan, Korea and South Korea. I would argue that these countries didn't benefit from free trade in a way that we're selling it to a lot of developing countries today. (Inaudible..) What would you now say to countries such as Kyrgystan and Cambodia?

MM:
Well, firstly it's not compulsory to join the WTO. So why would you want to. Secondly, it's not compulsory to take a loan from the World Bank either. But why would you want to join? It has to be in your interests. I think members are too tough and inflexible on some of the decisions. An issue was made of agriculture. I would lose my New Zealand citizenship if I said this. But I think we were very hard on China in agriculture. What would another four or five years matter? I think we're being very tough on the Russian position on agriculture. What are another five or six years?

These decisions are not made by the WTO. I must make this point: the WTO does not make these decisions. It is the members who decide these conditions that you will join on, and of course, sometimes the conditions are too tough. In my view, what does it matter if there is more space available in some delicate areas. And of course there are double standards. Of course there is shameful hypocrisy.

I'll give you one story that infuriates me and you might want to think about. There were some very serious senior American politicians in the Balkans, and they met with a group of women who had been savaged in unspeakable ways. These were widows, and mutilated people. What can you do for these people? Church-based and state-based organizations gave them some knitting machines to manufacture apparel. And what happened? They formed a business, doing what everyone said for them to, and they can't export their products to Europe or the United States. Tell me what's wrong.

But these are conditions the governments impose. What would you tell these women?

Questioner:
I just tell them to all hang in there and it will all be ok in about 10 years.

MM:
Well, maybe, but then you see, you get inspired and when you meet the President of Albania who says, people don't really know us, come to Albania and we'll show you how protectionism fails and globalization is good. And they, Albanians, Croatians and others, will use the membership of the WTO as China has, to help reshape, and reshuffle, and restructure their own economy. There is a model way of doing it.

We ran two very good conferences, one in the Balkans and one in Central Asia.

For the first time, the Serb minister had not been to Zagreb in 15 years and he went down to Central Asia and met with his Croatian counterpart, and Armenia is knocking on the door. He sat with the minister from Azerbaijan. For the first time, those two ministers were sitting at a table together, and I think that's the genius of the WTO umbrella. So while I may think it's sometimes a little tough, there's a lot in it for them. To stay out is costly, and they can use it as a device to remodel their economy, it is a smart thing to do. Any politician who doesn't is, of course, committing political suicide because people who are enlightened won't vote for him again. But if you're a patriot, winning an election isn't the only thing that you're in politics for.

HH:
Mr. Moore you've held this audience captive and spellbound. I think we could go on for a long, long time, but we really have to call it an evening for now. I want to thank you for your analysis of the history and the present contours of globalization, and your assessment of the present situation and the prospects for the WTO. I promised you the audience in my introduction of Mike Moore that his background as a worker, as a trade unionist, as a social democrat, as a politician at various levels in his country and in the international system, meant that he would be deeply qualified to address these issues, and I think you've seen what I meant.

What I didn't tell you, what I could have promised you is that he has a unique reputation for candor, insight and humor in discussing these kinds of issues and I think we've seen that as well.