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World Bank Presidential Fellows Lecture: Former WTO head urges strong leadership to promote globalization

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
August 2003
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Under Moore’s tenure at the WTO, the Doha Round was launched in the wake of violent protests in Seattle and elsewhere against the WTO and globalization. It was to Moore’s credit, noted Gobind Nankani (vice president of the World Bank’s Poverty Reduction and Economic Management network) in his introductory remarks, that in Doha, Moore pushed for a trading system that addressed developing countries’ concerns. In the resulting Doha declaration, WTO member governments committed themselves to duty-free, quota-free market access for products from developing countries and pledged to consider additional measures to improve market access for these exports. Members also agreed to try to ensure that developing countries could negotiate WTO membership faster and more easily.

Globalization: here to stay

Moore said that while globalization is a defining issue in world politics today, it is not new and it will not be stopped. The issue is how globalization is managed to ensure that its benefits are more fairly and evenly shared. “Too often, it is perceived that rich countries and rich people in poor countries get the most benefits,” he observed, but “credible research proves that the more open the society and the economy, the better the results for all.”

While globalization is not new, the speed of change has increased markedly, which, Moore conceded, can be destabilizing. But not all change is negative, he said, adding that “we should celebrate how well we have done over the past 50 years.” Life expectancy has risen by 20 years, infant mortality has fallen by two-thirds, and hundreds of millions of people have been lifted from extreme poverty, especially in economies that have adopted open economic strategies. Portugal’s living standards have exploded since the country embraced democracy and joined the European Union, Moore said, and while North Korea was richer than South Korea following their civil war, the situation has now reversed.

Moving the Doha Round forward

Moore noted that marginalization, not globalization, threatens development and developing countries. There have to be common international standards and binding enforceable agreements between countries to make globalization work, and that’s where the WTO comes in. He viewed the Doha Round as offering “a great opportunity to redress the injustices of the past.” Agricultural subsidies in OECD countries are costly for Western consumers and stifle developing country markets. The cost to the average English taxpayer, for example, of the Common Agricultural Policy is £30 a week, Moore said. A successful round with a deal on agriculture “could return five times more to Africa than all overseas development assistance put together, and a deal on cotton could return $250 million to West Africa alone.”

Moore also argued in support of new rules in other areas—trade facilitation, investment, competition, and intellectual property. “Modest rules on investment would provide a transparent base and help stop multinationals from forking investment around from country to country trying to get the best deal on the best subsidy and the most protection,” Moore said. The last round of trade negotiations, he noted, “has been distorted by claims of sovereignty and nonsense about compulsory privatization and abolishing public education and public health systems—that debate is false.”

And there are other issues on the Doha agenda, such as good governance. Rules on transparency will help expose corrupt practices and give taxpayers a better deal, Moore said. “If we’re talking about the quality of institutions, maybe we have to be a little more radical than we have been. I think it is time to redirect a lot of our aid to the building of skills.”

Countries and businesses underinvoice to escape tariffs and taxes or overinvoice to smuggle money out of countries with currency controls. Common customs valuation agreements are central to keeping business clean and products moving; trade facilitation, which will be at the heart of the agenda at CancÚn, will give great benefits to business and governments. Corporations’ reputations also play an important role in enforcing global standards. “All sorts of leverage can be used with those corporations that want to maintain their good image,” he said. “That’s where guys like us can get those people to raise their standards.”

Certainly, some countries will be hurt by a successful Doha Round, Moore acknowledged, and a system needs to be put in place to assist them. “It is our job to ensure that we can ease that transition.”

Lessons for the future

The most profound lesson Moore learned from his experience at the WTO and in government is that the quality of government institutions is critical for improving a country’s economy, as is a free press. Building a sound customs department, central bank, police department, and education system is as important a use of development aid as building a road or a bridge, he said.

“I am a deep believer in the multilateral system,” Moore stressed, and “we who are true believers must do things to make it more effective, more accountable, more transparent for our owners.” As in 1918 and 1945 after the two world wars, there is a need today for progressive leaders with a vision and for ideals of an international order that the rest of the world can buy into. “The idea of global justice has not disappeared,” Moore added; “however, after 50 years, the UN system is middle-aged and overweight and has blood clots and bad circulation.”

Yet “there’s a lot we should be optimistic and enthusiastic about,” Moore said, closing with an anecdote from a visit to Cambodia where he saw dozens of young people line up outside cyber cafes. “The young people out there get it,” Moore said. “What we have to do is get out of their way so they can do it. We are public servants. We are there to serve them by removing the impediments to their hope and their future.”

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