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October 11, 2005

World: Former WTO Head Michael Moore Talks About Who Benefits From Trade Reforms

Former New Zealand Prime Minister and ex-WTO head Michael Moore

Michael Moore, a former director-general of WTO and ex-Prime Minister of New Zealand, spoke with RFE/RL at Forum 2000 in Prague on 10 October about shedding "the old system" through a new round of trade talks, and how countries can take advantage of negotiations.
RFE/RL: One can often read debate in the world press about whether free-trade regimes, such as those promoted by the World Trade Organization (WTO), benefit all countries. Some critics say the WTO benefits the wealthy countries, which set the rules, while poorer countries are unable to get real free trade in spheres like agriculture, where they could benefit. How do you view this debate?

Moore: The WTO and the rules represent the old system. That’s why we need a new trade round to address agriculture and assist poor and developing countries. And the contradiction that comes out of some of the NGOs whose web pages every journalist reads and their criticisms -- some of them are true -- but that’s a reason to conclude the Doha development round to attack these issues. If you look at today’s "Financial Times," there are three or four stories about agricultural reform inside the Doha development round; that wouldn’t exist, those discussions, unless there was a World Trade Organization.

Even so, I mean, the point is that when President John Kennedy launched the Tokyo round of negotiations in the 1960s, he talked of how this would help poor countries like Japan. Now Japan is the second-most powerful economy in the world, an amazing importer of products -- could be doing better of course -- but without that where would Japan be? So I think the case is just overwhelming that free trade lifts all boats, the theories of comparative advantage have not completely disappeared but there are injustices, that’s why I was keen in my day when we launched the Doha round to see this damn thing through. That’s why we are so keen to get China into a rules-based system, and it could, or will represent the biggest readjustment of wealth in world history.

RFE/RL: What can you say about Ukraine’s approach to the WTO, and what can you say about the benefits for Ukraine and do you think it’s likely to gain its membership by this year?

Moore: I don’t know where the Ukraine negotiations are, but here’s the thing: Why does every country want to be part of the WTO? Because it gives you certain rights and obligations. Smart countries like China, Taipei, or Taiwan have used WTO membership as an outside peg (lever) to drive up internal reforms. That is, you should do it anyway because you want a better economy and society, that you want a good honest customs service, that you want accountable public-sector systems; so you use the WTO rules of introducing a market economy using the experience of hundreds of years of how a market economy works. And that’s why the countries that have done the best are the Baltic states, you know, and China or Taiwan in terms of lifting their living standards. They’ve used the rules of the WTO to their favor.


What else does it do for you? It creates predictability for business, predictability for investment, it allows you into a system where you can use the disputes mechanism. Despite what some of the media people say, the WTO is extremely democratic, even too democratic. Everything must be done by consensus, everybody must agree. There is no Security Council with the big guys who make the decisions; every country has a veto, and once you reach an agreement all those agreements must be ratified by everyone’s parliament. How hard is that? Once you have the agreements ratified by the parliament, you are contracting parties to the agreement; and then if you have a dispute or a difference you go to an independent dispute system to resolve your misunderstandings. This is unique, nowhere else in the international architecture has a binding disputes systems where the U.S. comes up against Costa Rica and where Costa Rica wins on an underpants dispute or something. This is unique. And that is why China wants the protection of the rules-based system, and why we wanted China in to protect us because if we thought they were breaking the rules we have someone to go to. And this is of great advantage to the Ukraine; but you have got to want it, you’ve got to be prepared to reform your economies because you want a democratic, free-market economy -- if you don’t want that, you shouldn’t bother -- and you will get time to implement it but you have to be serious.

RFE/RL: What about Japan, and just yesterday you were speaking about South Korea as an example of success. But some people would say that these countries first made their economies competitive including by state interventions. What would you recommend to countries like Belarus which has industries that are not very competitive in the world market? What should they do -- should they liberalize immediately and open their market, or should they reform first and then open to their market?

Moore: I think you have to do these things in parallel. The idea of the enormous successes of South Korea and Japan was during the industrial age, and we are now in the post-industrial age. So it would be pretty unwise for every country to think they can emulate South Korea and Japan. Or take Singapore, which has operated a completely different model in terms of not looking for industrial development but going beyond industrial development to the new age, the information age. You do these things in parallel, you do them with each other not instead of each other. What are the simple propositions? A good central bank, sound currency, trust in public service, accountable independent courts -- these are all parts of it. And then you negotiate your package, and it is really hard. Russia is still not with us, this is still a huge disappointment. And people are tough.

This is not just a sort of UN agency where we all say, well, let’s have world peace and love each other and go home, or do the rest, do the opposite. These are binding negotiations so issues of energy, costings -- agricultural costings -- come into play. I very much think the WTO can be used as a model and an outside peg to help reforms inside. This is what Cambodia did and other countries have done. Just as, you know, you look at European Union membership, not just to get to a market but to introduce best practices in management, best practices in government service.

See also:

Factbox: WTO Status Of RFE/RL Broadcast Countries
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