PRESS RELEASE
PRESS/281
20 March 2002
(02-1474)
EMBARGO:  NOT FOR PUBLICATION UNTIL
1630 GMT 21 MARCH 2002
WTO DIRECTOR-GENERAL MIKE MOORE CALLS FOR INCREASED TRADE
LIBERALIZATION TO HELP FINANCE DEVELOPMENT
Trade liberalisation can make a huge contribution to the generation of resources for the financing of
development, World Trade Organization Director-General Mike Moore told the UN International
Conference on Financing for Development in Monterrey, Mexico today ( March 21). But Mr Moore,while stressing the need for increased capacity-build ing to help developing countries participate more
fully in the global economy, also noted that these nations will have to do more to reduce costly trade
restrictions against each other.
"I come to you with a clear and simple message: Poverty in all its forms is the greatest single threat to
peace, democracy, human rights and the environment. It is a time-bomb against the heart of liberty;
but it can be conquered and we have the tools in our hands to do so, if only we have the courage and
focus to make proper use of them," Mr Moor e told the world's biggest-annual development
conference, attended by more than 50 heads of state, as well as ministers, heads of international
agencies and finance and trade experts.
Mr Moore told delegates that developing countries would gain more than 15 times the estimated
US$10 billion needed to achieve the core Millennium Development Goal of universal primary
education, if trade was further liberalized. Abolishing all trade barriers could boost global income byUS$2.8 trillion and lift 320 million people out of poverty by 2015, he said, citing World Bank
estimates.
"Poor countries need to grow their way out of poverty and trade can serve as a key engine of that
growth," he said.
But developing countries need not wait until the conclusion of the Doha Development Round, he
added. South/south trade in the 1990s grew further than world trade and now accounts for more than
one-third of developing country exports, or about $650 billion. The World Bank reports that 70% of
the burden on developing countries' manufactured exports result from trade barriers of other
developing countries. "The quicker those walls come down, the quicker the returns to developing
countries," he said.
In terms of the developed nations, Mr Moore warned against market restrictions in four key areas.
These were:
/g167 Agriculture, which he described as the backbone of almost all developing economies. Agricultural
support payments now cost a billion dollars a da y, noting that the average OECD bound tariff rate
for agricultural products was four times that on industrial products. The return to developingPRESS/281
Page 2
countries in this one area would be eight times all the debt relief granted developing countries
thus far, he added. Complete liberalisation in all sectors, agriculture, manufactures and services,
would amount to about eight times all ODA.
/g167 Textiles and clothing, which he called the greatest export earner for many developing countries.
Mr Moore said we must ensure that the sector is cleanly integrated as planned for 1 Jan 2005.
/g167 On Tariffs, Mr Moore said that even more insidious than tariff peaks –  which continue to attract
high tariffs in both developed and developing countries – is the problem of tariff escalation, which
tilts the tables against the development of indigenous processing. If developing countries are ever
to diversify their economies away from the dependence on a few primary products, this escalation
must be rooted out, he said.
Noting that restrictions were costly to the countr ies maintaining them, Mr Moore told the conference
that protection costs the European Union, the US and Japan, from between US$70 to US$110 billion
each annually. "The net losses to the US associated with its textile and clothing import restrictions
alone amount to over $10 billion annually," he said.
"This conference is about financing development in an era when private foreign direct investment
outnumbers ODA four-fold, and is 10 times the World Bank's development lending. That's why many
want an investment agreement in the Doha Development Round."
Mr Moore also emphasized the importance of other important development and good governance
issues, such as transparency in government procurement, competition policy and trade facilitation..
"Trade facilitation reform will generate huge returns," he said, citing an Inter-American Development
Bank study of two South American countries, in wh ich a truck delivering product to markets across
two borders took 200 hours, 100 hours of which were bound up in bureaucratic delays at the border.
"This domestic red-tape and bad governance is costly and corrosive," said Mr Moore, who also
observed that the poor's assets need to be legitimised. He noted that in Latin America, 80% of all real
estate is held outside the law.
"The extra-legal sectors in developing countries account for 50% – 70% of all working people. In the
poorest nation in Latin America, the assets of the poor are more than 150 times greater than all foreign
investment since their independence in 1804. In one African country, it took 77 bureaucraticprocedures at 31 public and private agencies to legally acquire land. He added that if the US were to
raise its ODA to the UN target of 0.7%, it would take the richest country on the planet 150 years to
transfer to the world's poor, resources equal to those they already possess."
Citing recent WTO commitments to increased capacity-building, Mr Moore concluded: "We should
provide technical assistance to train negotiators, build efficient customs regimes and plug porous taxsystems. We must give as much attention to building up the intellectual infrastructures of skilled
public servants as we did to filling in potholes, building roads and dams. The Doha Development
Round, can be achieved and implemented on time. The condition for success will be improving
capacity to provide for good governance, to enable them to participate, negotiate, conclude and
implement our agenda. This is being done. We can and we must  succeed."
ENDS
N.B.  The full text of the speech is attachedPRESS/281
Page 3
UN FINANCING FOR DEVELOPMENT CONFERENCE
SUMMIT-LEVEL OPENING SESSION
MONTERREY, 21 MARCH 2002
A GRAND BARGAIN:  A NEW INTERNATIONAL DEAL
By Mike Moore
Director-General, World Trade Organization
I come to you with a clear and simple message: Poverty in all its forms is the greatest single threat to
peace, democracy, human rights and the environment. It is a time-bomb against the heart of liberty;
but it can be conquered and we have the tools in our hands to do so, if only we have the courage andfocus to make proper use of them.
One of these tools is trade liberalisation. It can make a huge contribution to the generation of
resources for the financing of development. Study after study has shown the enormous impact of trade
liberalisation. Let me cite but one example. Everyone, globaliser or opponent, NGO or multinational,
left or right on the political spectrum, would agree that health and education are the fundamental bases
of any development programme. Recent studies have estimated that the cost of achieving the core
Millennium Development Goal of universal primary education could be in the region of US$10billion per year. Yet developing countries would gain more than 15 times this amount annually from
further trade liberalisation, according to one study by the Tinbergen Institute.
Indeed, the staff of the IMF and World Bank estimate that reaching all seven of the Millennium
Development Goals would require an additional US$54 billion annually – just one-third  of the
Tinbergen estimate of developing country gains from trade liberalisation. And the World Bank'sGlobal Economic Prospects report estimates that abolishing all trade barriers could boost global
income by $2.8 trillion and lift 320 million people out of poverty by 2015.
Of course, these are only estimates and we can quibble about the figures. But the basic message is
clear: if governments put their minds to it, the new trade round launched at Doha can bring huge
benefits. It is this immense magnitude of the benefits of trade liberalisation, which makes the workyour governments are doing in implementing the Doha Development Agenda so potentially important
as a source of finance for development.
Poor countries need to grow their way out of poverty and trade can serve as a key engine of that
growth. But currently products of developing countries face many obstacles in entering the markets of
rich countries. Rich countries need to do more to reduce trade distorting subsidies and dismantle theirexisting barriers on competitive exports from developing countries. So a basic priority of the
international trade community must be – as the Doha Development Agenda recognised – the creation
of conditions in which developing countries can maximise the gains they are able to reap from trade.
This requires action in four key areas:
/g167 Agriculture: this is the backbone of almost all developing economies. The poorest part of the
population – living in the rural areas – depend for their incomes on the development of a
sustainable and productive agricultural sect or. Nearly 50 developing economies depend on
agriculture for over one-third of their export earnings.  Nearly 40 of them depended on agriculturePRESS/281
Page 4
for over 50 percent of their export earnings in 1998-2000.  Yet massive agricultural support in the
OECD countries undercuts the developing countries and forces even the most efficient producers
out of markets where they would otherwise be earning foreign exchange. The number one
element of a true development agenda will therefore be to reduce substantially such support (and
to eliminate the specific export subsidies – but these are only a very small fraction of total
agricultural support payments which reach a billion dollars a day). In addition, the average OECDbound tariff rate for agricultural products is four times that on industrial products. The return to
developing countries in this one area would be eight times all the debt relief granted developing
countries thus far. Complete liberalisation in all sectors, agriculture, services and manufactures,
would amount to about eight times ODA.  Rapid action is also needed on this.
/g167 Textiles and clothing: this is the greatest export earner for many developing countries, and the
negotiations must ensure that the sector is cleanly "integrated" as planned for 1 Jan 2005. Given
the back-loading of this agreement, with th e bulk of changes substantively improving export
prospects of developing countries being left until the final year, there is every reason to be
extremely vigilant.
/g167 Tariff peaks: study after study has shown how, de spite low average non-agricultural tariffs, the
products in which developing countries are competitive nevertheless continue to attract relatively
high tariffs (in both developed and developing countries); these must imperatively be beatendown in the negotiations if trade is to provid e the needed boost to resources for development.
/g167 Tariff escalation: even more insidious an issue than tariff peaks is that of tariff escalation, which
tilts the tables against the development of indigenous processing/transformation (and thus
movement up the value-added chain). If developing countries are ever to diversify their
economies away from the dependence on a few primary products for most of their foreignexchange earnings, cutting them off from the most dynamic part of world merchandise trade, such
escalation must be rooted out.
How do we pay for our dreams and the vision of this conference? The restrictions I've outlined are
costly to the countries that maintain them. For example, protection costs the European Union, the US
and Japan, from between US$70 to US$110 billion each annually. The net losses to the US associated
with its textile and clothing import restrict ions alone amount to over $10 billion annually.
This conference is about financing development in an era when private foreign direct investment
outnumbers ODA four-fold, and is ten times the World Bank's development lending.
 Knowing that no
country has too much invested, we should encourage an international agreement on investment. It's on
the Doha Development Agenda, but many countries don't yet feel they have the ability to cope withthe complexities of such negotiations.
Other important development and good governance issues such as transparency in government
procurement, competition policy and trade facilitation, need direction from the highest political levels.
Trade facilitation, according to APEC and UNCTAD studies, will generate huge returns. An Inter-
American Development Bank study showed how in South America a truck delivering product to
markets across two borders took 200 hours, 100 hours of which were bound up in bureaucratic delays
at the border.
The need for this public service infrastructure improvement is desperately urgent to protect and
promote domestic property rights and justice systems. Domestic red-tape and bad governance is costly
and corrosive.
The poor's assets need to be legitimised. In Latin America 80% of all real estate is held outside the
law. The extra-legal sectors in developing countries account for 50% – 70% of all working people.  Inthe poorest nation in Latin America, the assets of the poor are more than 150 times greater than allPRESS/281
Page 5
foreign investment since their independence in 1804. In one African country, it took 77 bureaucratic
procedures at 31 public and private agencies to legally acquire land.
And if the US were to raise its ODA to the UN target of 0.7% it would take the richest country on the
planet 150 years to transfer to the world's poor  resources equal to those they already possess.
Unlocking and securing these investments, this talent  and skill is the challenge. This is where we can
converge with the ambitions of NEPAD and other bold initiatives.
Developing countries need not wait until th e conclusion of the Doha Development Round.
South/south trade in the 1990s grew further than world trade and now accounts for more than one-
third of developing country exports, or about $650 billion.  The World Bank reports that 70% of the
burden on developing countries' manufactured exports result from trade barriers of other developing
countries. The quicker those walls come down, the quicker the returns to developing countries.
So the way forward is clear: you, Excellencies, should resolve at this Conference to instruct your trade
ministers to ensure that their officials cast as ide the petty mercantilist methodology, which has
pervaded  trade negotiations for so many decades, in favour of a grand bargain that would see the
barriers I mentioned above (and others which persist in areas I have not mentioned) dismantled. Then
trade can play its important role in generating finance for development – a role which, not
incidentally, would also reduce significantly the burden on other facets of the finance for development
equation.
I have good news to report from Geneva.  Donor governments have kept their word, giving us
increased funding in our core budget for additional technical assistance to ensure developing countries
can participate fully in the new Round. On top of this our Pledging Conference gave us
CHF 30 million, double our target. We must redi rect ODA and technical assistance to train
negotiators, build efficient customs regimes and plug porous tax systems. We must give as muchattention to building up the intellectual infrastructures of skilled public servants, as we did filling in
potholes, building roads and dams.
The UN agencies have been very supportive of the WTO, and partnerships with sister organizations
have been formed, increasing institutional coherence and making better use of your resources. The
round is successfully under way and everything, from negotiating structure, time-tabling of meetings,to consensus on chairpeople for all committees, is  on schedule. The Doha Development Round can be
achieved and implemented on time. Conditionality was improved by developing countries at Doha,
the condition for success will be improving capacity to provide for good governance to enable them to
participate, negotiate, conclude and implement our agenda.  This is being done. We must and we can
succeed.
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