*{ICC 33rd World Congress Report Budapest, 3-5 May 2000 A powerful force for progress [http://www.iccwbo.org/home/conferences/reports/budapest/report/trade.asp]} World Trade Organization Director-General Mike Moore received strong backing for the WTO's efforts to restore momentum to the liberalization of international trade after the setback of the organization's ministerial meeting in Seattle last November, which was marred by hostile demonstrations. The Budapest Business Declaration issued as the Congress ended said that ICC would continue to press governments to start a new broad-based round of trade negotiations 'at an early date'. During a session on the post-Seattle trade agenda, Klaus Mangold, President and CEO of DaimlerChrysler Services (Debis), Germany emphasized the importance of achieving further progress in liberalizing trade in services. Dr Mangold said that the services sector was already the largest contributor to world economic output. Arthur Dunkel, who headed the GATT during most of the the Uruguay Round, noted that ambitions for liberalization and the number of issues for negotiation had increased since the Uruguay Round, which led to the creation of the WTO. Jagdish Bhagwati, Professor of Economics at Columbia University, rejected attempts by industrialized countries to address social problems in developing countries through the use of trade sanctions. Social issues should be handled by appropriate institutions, such as the International Labour Organization, he said. Mike Moore's keynote address depicted a WTO that was back in business after Seattle. Since then, the WTO, 'a powerful force for good in the world,' had not been idle, he said. The organization had launched sectoral negotiations on agriculture and services, which together account for over two-thirds of world output. 'The potential gains from further liberalization in these areas is huge,' Mr Moore added. The WTO was also working on a package to help the world's poorest countries reap greater benefits from the world trading system, which would include better access to rich-country markets and increased technical assistance. He said business people were not doing enough to promote free trade in the face of protests like those in Seattle. 'There is no shame in pushing hard for a new round of trade liberalization. Free trade is not an ugly word. On the contrary, free trade helps pay for the things we value most: jobs, health, education and a cleaner environment.' The WTO Director-General used his appearance in Budapest as a platform to urge the US Congress to vote for permanent trade relations with China. A favourable vote would help 'welcome China into the world trading order at a time when it is showing a genuine commitment to profound economic reform, rather than leaving it out in the cold,' he said. The WTO's first Director-General, Peter Sutherland, made a powerful plea for countries, and especially the US and the EU, to respect the authority of the WTO in settling trade disputes. He said business had a responsibility to persuade legislators in their countries of the crucial importance of this. 'The EU and the US have to learn to live with an adjudication system whose judgments they don't always like,' said Mr Sutherland, who is now Chairman of Goldman Sachs International, UK. Mr Sutherland added that multilateral structures like the WTO and the UN were essential to growing interdependence between nations. Another session highlighted investment in emerging markets - an issue that is closely related to trade liberalization since ability to attract investment goes hand in hand with trade expansion. Speakers said investment in emerging economies has become a key element of companies' investment strategies, due to the growing size of these economies and their potential for increasing a company's world market share. István Kapitány, CEO, Shell Hungary, said that the most important criteria for Shell's investment decisions in emerging markets was to ensure adequate return on investment and to increase shareholder value. Avijit Mazumdar, Chairman, TIL, India, listed the main factors for attracting investment to emerging markets. Necessary conditions in the host country included: a sizeable domestic market, the availability of raw materials, a skilled workforce, a well-developed financial system, an independent judiciary and transparent laws. The challenge of attracting foreign direct investment was the topic of a later session. While acknowledging the vital role FDI plays in the development of an emerging economy, Allied Zurich UK Chairman, Lord Cairns said flows of FDI around the world were unbalanced, with the bulk going only to a select few countries. Lajos Tolnay, Honorary Chair of ICC Hungary and Chairman of Magyar Aluminium, said FDI had made a substantial contribution to Hungary's economic success. He said the keys to attracting FDI were a stable political and economic environment, sustainable growth and convertible currency. Jeffrey Sachs, Director of Harvard University's Center for International Development, said there were three obvious catalysts to investment and long-term economic growth: technological change, domestic and international connections in markets and capital accumulation. Lamenting the unequal global spread of scientific and technological know-how, Mr Sachs said the fact rich countries control an estimated 98 percent of this vital knowledge meant at least half the world's nations were left outside the scope of change. T.N. Srinivasan, Chairman of Yale University's Department of Economics, said the trend among developing nations to dismantle high tariffs in favour of trade liberalization was a positive one. However, he counselled that if these countries wanted to attract FDI, they would also need to develop intellectual capital (especially in the high-tech fields) as well as form cross-border alliances and declare war on internal corruption. Ishmael Yamson, Executive Chairman of Unilever Ghana, cautioned against a trend among economists to treat Africa as a homogenous continent rather than individual nations. He said IMF and World Bank structural adjustment policies were fundamentally flawed. While successful in bringing about macroeconomic stability, the austerity measures they imposed demanded cutbacks in social expenditure resulting in high poverty. Mike Moore: 'While there are 2000 or 3000 people who riot against capitalism in London and courageously beat up a McDonalds, we have 30 countries and 1.5 billion people who want to join the WTO.' At a widely-reported news conference after the session on the post-Seattle trade agenda, WTO Director-General Mike Moore said that while he was ready to open a new round of global trade negotiations immediately he did not believe conditions were 'ripe at the moment' for a new round. 'It would be a brave person to say there would be a start shortly,' he added. 'There is still too much division among key WTO members over such issues as labour rights in developing countries.' The WTO's first Director-General, Peter Sutherland, had scathing words for what he termed 'the Luddites' who mounted anti-globalization protests in Seattle, Washington DC and elsewhere. 'I don't believe they represent any group or organization with legitimate grievances - and certainly they don't represent the least developed countries,' he said. 'They represent an unholy alliance of protectionists whose main aim is to deny opportunity to others. 'To use concern for labour or environmental standards as a vehicle to disrupt the internationalization of trade is a grave disservice to mankind, and especially to the poor.' *{Back to ICC's 33rd World Congress report menu}