The Opening Session Of
The First Arab International Management Conference
On
“Free Trade in Goods & Services”
Beirut, November 1, 1995
H.E. The Prime Minister of Lebanon
Your Excellencies
Distinguished Guests;
Allow me to claim at the outset that the signing of the GATT Agreement in Morocco in April 1994, and the subsequent creation of the World Trade Organization (WTO), are two of the most important international events to take place since the birth of the United Nations.
Instead of forming the WTO at the same time as the World Bank and the International Monetary Fund, as called for in the Briton Woods Agreement of 1944, the international community took nearly 50 years and 8 protracted rounds of negotiations before success was finally achieved. The duration of the negotiations says much about the Geneva round in 1947, and of the 7 successive rounds (the last of which was in Uruguay where the GATT negotiations elaborated on trade research for nearly every good in the world, eventually including even agriculture, textiles, and clothing). The most comprehensive international trade agreement ever reached, the GATT also covers services (GATS), and agreement for the trade-related aspects of intellectual property rights (TRIPS). The agreement covers all aspects of the economy and daily life in every activity, including aviation, freight handling, government purchases, national subsidy policies, employment, customs and investment, amounting to a volume of international trade which exceeds ten billion dollars, while the term “trade” commonly evokes the image of solid goods. The role of trade in services is equally important in the modern national and world economies. Trade in services is perhaps a subject of special interest to H.E. The Prime Minister of Lebanon, the patron of this conference, as Lebanon has been and remains an Arab leader in the export of services. The importance of trade in services can be underscored by noting that while it accounts for only 20% of the volume of international trade, it accounts for approximately 60% of the global GNP.
Such statistics point to the fact that for much of the world at least, the industrial revolution has subsided to allow the services revolution to supplant it. Elimination of barriers in this important area is bound to aid the development of this crucial sector. The ramifications for both service exporters, such as Lebanon, and net service importers as well, will be broad and beneficial. Countries like Lebanon will benefit from increased demand in the service market, Seville users will benefit from better quality, greater harmonization of systems, greater value, and many other benefits. It should also be remembered that one of the key functions of services is to maximize production of and/or the benefits derived from goods. The liberalization of trade in services will therefore have far-reaching and positive consequences for all.
The importance of our subject today is also demonstrated by referring to the constitution of the United States of America, which states in its first article that all matters relating to authority in international trade will be referred to the congress. We can also look to Europe which endeavored from the year 1860 (Cordon-Chevalier Treaty) or perhaps earlier, to affect the international establishment of what were called the Four Freedoms (trade, services, funds, and human beings), the very same principles which form the foundation of this treaty which was signed by more than 114 nations in addition to China, Honduras, and Paraguay.
One of the characteristics of this agreement is its legislative authority over legislative national bodies. Another characteristic is its enforceability and sanctions that are imposed on countries that do not abide by the terms of the agreement. This agreement has its own judiciary, and decisions are made based on consensus. Furthermore, we can see in the horizon a new economic block composed of the newly formed WTO as well as the World Bank and the IMF, a matter that deserves careful study.
I do not have the time to fully analyze the effects of the GATT Agreement on our region. We are speaking of a document weighing 176 Kilograms and more that 22,000 pages, but I can say that this agreement effects the Arab countries as much as any region in the whole world. The external trade of Arab countries represents more than 1/3 of their total output, and international trade on a per capita basis in the Arab region surpasses the international average.
But the World Trade Organization faces great challenges in finding a comfortable balance between the requirements of national sovereignty and the necessity of establishing enforceable international trade rules. It is also considered important to find balance between national interests and global interests.
The real challenge facing the WTO is to find a balance between free trade and the freedom of technology transfers, not only protecting its rights of this transfer, and that was not included in the agreement yet.
Another challenge is how to lend a helping hand to the least developed nations (LLDC) to help them with the adjustments necessary to become a part of the free trade system.
The UNCTAD conference convened in 1964 came as a landmark towards affecting a balance between the dominance of the advanced nations and the interests of developing countries.
The world we live in is made of economic blocks made up of the European market and the American markets, each with a total GNP in excess of five trillion dollars, and furthermore they are now talking about merging their markets in one block. This block will constitute half of the world’s production. The Third World share is 4 trillion of the remaining 10 trillion, and the rest belongs to the Pacific region.
The Arab nation is very rich with its new generation, its history and civilization. It also owns 2/3 of the world’s known oil reserves and 12% of its natural gas, and is full of all kinds of resources. Despite all this, its total national product does not exceed half a trillion dollars, although it should be 10 times this figure, which would be more appropriate considering its resources, and would bring it closer to the level of the advanced nations.
Therefore, establishing an Arab Free Trade Area to be followed by a Middle Eastern Free Trade Area is the only way to improve our presence in the world and to have a role among the world economy, on an equal footing. The best way to predict the future is to make it. One point which I think should be emphasized in this regard is that the establishment of a regional free trade bloc should not be seen as an end to itself but as a step on the way to full integration with other areas of the world including the Asian countries, NAFTA, the EC and so forth. We must resist the temptation to aim too low, being satisfied with regional vs. international free trade and becoming embroiled in an us vs. them mentality which regressive and wayward voices will sometimes voice.
The best recommendation I can suggest to this conference is to crystallize our idea and to establish a working mechanism with UNCTAD in affiliation with the Arab League, and to seek out a number of experts to provide advice on how best to apply or execute the agreement and how to deal with it in a way that serves the interest of our Arab region. Of course, we need to coordinate this effort with the World Trade Organization. I am certain that if we take action in this regards we will be well rewarded with greater success for all the people of the Arab world.
It gives me great pleasure to find myself with old and new friends, and to witness how everyone has worked on healing Lebanon’s wounds from the civil war, which had been bleeding for much too long.
We see everywhere signs of rebirth and rejuvenation. Therefore, the venue of our conference is clearly the best, indicating that Lebanon is regaining its rightful and proper place among its Arab brothers.
We Arabs need a new Lebanon to face the strong challenges in our new dynamic economic world characterized by the free movement of trade and services across boarders. We all know very well that what is taking place right now, right here will have a great effect on our destinies and faith in our future as an Arab region.
Lebanon is actually a synonym for Free Trade. It is a concept that was deeply embedded in the memory of this nation’s history from Phoenician times to the present day. Having few natural resources other than its great beauty and the impressive skills and the strong will of the Lebanese people, Lebanon will continue to look always beyond its borders in order to achieve and maintain their prosperity.
It is both an honor and a pleasure to have made these few introductory remarks at this First Arab International Management Conference on Free Trade, under the Patronage of His Excellency, Mr. Rafiq Hariri the Prime Minister of Lebanon, international statesman, businessman, philanthropist, and prime architect of his country’s renewal, and as is befitting for the Patron of our conference, a true Free Trade Man.
Thank you,