    [Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (2000, Book I)]
    [January 29, 2000]
    [Pages 150-161]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the World Economic Forum and a Question-and-Answer Session in
    Davos, Switzerland
    January 29, 2000

        President Clinton. Thank you very much. President Schwab, I think that it is an indication of the importance of
    the topic and the importance of the World Economic Forum that you have
    so many leaders from around the world here today. I see, just scanning
    the audience, the President of Colombia, the
    President of South Africa, Chairman
    Arafat, the Prime Ministers of Spain and Turkey, and a number
    of other leaders.
        We have here with me today the Secretary of State, the Secretary of the Treasury, the Secretary of Commerce,
    the Secretary of Energy, and our Trade
    Ambassador. There's no one home in
    Washington to take care of things. [Laughter] We have a large delegation
    from the United States Congress here; leaders from all over the world in
    business, public life; the leader of the American union movement, John
    Sweeney, whom I know has spoken to you.
        So I think that maybe the presence of all these distinguished people
    in the crowd is evidence of the importance of our being here and

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    shows, in my mind, one of the things we need to determine to do as a
    people.
        The World Economic Forum has been at it, as you pointed out, for 30
    years now. The thing that I have appreciated most about your
    deliberations is your consistent focus on the future. For example, you
    spotted the networking of society before the Internet was out of its
    infancy. Both Vice President Gore and my
    wife, Hillary, have spoken here, and
    I am glad, even though I am late, to finally get in on the act.
    [Laughter]
        Your theme, ``New Beginnings: Making a Difference,'' it seems to me,
    is the right theme. What I want to ask all of you to think about today
    is, what does making a difference and new beginnings mean in an era of
    globalization? What are the opportunities? What are the obligations?
    What are the hazards? What new beginnings will make a positive
    difference? And, perhaps the most difficult question of all, do we have
    the institutional and organized mechanisms to make them?
        As we know, in many ways the global economy was almost as integrated
    as it is today 100 years ago. But after World War I, leaders in the
    United States and Europe made what all now recognize were false and
    shortsighted choices. Instead of partnership, they chose protectionism
    and isolationism. And for decades, globalization went in reverse, with
    utterly disastrous consequences.
        After the second war, the leaders were given a second chance. This
    time it was clear that what was at stake was not simply the return of
    prosperity but the defense of freedom. They chose the path of economic
    and political partnership and set the stage for 50 years of growth
    across the globe. No one can seriously argue that the world would be a
    better place today if they had reverted to the old isolationism.
        So today, at the start of a new century, the entire world, not
    simply Europe and the United States and the wealthiest nations of Asia,
    the entire world finds itself at a crossroads. Globalization is
    revolutionizing the way we work, the way we live, and perhaps most
    important, the way we relate to each other across national boundaries.
    It is tearing down doors and building up networks between nations and
    individuals, between economies and cultures.
        The obvious consequence is that we are growing ever more
    interdependent, driven to be part of every vital network, understanding
    we cannot build our own future without helping others to build theirs.
    Today, we know that because of scientific and technological advance, we
    can change the equation between energy use and economic growth. We can
    shatter the limits that time and space pose to doing business and
    getting an education.
        But the openness and mobility, the flexible networking and
    sophisticated communications technologies that have made globalization
    what it is, so totally consuming--all these factors have also made us
    more vulnerable to some of our oldest problems.
        Terrorism, narcotraffickers, and organized criminals, they can use
    all this new technology, too, and take advantage of the openness of
    societies and borders. They present all of us with new security
    challenges in the new century. The spread of disease; ethnic, racial,
    tribal, religious conflicts, rooted in the fear of others who are
    different--they seem to find ways to spread in this globalized era. And
    the grinding poverty of more than a billion people who live on less than
    a dollar a day and live for a year on less than what it costs to stay in
    a nice hotel at night--they, too, are part of the globalized world. A
    few of us live on the cutting edge of the new economy; too many of us
    live on the bare edge of survival, without the means to move up.
        Those who wish to roll back the forces of globalization because they
    fear its disruptive consequences, I believe, are plainly wrong. Fifty
    years of experience shows that greater economic integration and
    political cooperation are positive forces. Those who believe
    globalizaton is only about market economics, however, are wrong, too.
    All these new networks must lead to new arrangements that work for all,
    that work to spur growth, lift lives, raise standards, both around the
    world and within nations.
        Now, leaders from business, government, and civil society,
    therefore, must come together to build a future that can unite, not
    divide, us. We must recognize, first, that globalization has made us all
    more free and more interdependent. Those of us who are more fortunate
    must be more responsible and work harder to be good neighbors and good
    partners. The United States has a special responsibility in that regard,
    because we have been so fortunate in our history and so very fortunate
    over the last decade.
        I came here today in the hope that by working together, we can
    actually find a way to create the conditions and provide the tools to
    give

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    people on every continent the ability to solve their own problems, and
    in so doing, to strengthen their own lives and our global economy in the
    new century.
        I would like to make just a few points. First, I think we have got
    to reaffirm unambiguously that open markets and rules-based trade are
    the best engine we know of to lift living standards, reduce
    environmental destruction, and build shared prosperity. This is true
    whether you're in Detroit, Davos, Dacca, or Dakar. Worldwide, open
    markets do create jobs. They do raise incomes. They do spark innovation
    and spread new technology. They do--coupled with the explosion of
    international communications through the Internet, which is the fastest-
    growing network in history. For example, when I became President 7 years
    ago, there were only 50 pages on the World Wide Web. Today, there are
    over 50 million--in 7 years. Trade broadens the frontiers of possibility
    for all of those who have access to its benefits and the tools to claim
    them.
        As I said a couple of days ago in my State of the Union Address, for
    me there is only one direction forward on trade, and that is to go on
    with what we're doing, recognizing that this is a new and very different
    world, that the idea that we would be better off with less trade, with
    less rule-based trade by turning away from our attempts to find
    international ways within which we can work together, I think is dead
    wrong.
        Now, having said that, what does that mean? Well, for me, it meant
    that when, first our neighbors in Mexico and then our friends in Asia
    were in turmoil and crisis, the United States had to keep our markets
    open, even though it led to record trade deficits. For me, it means it's
    very important to get China into the World Trade Organization, to ensure
    that China's markets are open to us--even as we have our markets open to
    China--and to advance peace and stability in Asia and increase the
    possibility of positive change in China.
        The changes in our markets are only beginning. You know, people have
    been trading goods across borders as long as there have been borders.
    But communications technology and the Internet are expanding trade in
    unprecedented ways many of you understand better than I. Today,
    everything from data processing to security monitoring to stockbrokering
    and advanced degrees can be bought and sold all over the world. E-
    commerce creates enormous potential for growth anywhere, and it will
    continue to do so if we can resist the temptation to put up barriers to
    this important part of our new economy.
        Trade is especially important, of course, for developing nations.
    Listen to this--this is something that I think people from the
    developing nations who oppose the WTO should think about--from the
    1970's to the early nineties, developing countries that chose growth
    through trade grew at least twice as fast as those who chose not to open
    to the world. The most open countries had growth that was 6 times as
    fast.
        Think about what Japan or the nations of southeastern Europe were
    like 50 years ago. They were poor, largely rural societies. Today, they
    are prosperous global leaders, in no small measure because of trade.
    Look at South Korea, Mexico, or Thailand, which built their growth on
    openness. Even after the recent traumas of financial crises, their
    national incomes are still more than double the 1970 levels, when they
    were more closed. And their gains in literacy, education, and life
    expectancy are truly extraordinary, far outpacing countries that chose
    not to open to the world.
        Certainly, many of the people who have questioned the wisdom of open
    trade are genuinely concerned about the fate of the poor and the
    disadvantaged, and well they should be. But they should ask themselves,
    what will happen to a Bangladeshi textile worker or a migrant from the
    Mexican countryside without the prospect of jobs and industry that can
    sell to foreign as well as domestic consumers? What happens to farmers
    in Uruguay or Zimbabwe, in Australia, Europe, the United States, if
    protectionism makes it impossible to market products beyond their
    borders? How can working conditions be improved and poverty be reduced
    in developing countries if they are denied these and other opportunities
    to grow, the things that come with participation in the world economy?
        No, trade must not be a race to the bottom, whether we're talking
    about child labor, basic working conditions, or environmental
    protection. But turning away from trade would keep part of our global
    community forever on the bottom. That is not the right response.
        Now, that means, it seems to me, that we must face another
    challenge. The second point I want to make is that developing countries
    will only reap the benefits of integration in the world

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    economy if the industrialized countries are able to garner enough
    domestic support for policies that are often controversial at home. It
    is easier for us to gather here, in vigorous agreement--and I'm glad you
    brought Mr. Sweeney over so we could have an
    occasional voice of occasional disagreement.
        But most of us here agree with everything I just said. Why? Well, we
    have seen and personally felt the benefits of globalization. But
    convincing our publics to go along, to go for greater integration in a
    rule-based system which might require them to change further and might
    require some of them, unlike most of us, to change what they do for a
    living, remains a challenge.
        How shall we meet it? In the United States, we must overcome
    resistance to our groundbreaking trade agreements with Africa and the
    Caribbean Basin--even though if they both pass, their impact on our
    economy will be very small, while their impact on the African nations
    that participate and those in the Caribbean will be very large indeed. I
    am determined to pass both measures this year, and I think we'll
    succeed, but it's an indication of what kinds of problems every country
    faces.
        Indeed, you probably have noted this, but one of the most ironic
    and, to me, disappointing consequences of our unprecedented prosperity,
    which has given us over 20 million new jobs in my country in the last 7
    years, is that it seems to me that protectionist sentiment, or antitrade
    sentiment at least, is greater now than it was 7 years ago when I took
    office, in the United States Congress. I want to talk a little about
    that today and how it relates to what's going on in other countries. But
    we all have an obligation to work through that, nation by nation.
        Part of what countries have to do is to be able to point to what
    other countries are doing and to say, ``Well, look what they're doing;
    we ought to do this. We ought to do our part.'' That means we are
    significantly affected in the United States by the policies of Europe,
    Japan, and other wealthier countries. I think for its part, Europe
    should put its agricultural subsidies on the table. If even one-third of
    the world's subsidies and tariffs in agriculture were eliminated, the
    poorest developing countries that could export would gain more than $4
    billion in economic benefits every single year.
        We can also, I must say, do better in the developed countries if we
    are able to make a more forceful case for the value of imports. None of
    us do this enough, and I must say, I haven't done this enough. We all go
    around talking about--every time we talk about trade agreements in our
    countries, we always talk about how many jobs will be created at home
    because we're opening markets abroad, and we make ourselves vulnerable
    to people who say, ``But it may not reduce the trade deficit, and look
    how big it is.''
        So I just want to say, I wish everyone here would look at yourselves
    and ask yourselves if you are wearing anything made in a country other
    than the country where you live.
        There are benefits to imports. We don't just do a favor to
    developing countries or to our trading partners in developed countries
    when we import products and services from them. We benefit from those
    products. Imports stretch family budgets. They promote the well-being of
    working families by making their dollars go further. They bring new
    technology and ideas. They, by opening markets, dampen inflation and
    spur innovation.
        In a few days, we will have the longest economic expansion in the
    history of the United States. I am convinced one of the reasons that it
    will happen is that we have kept our markets open, even in tough times,
    so that there has always been pressure to keep inflation down as we
    continue to generate jobs and growth. I am convinced of it. And those of
    us in wealthier countries need to make the case that even when we have
    trade deficits, if we're growing jobs and we're gaining ground and the
    jobs are growing in areas that pay better wages, we are getting the
    benefits of imports. I think all people in public life have been
    insufficiently willing to say that. And we must do more.
        The third point I would like to make is that we simply cannot expect
    trade alone to carry the burden of lifting nations out of poverty. It
    will not happen. Trade is essential to growth in developing countries,
    but it is not sufficient for growth in developing countries. Sustained
    growth requires investment in human capital, education, health care,
    technology, infrastructure. Particularly in an economy that runs more
    and more on brainpower, no investment pays off faster than education.
    The international community has set 2015 as a target for giving every
    child access to basic education. I'm asking our

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    Congress for more funding to help nations get more children out of work
    and into school. I hope others in the public and private sectors will
    join us.
        Each year in the developing world, we see millions of lives lost and
    billions of dollars lost--dollars that could be spent in many more
    productive ways--to killer diseases like AIDS, malaria, and
    tuberculosis. Last year in Africa, AIDS killed more people--10 times
    more--than all the wars did. We have the technology to find vaccines for
    those diseases. We have medications that can lengthen and improve the
    quality of life.
        But let's face a fact. The pharmaceutical industry has no incentive
    to develop products for customers who are too poor to buy them. I have
    proposed a tax credit to say to our private industry, if you will
    develop these vaccines, we'll help to pay for them. I hope the World
    Bank, other nations, and the corporate world will help us in meeting
    this challenge. If we could get the vaccines out to the people who need
    them in time, we could save millions and millions of lives and free up
    billions of dollars to be invested in building those lives, those
    societies into strong, productive partners, not just for trade but for
    peace.
        We can also help countries help themselves by lifting their
    crippling burden of debt, so they'll have more to invest in their people
    and their future. The Cologne debt initiative commits us to reducing the
    foreign debt of the world's poorest and most indebted nations by as much
    as 70 percent. Last fall I pledged that the United States would forgive
    100 percent of the debts those countries owe to us. This year I will
    work to fund our share of the multilateral debt relief. I am pleased
    that so many others have made similar pledges and look forward to the
    first countries benefiting from this initiative very soon. If we keep
    working on this, expanding it, and we all pay our fair share, we can
    turn a vicious cycle of debt and poverty into a virtuous cycle of
    development and trade.
        The last point I'd like to make on this is that I think the
    developed countries who want an open trading system that has the trust
    and confidence of developing countries should also contribute to
    indigenous trade, which may not be directly related--excuse me,
    indigenous economic development, which may not be directly related to
    trade. Just for example, the United States Agency for International
    Development each year funds about 2 million microenterprise loans in
    poor communities in Africa, Asia, and Latin America.
        I will never forget going to small villages in Senegal and Uganda
    and seeing people who had gotten their first business loan--sometimes as
    small as $50--show me their businesses, show me the people they were
    doing business with in their villages, who had also gotten such loans.
    I'll never forget the man in Senegal who was this designated village
    accountant, making me wait outside his front door while he went into his
    house to bring me back all of the accounts he had carefully kept for the
    last month, to prove that the money we were investing was being spent
    wisely.
        Does this have any direct impact on international trade? Of course
    not. Did it make that society stronger? Did it make the economy
    stronger? Did it increase the stability and long-term prospects of the
    nation? Of course it did. So I believe we should all be thinking about
    what more we can do on the indigenous economic development issues.
        The President of Colombia is here. I've
    asked the Congress to pass a very ambitious program to try to help
    Colombia deal with the narcotraffickers and the guerrillas and all the
    problems that he faces--perhaps the oldest democracy in Latin America.
    But one part of it is for economic development. It is one thing to tell
    people they should stop growing crops that can be turned into drugs that
    can kill our children, and quite another to tell people, if you do this,
    by the way, here's a way to support your children.
        And so I think that we can never lose sight of the fact that if we
    want to build an integrated economy with more and more trade, we have to
    build an economy from the grassroots up in places that want to have a
    balanced, stable society.
        The fourth point I would make is that developed and developing
    countries alike must ensure that the benefits of trade flow widely to
    workers and families within our nations. Industrialized nations must see
    that the poor and those hard hit by changes are not left behind. And all
    nations need to ensure that workers have access to lifelong learning
    benefits, they can move between jobs without being unemployed for too
    long and without having their standard of living dropped.

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        We have to work with corporate leaders to spur investment also in
    the people and places that have been left behind. We have to find the
    new markets within our own Nation. For example, I will tell you
    something that might surprise many of you. The national unemployment
    rate in the United States is 4.1 percent. On many of our Native American
    Indian reservations, the unemployment rate is about 70 percent. In
    isolated rural areas in America, the unemployment rate is sometimes 2,
    3, 4 times as high as the national average. So we have not figured out
    how to solve this. When you have these eyesores in a country, when the
    development is not even, they can easily become the symbols with which
    those who do not want us to open our markets more and build a more
    integrated world can use to defeat our larger designs, even if they're
    right.
        And as I said to the American people in Congress a couple of nights
    ago, we in the United States, I think, have a terrifically heavy
    responsibility to reach out to our poor communities, because we've never
    had an expansion this long, and if we can't help our people now, we will
    never get around to it. I am convinced that even though this has nothing
    directly to do with trade, if we succeed, we will build more support for
    a more integrated global economy.
        Leaders of developing nations have their responsibilities as well,
    to narrow the gap between rich and poor by ensuring that government
    institutions are open and accountable, honest and effective, so they can
    get foreign investment, have widely-shared growth, uproot corruption,
    and solve social problems. There is a limit to what wealthy nations can
    do for people who will not take the necessary steps to make their own
    societies work. Even in this heyday of global free enterprise, many
    people suffer not because their governments are too strong but because
    their governments are too weak.
        Fifth, since globalization is about more than economics, our
    interdependence requires us to find ways to meet the challenges of
    advancing our values without promoting protectionism or undermining open
    trade. I know that the words ``labor and environment'' are heard with
    suspicion in the developing world when they are uttered by people from
    the developed world. I understand that these words are code for ``rich-
    country protectionism.''
        So let me be as clear as possible on this. We shouldn't do anything
    to stunt the economic growth and development of any developing nation. I
    have never asked any developing nation, and never will, to give up a
    more prosperous future. But in today's world, developing countries can
    achieve growth without making some of the mistakes most developed
    countries made on worker protection and the environment as we were on
    our path to industrialization. Why is that? Why can they get richer
    without doing the same things we did? And since, when countries get
    richer, they lift labor standards and clean up the environment, why do
    we care? I think there are two answers to that.
        First, the reason they can do it is that the new economy has
    produced scientific and technological advances that absolutely disprove
    the old ideas about growth. It is actually now possible to grow an
    economy faster, for example, with a sensible environmental policy and by
    keeping your kids in school instead of at work, so that you build more
    brainpower to have more rapid, more long-term, more balanced growth.
        Secondly, we all have an interest particularly in the environmental
    issue, because of global warming, because of greenhouse gas emissions,
    and because it takes somewhere between 50 and 100 years for those
    emissions to go away out of our larger atmosphere. So if there is a way
    for us to find a path of development that improves, rather than
    aggravates, the difficulties we have with climate change today by
    reducing rather than increasing greenhouse gases, we are all obligated
    to do it.
        That is why, after the Kyoto Protocols, I recommended to all the
    advanced nations that we engage in emissions trading and vigorous
    investment of new technologies in developing countries, with an absolute
    commitment to them that we would not ask them to slow their economic
    growth.
        We will see within the next few years automobiles on the streets all
    over the world that routinely get somewhere between 70 and 90 miles a
    gallon. In South America, many countries run on ethanol instead of
    gasoline. The big problem is that the conversion is not very good; it
    takes about 7 gallons of gasoline to make 8 gallons of ethanol. Within a
    matter of a couple of years, scientists almost certainly will unlock the
    chemical block that will enable us to produce 8 gallons of fuel from
    farm products or grasses or even farm waste like rice hulls, for 1
    gallon of gasoline. When that happens, you will see people driving cars
    that effectively

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    are getting 400 or 500 miles to the gallon of gasoline.
        These things are before us. All these technologies should be
    disseminated as widely as possible, as quickly as possible, so that no
    nation gives up any growth to be a responsible environmental partner in
    the world.
        And on the human development side, I will say again, the globalized
    economy prizes human development above all else. It is in the long-term
    and the short-term interests of developing countries not to abuse their
    workers and to keep their children in school.
        Now, do we have all the answers to this? No, partly because the
    circumstances and the possibility, even for trade engagement, from
    nation to nation vary so much; but partly because we don't have more
    forums like this within which we can seek common understandings on
    worker rights, the environment, and other contentious issues.
        We have suggested that the Committee on Trade and the Environment be
    invited to examine the environmental applications of WTO negotiations in
    sessions where developing countries form the majority. We cannot improve
    cooperation and mutual understanding unless we talk about it. That is
    our motivation--that is our only motivation in seeking to open a
    discussion about the connections between labor and trade and
    development, in the form of a new WTO working group.
        And I will say this again, the consequence of running away from an
    open dialog on a profoundly important issue will be--it won't be more
    trade; it'll be more protection. The consequence of opening up a dialog
    and dealing honestly with these issues will show that in the new
    economy, we can have more growth and more trade with better treatment
    for people in the workplace and more sensible environmental policies. I
    believe that. You have to decide if you believe that.
        My experience in life--and I'm not as young as I used to be--let me
    just say, at Thanksgiving a 6-year-old daughter of a friend of mine
    asked me how old I was. She looked up at me and she said, ``How old are
    you, anyway?'' And I said, ``I'm 53.'' She said, ``That's a lot.''
    [Laughter]
        Well, it looks younger every day to me. But I have lived long enough
    to know this: In the words of that slogan that people my daughter's age
    always use, denial is not just a river in Egypt. [Laughter] And the more
    we hunker down and refuse to devote time systematically to discussing
    these issues and letting people express their honest opinion, the more
    we are going to fuel the fires of protectionism, not put them out. We
    have to make some institutional accommodation to the fact that this is a
    part of the debate surrounding globalization.
        Now, I feel the same way about labor standards. And there is a win-
    win situation here. Let me just give you one example. We had a pilot
    program through our Agency for International Development, working with
    the garment industry in Bangladesh to take children out of factories and
    put them back in schools. The program got kids to learn and actually
    boosted garment exports and gave jobs to adults who would otherwise not
    have had them.
        We can do more of this if we lower the rhetoric and focus more on
    results. Common ground means asking workers in developed countries to
    think about the future of workers in Asia, Africa, or Latin America. It
    means governments finding the courage to rise above short-term political
    interest. It means corporations taking responsibility for the effects of
    their actions, whether they're in an African delta or a New York
    highrise. It means a new, more active idea of corporate responsibility,
    stepping up to the plate to pay for vaccines or educate a new generation
    of workers in another country as a part of the globalization economic
    strategy.
        Finally, let me say that the lessons from our history are clear: We
    will--we must--support the rules-based system we have, the WTO, even as
    we seek to reform and strengthen it.
        I think those who heard a wakeup call on the streets of Seattle got
    the right message. But those who say that we should freeze or disband
    the WTO are dead wrong. Since World War II, there have been eight
    separate rounds of multilateral trade negotiations, hundreds of trade
    agreements signed. What's happened? Global trade has increased
    fifteenfold, contributing to the most rapid, sustained, and, yes, widely
    shared growth ever recorded.
        There is no substitute for the confidence and credibility the WTO
    lends to the process of expanding trade based on rules. There's no
    substitute for the temporary relief WTO offers national economies,
    especially against unfair trade and abrupt surges in imports. And there
    is no

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    substitute for WTO's authority in resolving disputes, which commands the
    respect of all member nations. If we expect public support for the WTO,
    though--I'll get back to my main point--we've got to get out of denial
    of what's happening now.
        If we expect the public to support the WTO the way I do--and I think
    almost all of you do--we have to let the public see what we're doing. We
    have to make more documents available, faster. We have to open dispute
    panel hearings to the public. We have to allow organizations and
    individuals to panel their views in a formal way. And we all have to
    play by the rules and abide by the WTO decisions, whether we win or
    whether we lose.
        Let me be clear. I do not agree with those who say we should halt
    the work of the WTO or postpone a new trade round. But I do not agree
    with those who view with contempt the new forces seeking to be heard in
    the global dialog. Globalization is empowering people with information,
    everywhere.
        One of the most interesting things I did on my trip to China was
    visit an Internet cafe. The more people know, the more opinions they're
    going to have; the more democracy spreads--and keep in mind, more than
    half the world now lives under governments of their own choosing--the
    more people are going to believe that they should be the masters of
    their own fate. They will not be denied access. Trade can no longer be
    the private province of politicians, CEO's, and trade experts. It is too
    much a part of the fabric of global interdependence.
        I think we have to keep working to strengthen the WTO, to make sure
    that the international trade rules are as modern as the market itself,
    to enable commerce to flourish in all sectors of the economy from
    agriculture to the Internet. I will keep working for a consensus for a
    new round, to promote development, to expand opportunity, and to boost
    living standards all around the world. We will show flexibility, and I
    ask our trading partners to do the same.
        But I would like to just close by trying to put this dilemma that
    you've all been discussing, and that was writ large in the streets of
    Seattle, in some context. Now, keep in mind, arguably a lot of the
    demonstrators in Seattle have conflicting objectives themselves, because
    of the interests that they represented. The thing they had in common
    was, they felt that they had no voice in a world that is changing very
    rapidly. So I want to make two observations in closing.
        Number one, we should stop denying that there is in many places an
    increase in inequality, and we should instead start explaining why it
    has happened and what we can do about it. Every time a national economy
    has seen a major change in paradigm, in the beginning of the new economy
    those that are well-positioned reap great gains; those that are uprooted
    but not well-positioned tend to suffer an increase in inequality.
        In the United States, when our economy, the center of our economy
    moved from farm to factory 100 years ago--and many people left the farm
    and came to live in our cities; and many people from your countries came
    to our shores and were living in unbelievably cramped conditions in
    tenement houses in New York City and elsewhere, working long hours,
    breathing dirty air--there was a big increase in inequality, even though
    there was an increase in wealth, in the beginning. Why? Because some
    people were well-positioned to take advantage of the new economy, and
    some people weren't.
        But then political and social organizations began to develop the
    institutions which would intermediate these inequalities. And the
    economy itself began to mature and disperse the benefits more broadly,
    and inequality went down. When we saw, beginning about 20 years ago in
    most advanced economies, a shift from the industrial economy to the
    digital economy, in many places there was an increase in inequality. In
    our country, we had a 25-year increase in inequality, which seems to
    have halted and been reversed only in the last 2 to 3 years.
        So a part of this is the change in the paradigm of the global
    economy which puts a huge, huge, huge premium on education, skills, and
    access to information technology, which is even more burdensome to
    developing economies seeking to come to grips with these challenges.
        Now, having said that, it should be obvious to all that the last
    thing in the world we want to do is to make the global economy less
    integrated, because that will only slow the transition to the digital
    economy in the poorest countries or in the poorest neighborhoods of the
    wealthy countries.
        The answer is to look at what happened in the transition from the
    agricultural economy to the industrial economy, develop a 21st century
    version of that, and get it done much, much

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    faster--not to run to the past but not to deny the present.
        The second point I'd like to make is this. We have a well-developed
    WTO for dealing with the trade issues. We don't have very well-developed
    institutions for dealing with the social issues, the environmental
    issues, the labor issues, and no forum within which they can all be
    integrated. That's why people are in the streets; they don't have any
    place to come in and say, ``Okay, here's what I think, and here's the
    contribution I have. Here's the beef I have. How are we going to work
    all this out?''
        That's why you're all here talking about it. That's why you've got a
    record crowd here. And we all know this intuitively. So I think if I
    could offer any advice, there are--there's thousands of times more
    experience and knowledge about all these things in this room than I have
    in my head. But I do understand a little bit about human nature and a
    little bit about the emerging process of freedom and democracy. We have
    got to find ways for these matters to be dealt with that the people who
    care about them believe are legitimate. And we cannot pretend that
    globalization is just about economics and it's over here, and all these
    other things are very nice and we will be very happy to see somebody
    over here somewhere talk about them. You don't live your life that way.
    You don't wake up in the morning and sort of put all these barriers in
    your head and--you know, it's all integrated.
        It's like I say, we've got the Chairman of the Palestinian
    Authority here. We're working very hard to
    find a comprehensive peace in the Middle East. We can't find that peace
    if we say, ``Well, here's what we're going to do on these difficult
    issues and, oh, by the way, there's economics, but it's over here and it
    doesn't have anything to do with it.'' We have to put all these things
    together.
        So I ask you, help us to find a way, first, to explain to the
    skeptics and the opponents of what we believe in why there is some
    increase in inequality as a result of an economic change that is
    basically wonderful and has the potential, if we make the changes we
    should, to open possibilities for poor people all over the world that
    would have been undreamed of even 10 years ago. And second, find a way
    to let the dissenters have their say and turn them into constructive
    partners. If you do that, we will continue to integrate the world
    economically and in terms of political cooperation.
        We have got a chance to build a 21st century world that walks away
    not only from the modern horrors of terrorists and bio- and chemical
    terrorism and technology but away from ancient racial, religious, and
    tribal hatred. Growth is at the center of that chance. It gives people
    hope every day. But the economics must be blended with the other
    legitimate human concerns. We can do it--not by going back to the past
    but by going together into the future.
        Thank you very much.
        World Economic Forum President Klaus Schwab. Mr. President, ladies and gentlemen, we have just time
    for one or two questions. But before raising these issues, Mr.
    President, I can tell you and the applause has shown you what support
    you have for your plea for an open, rules-based trading system and for
    globalization. But at the same time, what we take home and what suddenly
    will influence our discussions very much over the next days, I think we
    have--and we are all aware here in this hall--that we have to change our
    attitudes and that we have to create this human and social dimension to
    globalization. It's in our own interest. And your speech, I think, will
    be reminded and will be translated into the necessary action.
        Now, Mr. President, just two questions. The first one: In your
    reference to free trade and the WTO, you didn't mention China. And my
    question is----
        President Clinton. Yes, I did.
        President Schwab. You mentioned it?
        President Clinton. I did, but I don't have--I speak with an accent,
    so--[laughter]
        President Schwab. No, no. [Laughter]
        President Clinton. I did, but I----
        President Schwab. The question which I
    would like to raise is, will you actually rally the support in your
    country and internationally to get China integrated into the WTO?
        President Clinton. I think so. In the United States, in the
    Congress, there are basically two blocks of people who oppose China's
    accession to the WTO. There are those who believe we should not do it
    because even though--everyone has to recognize, if you look at our trade
    deficit with China, everyone recognizes it's huge, by far the biggest
    part of our trade deficit. Everyone recognizes that we have kept our
    markets open to China and that if we had greater access to Chinese
    markets, it would be a good thing for us. So no one could seriously
    argue that--

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    the openings from agriculture and for other opportunities are massive,
    and that it would mean more to the United States than any other country
    since we buy--we're about 22 percent of the world's economy, and every
    year we buy between 33 and 40 percent of all China's exports, and we
    have a major, major trade deficit.
        So on the economic argument, the people who are against it say,
    ``Yes, that may be true, but if you put China in the WTO, it's basically
    a protectionist country, and then America will never get any real action
    on labor and environmental standards and all that because China will
    thwart every reform we want.'' That's what people say.
        Then, there is another group of people that don't want to vote for
    it because of the actions the Chinese have taken to try to preserve
    stability at the expense of freedom. They believe that even if China's
    economy has grown more open, political crackdowns, crackdowns against
    the Falun Gong and others have gotten more intense, more open, and that
    it puts the lie to the argument that integrating China into the
    international system will lead to a more open, more democratic, more
    cooperative China. Those are basically the two arguments that will be
    made.
        Those both raise serious issues, but I think it would be a mistake
    of monumental proportion for the United States not to support China's
    entry into the WTO. I believe that because, again, my experience is that
    you're almost 100 percent of the time better off having an old adversary
    that might be a friend working with you, even when you have more
    disagreements and you have to stay up a little later at night to reach
    agreement, than being out there wondering, on the outside wondering what
    you're doing and being absolutely sure whatever it is, it's not good for
    them.
        So I believe that having them in the WTO will not only pad the
    economic benefits for the United States and other countries I mentioned
    but will increase the likelihood of positive change in China and,
    therefore, stability throughout Asia.
        Let me say, you know, China and Russia both are still going through
    big transitions. The Russian economy is coming back a little better than
    most people think it is. No one knows what China and Russia will be like
    10 years from now for sure, and you can't control it, unless you're
    Chinese or Russian; but you can control what you do. And I don't know
    about you, but 10 years from now, whatever happens, I want to know that
    I did everything I could to increase the chance that they would make
    good choices, to become good, constructive neighbors and good,
    constructive partners in the global community.
        You know, we don't agree with the Russian policy in Chechnya, but
    we've gotten rid of 5,000 nuclear weapons, and we got our soldiers
    working together in the Balkans. So I think the argument--we've got to
    try to have these big countries integrated, for the same reason we have
    to keep trying to work with India and with Pakistan to resolve those
    difficulties and get them fully integrated.
        At every turn, we have to ask ourselves--we cannot control what
    other people do; we can only control what we do. But when all is said
    and done, if it works out well or it works out poorly, we want to know
    that we have done everything we possibly could to give people a chance
    to make good decisions. And that's what drives me, and that's why we're
    going to do everything we possibly can--under the leadership of
    Secretary Daley, who's going to coordinate
    our efforts to implement the agreement that our Trade Ambassador,
    Charlene Barshefsky, negotiated--we're
    going to try everything we can to get China permanent trading status so
    we can support their entering the WTO. And my guess is that we'll do it.
    But it's going to be a big fight, and you can watch it with interest
    and, I hope, with support. Thank you.
        President Schwab. Mr. President, you
    mentioned debt relief in your speech, and you also mentioned it in your
    State of the Union message. Do you think the G-7 are really doing enough
    in this respect?
        President Clinton. No, I don't. But if we do--I'm trying to focus on
    doing what we promised to do. And again, let me tell you what the debate
    is. We had an intense effort, in the last session of Congress, to pass
    what the Congress was finally, at the end of the session, good enough to
    do, and do on a bipartisan basis--I want to give credit to the
    Republicans, as well as the Democrats, who voted for this--to support
    our forgiving 100 percent of our bilateral debt for the poorest
    countries. And we're going to have another intense debate to support our
    contributions to the multilateral debt reduction effort, which is even
    more important.

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        The debate at home--basically, the people who are against this are
    old-fashioned conservatives who think when people borrow money they
    ought to pay it back, and if you forgive their debt, well, then, no one
    else will ever loan them money, because they'll think they'll have to
    forgive their debt, too. There's something to that, by the way. There's
    something to that. In other words, when we get into negotiations of
    whether debt should be rescheduled or totally forgiven, there are many
    times--when I have confidence in the leader of a country and I know
    they're going in the right direction, I would almost always rather
    forgive it, assuming I could get the support in Congress to do so.
        But we do have to be sensitive to the way the world investor
    community views all these things, so that when all is said and done,
    countries that genuinely will have to continue to borrow money can get
    the money they need. But with that caveat, I favor doing more and more
    than the Cologne debt initiative. But my experience is, we do these
    things on a step-by-step basis. We already have broadened the Cologne
    debt initiative, and we're going to broaden it again. And I think if we
    get the Cologne debt initiative done and it works and people see that it
    works, then we can do more.
        But it is really--it is quite pointless, it seems to me, to keep
    these poor countries trapped in debt. They're having to make debt
    service payments, which means that they can't educate their children,
    they can't deal with their health care problems, they can't grow their
    economy, and therefore they can't make any money to pay their debts off
    anyway. I mean, it's a totally self-defeating policy we've got now.
        So I would like to see us do as much as possible, but at the same
    time, I want to remind you of another point I made. A lot of countries
    suffer not because they have governments that are too strong; they
    suffer because they have governments that are too weak. So we have to
    keep trying to build the governance capacity for countries so, when they
    get their debt relief, then they can go forward and succeed. So I don't
    think you should forget about that, either.
        All of us have a real obligation to try to help build capacity so
    our friends, when they get the relief, can make the most of it.
        President Schwab. Mr. President, to
    conclude our session, you have in front of you the 1,000 most
    influential business leaders. What would be your single most important
    wish towards them at this moment?
        President Clinton. My most important wish is that the global
    business community could adopt a shared vision for the next 10 to 20
    years about what you want the world to look like, and then go about
    trying to create it in ways that actually enhance your business, but do
    so in a way that helps other people as well.
        I think the factor about globalization that tends to be
    underappreciated is, it will only work if we understand it genuinely
    means interdependence. It means interdependence, which means we can--
    none of us who are fortunate can any longer help ourselves unless we are
    prepared to help our neighbors. And we need a more unifying, more
    inclusive vision. Once you know where you're going, it's a lot easier to
    decide what steps to take to get there. If you don't know where you're
    going, you can work like crazy, and you would be walking in the wrong
    direction. That's why I think this forum is so important.
        You need to decide. The business community needs to decide. You may
    not agree with anything I said up here today. But you have to decide
    whether you really agree that the WTO is not just the province for you
    and me and the trade experts. You have to decide whether you really
    agree that globalization is about more than markets alone. You have to
    decide whether you really agree that free markets--even in an age of
    free markets, you need confident, strong, efficient government. You have
    to decide whether you really agree that it would be a good thing to get
    the debt off these countries' shoulders if you knew and could require
    that the money saved would go into educating children and not building
    weapons of destruction. Because if you decide those things, you can
    influence not only the decisions of your own government but how all
    these international bodies, including the WTO, work.
        So the reason I came all the way over here on precious little sleep,
    which probably undermined my ability to communicate today, is that
    collectively, you can change the world. And what you are doing here is a
    mirror image of what people are doing all over the world. This is a new
    network.
        But don't leave the little guys out. You know, I come from a little
    town in Arkansas. I was born in a town of 6,000 people, in a State
    that's

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    had an income just about half the national average. I've got a cousin
    who lives in Arkansas. He's a small-business man--he works for a small
    business--who two or three times a week plays chess on the Internet with
    a guy in Australia. Now, they've got to work out the times; how they do
    that, I don't know. But the point I want to make to you is, he thinks he
    knows as much about his life and his interests and how he relates to the
    Internet and the world as I do. He thinks he knows just as much about
    his interests as his President does, who happens to be his cousin.
        So we need these networks. And you are in an unbelievably unique
    position. So my one wish for you--you might think I'd say China or this
    or that and the other--it's nothing specific: Develop a shared vision.
    When good people with great energy have shared vision, all the rest
    works out.
        Thank you very much.

    Note: The President spoke at 12:36 p.m. in the Plenary Room at the
    Congress Center. In his remarks, he referred to President Andres
    Pastrana of Colombia; President Thabo Mbeki of South Africa; Chairman
    Yasser Arafat of the Palestinian Authority; President Jose Maria Aznar
    of Spain; Prime Minister Bulent Ecevit of Turkey; and John J. Sweeney,
    president, AFL-CIO.