[Weekly Compilation of Presidential Documents Volume 36, Number 5 (Monday, February 7, 2000)]
[Pages 185-196]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 and 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 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?

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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 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.

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    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

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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 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, remain 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.

[[Page 189]]

    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 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

[[Page 190]]

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.
    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 symbol 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

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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 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

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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 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.

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    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 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

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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.
    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 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.
    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 rate 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

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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.
    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

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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 had an income just about half the national average. I've got a 
cousin who lives in Arkansas. He's a small-businessman, he works for a 
small business who, 2 or 3 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. [Laughter] 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. Klaus Schwab served as President of the World 
Economic Forum.