Remake trade through a US-EU trade partnership

Susan Ariel Aaronson

Associate Research Professor of International Affairs, George Washington University

1 October 2010

In response to Dr. Cernat’s call for feedback on the EU’s trade policy, this column calls on Europeans and Americans to rethink their trade policies. It argues both can meet 21st century needs only by collaborating, mostly at the WTO. Trade policy challenges are also an opportunity to make the system more coherent and meet the goals of expanding trade, enhancing human welfare and increasing employment.

Americans may be from Venus, and Europeans from Mars; we clearly have different views about the role of government in the domestic and global economy. But Americans and Europeans have long collaborated to expand trade, enhance human welfare, and encourage employment. The US and European post-war planners wrote these objectives into the preambles of the ITO and the GATT, and they were repeated in the WTO.

But clearly the WTO system (and related policies and institutions) do not always work for all of the world’s people. The World Bank reports that more than 1 billion people go to bed hungry each night; and many lack access to opportunities, education and even the bare necessities to sustain life. Meanwhile, since the global financial crisis of 2007, a growing number of Americans and Europeans have reduced economic opportunities. Some 10% of Americans are officially unemployed; 1 in 7 Americans live in poverty, and the US cannot meet its bills without overseas borrowing. In Europe, although the rate varies widely among the EU 27, unemployment is also around 10%, and some 17% of the population is at risk of poverty (Eurostat). While trade liberalisation is not to blame for these circumstances, these conditions make Americans and Europeansless positive towards trade liberalisation and the WTO.

In 2008, in recognition that the system was not working in support of trade, development, and employment, EU officials called for a broad rethink of the global architecture that would “meet the needs of the 21st century.” The leaders of the G20 agreed during their 2008 meeting in Pittsburgh, although they said nothing about revamping the WTO. They agreed “to refrain from raising barriers or imposing new barriers to investment or to trade in goods and services, imposing new export restrictions or implementing World Trade Organisation inconsistent measures to stimulate exports and commit to rectify such measures as they arise.” And they vowed to weigh international spillovers of their domestic policy actions, such as financial stimuli”.

Some two years later, policymakers still espouse collaboration and coherence, but do little to make it a reality. In fact, rather than coordinating policy, many countries are acting unilaterally, trying to boost exports by pushing down their currencies, and using domestic stimuli to maintain jobs. Thus, in response to Dr. Cernat’s call for feedback to the EU’s trade policy, this American calls on Europeans and Americans to rethink their trade policies. Together the US and EU have enormous political, moral, and economic clout. As partners, we might steer the world back towards a coherent approach to multilateral trade liberalisation that addresses development and employment.

Ironically, both the US and Europe bear responsibility for moving the world away from multilateral trade liberalisation. During the Bush Administration, the US reoriented trade liberalisation efforts towards only those nations willing to make governance agreements addressing not just trade, but investment, intellectual property rights, labour rights and environmental policies. America’s actions inspired many other nations to focus their efforts on negotiating preferential trade agreements. Our failure to work collaboratively has international repercussions. As economist Fred Bergsten (2002) noted, “The EU is the source of the world's greatest trade discrimination—which will increase sharply as its membership expands—and the hub of the most extensive set of preferential deals with non-members. Europe badly needs the outside pressure of global commitments to implement essential internal reforms, especially in agriculture. That outside pressure comes primarily from the Americans.” But Americans have been focused on currency and trade issues with China and when we focused on negotiations, policymakers put their efforts towards preferential trade agreements, rather than the WTO.

Instead, the EU and the US should take the following three steps:

• Move the trade liberalisation process away from preferential trade agreements and towards the WTO.

The focus on preferential trade agreements has had several unanticipated side effects. Instead of stimulating a renewed commitment and deeper concessions at the multilateral level, countries began to focus less on the WTO as a platform, and more on using the leverage of their own markets to attract free trade agreement partners. But this approach no longer makes sense. Although the US and EU have large markets, we now compete with China, India, and Brazil for markets and trade agreement partners. Moreover, the cumulative effect of these agreements has undermined both the effectiveness of the WTO and its fundamental principle of most favoured nation (nondiscrimination among nations). The focus on preferential trade agreements has not helped expand trade for all countries; many smaller (or poorer markets) have not been invited to negotiate these preferential agreements. The citizens in such nations are thereby less able to reap access to global markets compared to their counterparts in larger or richer nations. Meanwhile, these preferential trade agreements are probably not good for business. Traders have less security of market access. Every one of these free trade agreements has preferential rules of origin, and their complexity and diversity may distort sourcing decisions. Finally, these bilateral regional agreements often contain tighter standards for intellectual property and transparency, and broader standards for issues not covered in the WTO such as labour, the environment, democratic decision-making, and investment. As a result, the world now has a mish-mash of global trade governance, where some nations adopt higher standards on some of these issues some of the time. It would be better for the US and the EU to work together at the WTO to make a broader approach to trade liberalisation a goal of the WTO. But in order to expand the scope of the WTO, policymakers must first meet their promise of fully integrating developing countries into the WTO.

• Work globally and at the WTO to coordinate trade and development policies.

After the 2001 terrorist attacks, the US and the EU argued that the world must work to make trade and development policies more coherent. Then US Trade Representative Zoellick and EU Trade Commissioner Lamy (2010) wrote an op-ed arguing that "Trade policy must…make a material difference to the poorest of the world's populations." They stressed that the World Bank must do a better job "building developing country capacity" to implement trade rules, which often require these countries to make expensive and difficult governance choices. They warned that if industrialised countries didn't provide greater market access for developing country goods and services, "we shut their doors on their future," hinting it was our future as well. But the two did not offer significant enough incentives to get big developing countries to play ball. The US, EU and other industrialised countries didn’t deliver on their promise to make the Doha Round focus on development. The EU and the US can rescue the round by rethinking it as a two tiered negotiation. The first tier would truly focus on the needs of developing countries—rethinking how to facilitate negotiations that provide market access for all, as well as a new approach to capacity building focused on empowering small farmers and business owners in the developing world. As an incentive, the US and the EU could jointly announce that while they could not alter agricultural or health and safety standards, they would reduce all tariffs for developing country commodities provided that all developing countries agree to wider market access commitments. They could also agree to a new common approach to trade preferences, based on the EU’s incentive based General Scheme of Preferences (GSP)+. This program provides incentives (lower tariffs) to developing countries which implement international conventions on human rights, labour rights, good governance, and sustainable development. Instead of providing such benefits nationally, the major sources of GSP (the US, EU, Canada, Australia, Japan, New Zealand, Norway and Switzerland) should develop a uniform WTO based approach. After so doing, the EU and the US might find more support for a more ambitious round.

• Finally the US and the EU should work to make trade and employment policies more coherent.

In 2009, the ILO (2010) reported that some 212 million of the world’s able bodied workers were unemployed. Such high unemployment threatens political stability and thus, policymakers in almost in every country have made job creation and job maintenance their top priority. They recognise that investors will go where the skills, infrastructure, and incentives are most attractive and most effective. Although job creation is not a zero sum game, where the jobs gained in one nation are lost in another, how a nation creates or preserves jobs can have implications for the terms of trade in another. Although jobs lost to trade and technology changes are normal, policymakers must find ways to ensure that job creation strategies in one country doesn’t beggar jobs in another—such strategies must not be trade distorting. China provides a prominent example of why we need to address this question internationally and cooperatively.

Since the downturn, many countries including China have developed policies to maintain jobs and attract investment. China is not only the most populous country and the second largest trading nation. China has more than 750 million workers, some 26% of the world’s total. Each year the work force increases by some 10 million workers. However, many observers, including the Nobel Prize winning economist Paul Krugman argue that Chinese policies to maintain employment are trade distorting. Although wages in many areas and sectors in China have been rising, they stress that China manipulates its currency, provides generous albeit GATT illegal subsidies, and ignores its own labour laws to maintain low-wage export oriented production. Moreover, because China is an opaque authoritarian regime with a huge and growing market, some fear that China cannot be reined in by the WTO.

The US and the EU should use this situation to build a global discussion about the relationship between trade and employment policies. The WTO is the right place to have this discussion, because as noted above, it is based on the idea that nations have a responsibility to collaborate in the fields of trade and investment to create employment at both the national and international levels. Since 2008, the WTO has worked with the ILO on trade and employment issues. The G20 asked the WTO to monitor the trade distortions of domestic stimuli as part of its trade policy review process; the EU and the US should partner to encourage the WTO to examine how employment policy choices may affect trade. In so doing, they may again bolster the WTO (Aaronson forthcoming).

In sum, Americans and Europeans can make the system we designed meet our 21st century needs only if we collaborate. The challenges we face today are also an opportunity to make the system more coherent and finally meet the goals of expanding trade, enhancing human welfare and increasing employment.

References

Bergsten, C. Fred (2002) “A Competitive approach to Trade,” Financial Times, 14 February.

Lamy ,Pascal and Robert B. Zoellick (2010), “In the Next Round”, Financial Times

ILO (2010), “Global Employment Trends”, January.

Susan Ariel Aaronson (forthcoming) , “How China’s Employment Problems Became Trade Problems,” Global Economy Journal 

This article may be reproduced with appropriate attribution. See Copyright (below).

Plaza II is the wrong approach for global rebalancing

How should policymakers deal with global imbalances? This column argues that a return to the Plaza Accord of the 1980s with an exclusive focus on the exchange rate could well dilute the G20’s other agendas and may not even work in practice. The best solution is instead to focus on structural reforms. In many respects, the Chinese renminbi looks increasingly like the Japanese yen thirty years ago. The US Congress is in the process of passing legislation enforcing tariffs on imports from China, as US politicians blame the undervalued renminbi for their own economic problems. President Obama has openly criticised China for “having not done enough”. While the Chinese government does still try its best to avoid sharp currency appreciation, as Premier Wen has warned that the type of currency adjustment demanded by the US could lead to significant damage to China’s export sector and massive job losses, the pace of renminbi appreciation did pick up in September as external pressures mounted. For now, the risks of a trade war look manageable. Yet today’s China does resemble Japan thirty years ago in many aspects. It is the second largest economy in the world, after the US. Its economy depends heavily on export markets. It runs a large current-account surplus. Its currency is probably undervalued, and the government is very reluctant to let the currency strengthen. But China is also different from Japan in the old days in many important ways. China is an independent actor in the global stage. It is less likely for China to be pushed to make decisions simply for international political reasons. Its economy is much more flexible, in terms of economic structure, job markets and growth dynamism. While the Chinese government is particularly concerned with job implications, its economy may be more able to adjust to currency movements. Both the US and Chinese governments appear to favour multilateral frameworks for resolving the renminbi dispute. US Treasury Secretary Geithner, for instance, suggested tackling the renminbi issue at the G20 meetings. This was indeed a good suggestion as a multilateral framework should help reduce risks of direct confrontation between the US and China. After all, economic imbalances are a global issue. A critical question, however, is what specific policy approach the G20 might adopt for dealing with such problems. Memories of the Plaza Accord The world has previous experiences of multilateral policy efforts for global rebalancing. One well-known example is the Plaza Accord introduced by the G5/7 in early 1985. At its core, the Plaza Accord contains two policy subscriptions: currency appreciation in surplus countries like Japan and Germany and fiscal contraction in deficit countries like the US. But how successful was the Plaza Accord for tackling current-account imbalances? Economic data indicate that the Accord did not really eliminate the imbalances, let alone their root causes. Princeton historian Harold James puts it bluntly: “The lesson of the past clearly indicates that a more sophisticated approach is required rather than exerting massive pressure for exchange rate adjustment and looser monetary and fiscal policy” (James 2010). There is no denying that exchange rates are an important parameter determining exports, imports and, therefore, the imbalances. But the mechanisms through which the exchange rate affects the current account are much more complicated than what appears in undergraduate textbooks. For instance, during the decade preceding the subprime crisis, the US dollar exchange rate moved up and down, but the US current-account deficits continued to climb. Again, the renminbi appreciated by more than 16% from mid-2005 to mid-2008, but China’s current-account surpluses surged. These isolated examples make an important point: there are probably more important factors determining current-account imbalances of both the US and China. It would be much more effective for G20 to deal with the imbalance issues by focusing on structural reforms in respective countries. While currency adjustments by both the US dollar and renminbi should be a part of that comprehensive policy package, exclusive focus on the exchange rate could be politically difficult and practically ineffective. It might also be poisonous for the G20’s other agendas. It is therefore best for G20 to avoid a Plaza II, or a repeat of the G5/7 policy approach of the 1970s and 1980s. And this is consistent with what was agreed by G20 leaders in September 2009 in Pittsburgh (G20 2009), specifically: G20 members with sustained, significant external deficits have pledged to undertake policies to support private savings and undertake fiscal consolidation while maintaining open markets and strengthening export sectors. G20 members with sustained, significant external surpluses have pledged to strengthen domestic sources of growth. According to national circumstances this could include increasing investment, reducing financial markets distortions, boosting productivity in service sectors, improving social safety nets, and lifting constraints on demand growth. In China, for example, the large current-account surplus was caused mainly by broad distortions of the factor markets, which generally repressed cost of production and artificially improved competitiveness of China exports (Huang 2010). Exchange rate misalignment is only a part of that broad distortion picture. Relying exclusively on currency adjustment to correct the overall external imbalance requires an out-sized appreciation, which is difficult for China to accommodate at this stage, both politically and economically. Likewise, the exceedingly low saving ratio in the US before the subprime crisis was caused by a number of factors. Simply depreciating the dollar by a significant margin is unlikely to be sufficient to substantially lift the saving ratio. In addition, such currency moves within a short period are likely to destabilise the economy and financial markets. Rebalancing already underway The good news is that global rebalancing is already occurring. In the US the current-account deficit as a share of GDP has already halved from its pre-crisis peak, while in China the surplus as a share of GDP has already shrank by two-thirds. Obviously, part of the recent adjustments must be cyclical, given global economic recession. But World Bank’s Caroline Freund has discovered that the bulk of the decline in global imbalances from 2007 to 2009 was a result of countries rebalancing export and import growth, which is more likely to be sustainable (Freund 2010). Again, taking China as an example, recent adjustment of its external imbalance was, at least to a certain extent, the result of changes in domestic factor markets. Factor costs have been on the rise despite the global financial crisis. And this was most evident in labour and resource markets due to changes in both policies and demand-supply conditions. During the past year, the government has begun to reduce price distortions for most resource products in order to improve economic efficiency. The upcoming labour shortage is already pushing up wages by close to 20% a year. Hu Xiaolian, deputy governor at the People’s Bank of China, recently argued that adjustment of factor prices are an important way of changes in renminbi’s real effective exchange rate (Xiaolian 2010).Therefore, such price adjustments are bound to have important impact on China’s trade composition. Rapid rise in wages, for instance, not only directly benefits consumption but also forces industries moving towards inland provinces, another important positive factor for promoting domestic demand. It is clear that adjustments of factor prices are only just beginning. These are the policy issues that G20 leaders should focus on in Seoul in November this year. Of course, all governments will need to entertain domestic political demand. Therefore, it is important for them to coordinate on the policy agenda. It may even be possible for G20 leaders to set specific targets or guidelines for global rebalancing. But it is better to leave the decisions on choices of policy instruments and paces of implementation to national governments. Such policy strategy is likely to be more effective and lasting compared with the G5/7’s exclusive focus on exchange rate and fiscal policy. References G20 (2009), “G20 Framework for Strong, Sustainable, and Balanced Growth”, G20 Pittsburgh Summit, 24/25 September. Huang, Yiping (2010), “What caused China’s current account surplus?”, in Simon Evenett (ed.), The US-Sino Currency Dispute: New Insights from Economics, Politics and Law, A VoxEU.org Publication, Centre for Economic Policy Research. James, Harold (2010), “The history of tackling current account imbalances”, in Stijn Claessens, Simon Evenett, and Bernard Hoekman (eds.), Rebalancing the Global Economy: A Primer for Policymaking, A VoxEU.org Publication, Centre for Economic Policy Research. Freund, Caroline (2010), "Adjustment in global imbalances and the future of trade growth", in Stijn Claessens, Simon Evenett and Bernard Hoekman (eds.), Rebalancing the Global Economy: A Primer for Policymaking, A VoxEU.org Publication, Centre for Economic Policy Research, London, UK. Xiaolian, Hu (2010), “Coordinated relationship between factor price adjustments and exchange rate policy reform”, People’s Bank of China website, Beijing, China.

UN: Central Figure in Global Governance?

Wednesday, 29 September 2010, 1:07 pm Press Release: United Nations

Reforms Can Help UN Remain Central Figure in Global Governance, Says Liechtenstein
New York, Sep 28 2010 7:10PM Highlighting the primacy of the United Nations amid a growing field of groupings, such as the Group of 20 (G20) developed and emerging powers and others that discuss global issues, the Foreign Minister of Liechtenstein today <"http://gadebate.un.org/Portals/1/statements/634212851470937500LI_en.pdf">called on Member States to reform the world body so that it can remain the central forum for finding effective solutions to today’s challenges.
“We welcome the work of the G20 and other groupings that seek to contribute to global solutions,” Aurelia Frick said during the high-level debate of the General Assembly. “At the same time, they can only deal with a limited number of issues.
“And more importantly, they can never be a substitute for genuine multilateralism, which must continue to take place inside the United Nations.”
While she voiced support for the efforts of groups such as the G20 in discussing matters that affect the global economic and financial architecture, she added that their work should be better integrated with the UN system.
Ms. Frick also stressed the need to safeguard the central place of the UN, while adding that this can only be done by using it to find effective solutions to problems such as climate change, disarmament and other areas “where results have been insufficient.
“If we continue to underachieve in the UN framework, we must not be surprised if solutions are sought elsewhere,” she remarked.
“Today, we must ask ourselves: Is the UN still at the centre of global governance? How does it relate to a number of other rising actors in the ever more crowded field of international relations?”
The official called for reform of the Security Council, including its composition and working methods, as well as strengthening of the UN Secretariat, particularly with regard to management issues.
“The challenges in global governance are numerous and interlinked,” said Ms. Frick. “The governance architecture reflected in the UN Charter gives us the possibility to address them. It is up to us to make the necessary political investments to make this system work for our peoples.”
General Assembly President Joseph Deiss has made reinstating the UN at the centre of global governance a key theme of the 192-member body’s current session.
In an address to the opening of the Assembly’s high-level debate last week, he warned against the danger of the UN becoming marginalized as other actors emerge on the international scene. He also said that for the UN to fulfil its role at the centre of global governance, it must be made stronger, more open and more inclusive. Sep 28 2010 7:10PM

S. Korea calls for global financial safety net

South Korea has called for the setting up of an effective global mechanism to safeguard the financial interests of emerging economies ahead of the November G20 summit in Seoul.

"Uncertainties and risks remain amid the slow world economic recovery," said Kim Jae-chun, deputy governor of the Bank of Korea (BOK) in Seoul. "G20 member countries need to formulate a more coordinated framework."

As the first Asian country to host the G20 summit, South Korea has vigorously pushed for the establishment of a global financial safety net, a network of insurance and loan instruments aimed to cope with volatile global capital flows.

The volatility of the South Korean won is a serious concern for South Korea. During the 1997-1998 Asian financial turmoil, its currency saw sharp depreciation. When the global financial crisis hit in 2008, it saw a huge outflow of foreign capital from its stock and bond markets.

By spring 2009, the South Korean economy had recovered faster than Europe's or the United States'.

As a result, international capital started flowing in once again into the country, causing the South Korean won to become more volatile.

South Korea is pushing forward a Global Stabilization Mechanism (GSM), a framework to complement other bilateral and regional liquidity support arrangements for countries hit by contagion.

"I know Germany and other advanced countries are a bit suspicious about expanding the system to cover the globe as they worry that it might cause more hazards. We will have to address that concern and at the same time try to establish a more systematically expanded global financial safety network," Kim said.

What South Korea and other countries are asking for is a system that can cover the whole world, he added.

"Developing countries didn't do anything to cause the financial crisis but have suffered the most from the global crisis," said Wongi Choe, assistant professor at the Institute of Foreign Affairs and National Security under the Ministry of Foreign Affairs and Trade.

A global financial safety net is needed to ensure emerging nations are able to cope with this sort of unexpected financial crises. Protection, such as extending the swap agreements among central banks, is needed to help developing countries ward off risks, Choe said.

The G20 is stepping up cooperation with the International Monetary Fund (IMF) to expand existing regional financial arrangements, such as the Chiang Mai Initiative in Asia. The regional monetary facility would complement the IMF mechanism instead of competing with it, said II Sakong, chairman of the presidential committee for the G20 Summit in November.

The G20 summit agenda also include transfer of voting power to the emerging economies.

In 2009, the G20 leaders agreed to transfer at least 5 percent of the IMF quotas to emerging markets and developing countries. At the G20 Toronto summit in June, the world leaders urged the IMF to complete the reform plan before the Seoul summit.

"The G20 has been mandated by leaders to come up with a conclusion before the Seoul meeting. So we have a deadline and a mandate, we need more concessions and cooperation from member countries to meet that deadline," said Kim, the BOK deputy governor.

"Hopefully, at the Seoul summit we can reach a favorable conclusion," Kim said. 

Source: China Daily

HIGHLIGHTS-World leaders address U.N. General Assembly

23 Sep 2010 20:32:35 GMT Source: Reuters UNITED NATIONS, 

Sept 23 (Reuters) - U.S. President Barack Obama appealed for international support for the Middle East peace process at the United Nations on Thursday, urging world leaders to make sure "this time is different."

Below are excerpts from speeches: 

U.S. PRESIDENT BARACK OBAMA ON MIDDLE EAST PEACE PROCESS:

"Now, many are pessimistic about this process. The cynics say that Israelis and Palestinians are too distrustful of each other, and too divided internally, to forge lasting peace.

"But consider the alternative. If an agreement is not reached, Palestinians will never know the pride and dignity that comes with their own state. Israelis will never know the certainty and security that comes with sovereign and stable neighbors who are committed to co-existence."

IRANIAN PRESIDENT MAHMOUD AHMADINEJAD ON SEPT. 11 ATTACKS:

"There remain a few questions to be answered. Would it not have been sensible that first, a thorough investigation should have been conducted by independent groups to conclusively identify the elements involved in the attack, and then map out a rational plan to take measures against them?

"I wish to announce that next year the Islamic Republic of Iran will host a conference to study terrorism and the means to confront it."

CHINESE PREMIER WEN JIABAO ON CHINA'S DEVELOPMENT:

"China, which has come a long way in modernization is advanced in some areas of development but remains backward in others. And it faces unprecedented challenges brought by problems old and new.

"Taken as a whole, China is still in the primary stage of socialism and remains a developing country." 

EMIR OF QATAR SHEIKH HAMAD BIN KHALIFA AL-THANI ABOUT THE WAR ON TERRORISM:

"For reasons, some of which we understand and some of which we fail to understand, this first decade of the 21st Century has been blindly attacked by what has come to be known as the war on terrorism.

"We believe that even as the phenomenon of terrorism exists, it should not be treated by waging wars. This treatment has not achieved security, peace or prosperity."

MALAWI PRESIDENT BINGU WA MUTHARIKA ON AFRICA: "Africa has decided to shift from Afro-pessimism to Afro-optimism, we are going to make Africa better.

"I want the world to know that we the African leaders have a vision of Africa free of hunger, disease and poverty. We have the vision of a new Africa that is prosperous and full of hope. We have the vision of African nations determined to contribute more to the global prosperity, peace and stability."

BRAZILIAN FOREIGN MINISTER CELSO AMORIM ON G20 REFORM:

"The financial crisis of 2008 accelerated change in global economic governance. The G20 replaced the G8 as the primary forum for deliberation on economic issues.

"The G20 was a step forward. But the group must be adjusted to ensure, for instance greater African participation." 

CANADIAN PRIME MINISTER STEPHEN HARPER ON SECURITY COUNCIL SEAT:

"This assembly should know that Canada is eligible to serve on the Security Council. If we are elected, we will be ready to serve.

"And, if called upon to serve on the Security Council which shall be informed by these ideals and strive to further them just as we have striven to implement Security Council resolutions."

TURKISH PRESIDENT ABDULLAH GUL ON GLOBAL ECONOMY:

"The current economic crisis unveiled, once again, the weaknesses and deficiencies of the existing global and national financial and economic architectures which lack efficient governance and regulation over those reckless financial institutions.

"Within the G20, we strongly support the efforts in international forums aiming at restoring global growth and streamlining financial practices."

SWISS PRESIDENT DORIS LEUTHARD ON U.N. POVERTY GOALS: "The Millennium Development Goals must be implemented fully and rapidly.

"We know that dropping sacks of rice from helicopters is not enough. We must help people to grow it. Still today, 1.4 billion people around the world are living in extreme poverty ... Money flows to emergency situations, but who is still concerned three years later." (Compiled by Helen Popper; Editing by Eric Walsh)

URL: http://www.alertnet.org/thenews/newsdesk/N23141253.htm 

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Obama calls for global cooperation

By Joseph Picard

U.S. President Barack Obama addressed the General Assembly of the United Nations today in New York City.

He called upon the world's leaders for increased cooperation among nations coming out of global recession and in continued nuclear non-proliferation. He asked the other nations to stand by their commitments and help the U.S. foster peace between Israel and Palestine.

"The global economy suffered an enormous blow during the financial crisis, crippling markets and deferring the dreams of millions on every continent," Obama said.

He noted that the global economy "has been pulled back from the brink of a depression, and is growing once more."

Obama, who will be attending the upcoming G20 Summit in Seoul, Korea, in November, said "we made the G20 the focal point for international coordination, because in a world where prosperity is more diffuse, we must broaden our circle of cooperation to include emerging economies -- economies from every corner of the globe."

While noting that the U.S. arms control treaty with Russia and a stronger Nuclear Non-proliferation Treaty, Obama chastised Iran for non-compliance.

"Iran is the only party to the NPT that cannot demonstrate the peaceful intentions of its nuclear program, and those actions have consequences," Obama said, referring to U.S. and UN trade sanctions against Iran.

Obama added that "the door remains open to diplomacy."

On the renewed Mideast Peace Talks, now in their opening stages, Obama acknowledged the cynics who will say that "Israelis and Palestinians are too distrustful of each other."

"Rejectionists on both sides will try to disrupt the process, with bitter words and with bombs and with gunfire," he said. 

The alternative, however, was that "more blood will be shed."

Obama said both sides now must follow their words with actions, and expected both sides to carry the talks through to completion.

He said Israel's friends and allies must understand that true security for the Jewish state requires an independent Palestine.

"I know many in this hall count themselves as friends of the Palestinians," Obama said. "But these pledges of friendship must now be supported by deeds.  Those who have signed on to the Arab Peace Initiative should seize this opportunity to make it real by taking tangible steps towards the normalization that it promises Israel. 

"And those who speak on behalf of Palestinian self-government should help the Palestinian Authority politically and financially, and in doing so help the Palestinians build the institutions of their state. 

"Those who long to see an independent Palestine must also stop trying to tear down Israel," Obama said, adding that "Israel's existence must not be a subject for debate."

Text of President Barack Obama's remarks to the United Nations

Published: Thursday, September 23, 2010, 1:18 PM

 The Associated Press 

U.S. President Barack Obama addresses the 65th session of the United Nations General Assembly at United Nations headquarters Thursday in New York City.

Text of President Barack Obama's remarks to the United Nations General Assembly on Thursday, as provided by the White House: 

Mr. President, Mr. Secretary-General, my fellow delegates, ladies and gentlemen. It is a great honor to address this assembly for the second time, nearly two years after my election as president of the United States. 

We know this is no ordinary time for our people. Each of us comes here with our own problems and priorities. But there are also challenges that we share in common as leaders and as nations. 

We meet within an institution built from the rubble of war, designed to unite the world in pursuit of peace. And we meet within a city that for centuries has welcomed people from across the globe, demonstrating that individuals of every color, faith and station can come together to pursue opportunity, build a community, and live with the blessing of human liberty. 

Outside the doors of this hall, the blocks and neighborhoods of this great city tell the story of a difficult decade. Nine years ago, the destruction of the World Trade Center signaled a threat that respected no boundary of dignity or decency. Two years ago this month, a financial crisis on Wall Street devastated American families on Main Street. These separate challenges have affected people around the globe. Men and women and children have been murdered by extremists from Casablanca to London; from Jalalabad to Jakarta. The global economy suffered an enormous blow during the financial crisis, crippling markets and deferring the dreams of millions on every continent. Underneath these challenges to our security and prosperity lie deeper fears: that ancient hatreds and religious divides are once again ascendant; that a world which has grown more interconnected has somehow slipped beyond our control. 

These are some of the challenges that my administration has confronted since we came into office. And today, I'd like to talk to you about what we've done over the last 20 months to meet these challenges; what our responsibility is to pursue peace in the Middle East; and what kind of world we are trying to build in this 21st century. 

Let me begin with what we have done. I have had no greater focus as president than rescuing our economy from potential catastrophe. And in an age when prosperity is shared, we could not do this alone. So America has joined with nations around the world to spur growth, and the renewed demand that could restart job creation. 

We are reforming our system of global finance, beginning with Wall Street reform here at home, so that a crisis like this never happens again. And we made the G20 the focal point for international coordination, because in a world where prosperity is more diffuse, we must broaden our circle of cooperation to include emerging economies -- economies from every corner of the globe. 

There is much to show for our efforts, even as there is much work to be done. The global economy has been pulled back from the brink of a depression, and is growing once more. We have resisted protectionism, and are exploring ways to expand trade and commerce among nations. But we cannot -- and will not -- rest until these seeds of progress grow into a broader prosperity, not only for all Americans, but for peoples around the globe. 

As for our common security, America is waging a more effective fight against al-Qaida, while winding down the war in Iraq. Since I took office, the United States has removed nearly 100,000 troops from Iraq. We have done so responsibly, as Iraqis have transitioned to lead responsibility for the security of their country. 

We are now focused on building a lasting partnership with the Iraqi people, while keeping our commitment to remove the rest of our troops by the end of next year. 

While drawing down in Iraq, we have refocused on defeating al-Qaida and denying its affiliates a safe haven. In Afghanistan, the United States and our allies are pursuing a strategy to break the Taliban's momentum and build the capacity of Afghanistan's government and security forces, so that a transition to Afghan responsibility can begin next July. And from South Asia to the Horn of Africa, we are moving toward a more targeted approach -- one that strengthens our partners and dismantles terrorist networks without deploying large American armies. 

As we pursue the world's most dangerous extremists, we're also denying them the world's most dangerous weapons, and pursuing the peace and security of a world without nuclear weapons. 

Earlier this year, 47 nations embraced a work-plan to secure all vulnerable nuclear materials within four years. We have joined with Russia to sign the most comprehensive arms control treaty in decades. We have reduced the role of nuclear weapons in our security strategy. And here, at the United Nations, we came together to strengthen the Nuclear Nonproliferation Treaty. 

As part of our effort on nonproliferation, I offered the Islamic Republic of Iran an extended hand last year, and underscored that it has both rights and responsibilities as a member of the international community. I also said -- in this hall -- that Iran must be held accountable if it failed to meet those responsibilities. And that is what we have done. 

Iran is the only party to the NPT that cannot demonstrate the peaceful intentions of its nuclear program, and those actions have consequences. Through U.N. Security Council Resolution 1929, we made it clear that international law is not an empty promise. 

Now let me be clear once more: The United States and the international community seek a resolution to our differences with Iran, and the door remains open to diplomacy should Iran choose to walk through it. But the Iranian government must demonstrate a clear and credible commitment and confirm to the world the peaceful intent of its nuclear program. 

As we combat the spread of deadly weapons, we're also confronting the specter of climate change. After making historic investments in clean energy and efficiency at home, we helped forge an accord in Copenhagen that -- for the first time -- commits all major economies to reduce their emissions. We are keenly aware this is just a first step. And going forward, we will support a process in which all major economies meet our responsibilities to protect the planet while unleashing the power of clean energy to serve as an engine of growth and development. 

America has also embraced unique responsibilities with come -- that come with our power. Since the rains came and the floodwaters rose in Pakistan, we have pledged our assistance, and we should all support the Pakistani people as they recover and rebuild. And when the earth shook and Haiti was devastated by loss, we joined a coalition of nations in response. Today, we honor those from the U.N. family who lost their lives in the earthquake, and commit ourselves to stand with the people of Haiti until they can stand on their own two feet. 

Amidst this upheaval, we have also been persistent in our pursuit of peace. Last year, I pledged my best efforts to support the goal of two states, Israel and Palestine, living side by side in peace and security, as part of a comprehensive peace between Israel and all of its neighbors. We have traveled a winding road over the last 12 months, with few peaks and many valleys. But this month, I am pleased that we have pursued direct negotiations between Israelis and Palestinians in Washington, Sharm el Sheikh and Jerusalem. 

Now I recognize many are pessimistic about this process. The cynics say that Israelis and Palestinians are too distrustful of each other, and too divided internally, to forge lasting peace. Rejectionists on both sides will try to disrupt the process, with bitter words and with bombs and with gunfire. Some say that the gaps between the parties are too big; the potential for talks to break down is too great; and that after decades of failure, peace is simply not possible. 

I hear those voices of skepticism. But I ask you to consider the alternative. If an agreement is not reached, Palestinians will never know the pride and dignity that comes with their own state. Israelis will never know the certainty and security that comes with sovereign and stable neighbors who are committed to coexistence. The hard realities of demography will take hold. More blood will be shed. This Holy Land will remain a symbol of our differences, instead of our common humanity. 

I refuse to accept that future. And we all have a choice to make. Each of us must choose the path of peace. Of course, that responsibility begins with the parties themselves, who must answer the call of history. Earlier this month at the White House, I was struck by the words of both the Israeli and Palestinian leaders. Prime Minister Netanyahu said, "I came here today to find a historic compromise that will enable both people to live in peace, security, and dignity." And President Abbas said, "We will spare no effort and we will work diligently and tirelessly to ensure these negotiations achieve their cause." 

These words must now be followed by action and I believe that both leaders have the courage to do so. But the road that they have to travel is exceedingly difficult, which is why I call upon Israelis and Palestinians -- and the world -- to rally behind the goal that these leaders now share. We know that there will be tests along the way and that one test is fast approaching. Israel's settlement moratorium has made a difference on the ground and improved the atmosphere for talks. 

And our position on this issue is well known. We believe that the moratorium should be extended. We also believe that talks should press on until completed. Now is the time for the parties to help each other overcome this obstacle. Now is the time to build the trust -- and provide the time -- for substantial progress to be made. Now is the time for this opportunity to be seized, so that it does not slip away. 

Now, peace must be made by Israelis and Palestinians, but each of us has a responsibility to do our part as well. Those of us who are friends of Israel must understand that true security for the Jewish state requires an independent Palestine -- one that allows the Palestinian people to live with dignity and opportunity. And those of us who are friends of the Palestinians must understand that the rights of the Palestinian people will be won only through peaceful means -- including genuine reconciliation with a secure Israel. 

I know many in this hall count themselves as friends of the Palestinians. But these pledges of friendship must now be supported by deeds. Those who have signed on to the Arab Peace Initiative should seize this opportunity to make it real by taking tangible steps towards the normalization that it promises Israel. 

And those who speak on behalf of Palestinian self-government should help the Palestinian Authority politically and financially, and in doing so help the Palestinians build the institutions of their state. 

Those who long to see an independent Palestine must also stop trying to tear down Israel. After thousands of years, Jews and Arabs are not strangers in a strange land. After 60 years in the community of nations, Israel's existence must not be a subject for debate. 

Israel is a sovereign state, and the historic homeland of the Jewish people. It should be clear to all that efforts to chip away at Israel's legitimacy will only be met by the unshakable opposition of the United States. And efforts to threaten or kill Israelis will do nothing to help the Palestinian people. The slaughter of innocent Israelis is not resistance -- its injustice. And make no mistake: The courage of a man like President Abbas, who stands up for his people in front of the world under very difficult circumstances, is far greater than those who fire rockets at innocent women and children. 

The conflict between Israelis and Arabs is as old as this institution. And we can come back here next year, as we have for the last 60 years, and make long speeches about it. We can read familiar lists of grievances. We can table the same resolutions. We can further empower the forces of rejectionism and hate. And we can waste more time by carrying forward an argument that will not help a single Israeli or Palestinian child achieve a better life. We can do that. 

Or, we can say that this time will be different -- that this time we will not let terror, or turbulence, or posturing, or petty politics stand in the way. This time, we will think not of ourselves, but of the young girl in Gaza who wants to have no ceiling on her dreams, or the young boy in Sderot who wants to sleep without the nightmare of rocket fire. 

This time, we should draw upon the teachings of tolerance that lie at the heart of three great religions that see Jerusalem's soil as sacred. This time we should reach for what's best within ourselves. If we do, when we come back here next year, we can have an agreement that will lead to a new member of the United Nations -- an independent, sovereign state of Palestine, living in peace with Israel. 

It is our destiny to bear the burdens of the challenges that I've addressed -- recession and war and conflict. And there is always a sense of urgency -- even emergency -- that drives most of our foreign policies. Indeed, after millennia marked by wars, this very institution reflects the desire of human beings to create a forum to deal with emergencies that will inevitably come. 

But even as we confront immediate challenges, we must also summon the foresight to look beyond them, and consider what we are trying to build over the long term? What is the world that awaits us when today's battles are brought to an end? And that is what I would like to talk about with the remainder of my time today. 

One of the first actions of this General Assembly was to adopt a Universal Declaration of Human Rights in 1948. That Declaration begins by stating that, "recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice, and peace in the world." 

The idea is a simple one -- that freedom, justice and peace for the world must begin with freedom, justice, and peace in the lives of individual human beings. And for the United States, this is a matter of moral and pragmatic necessity. As Robert Kennedy said, "the individual man, the child of God, is the touchstone of value, and all society, groups, the state, exist for his benefit." So we stand up for universal values because it's the right thing to do. But we also know from experience that those who defend these values for their people have been our closest friends and allies, while those who have denied those rights -- whether terrorist groups or tyrannical governments -- have chosen to be our adversaries. 

Human rights have never gone unchallenged -- not in any of our nations, and not in our world. Tyranny is still with us -- whether it manifests itself in the Taliban killing girls who try to go to school, a North Korean regime that enslaves its own people, or an armed group in Congo-Kinshasa that use rape as a weapon of war. 

In times of economic unease, there can also be an anxiety about human rights. Today, as in past times of economic downturn, some put human rights aside for the promise of short term stability or the false notion that economic growth can come at the expense of freedom. We see leaders abolishing term limits. We see crackdowns on civil society. We see corruption smothering entrepreneurship and good governance. We see democratic reforms deferred indefinitely. 

As I said last year, each country will pursue a path rooted in the culture of its own people. Yet experience shows us that history is on the side of liberty; that the strongest foundation for human progress lies in open economies, open societies, and open governments. To put it simply, democracy, more than any other form of government, delivers for our citizens. And I believe that truth will only grow stronger in a world where the borders between nations are blurred. 

America is working to shape a world that fosters this openness, for the rot of a closed or corrupt economy must never eclipse the energy and innovation of human beings. All of us want the right to educate our children, to make a decent wage, to care for the sick, and to be carried as far as our dreams and our deeds will take us. But that depends upon economies that tap the power of our people, including the potential of women and girls. That means letting entrepreneurs start a business without paying a bribe and governments that support opportunity instead of stealing from their people. And that means rewarding hard work, instead of reckless risk-taking. 

Yesterday, I put forward a new development policy that will pursue these goals, recognizing that dignity is a human right and global development is in our common interest. America will partner with nations that offer their people a path out of poverty. And together, we must unleash growth that powers by individuals and emerging markets in all parts of the globe. 

There is no reason why Africa should not be an exporter of agriculture, which is why our food security initiative is empowering farmers. There is no reason why entrepreneurs shouldn't be able to build new markets in every society, which is why I hosted a summit on entrepreneurship earlier this spring, because the obligation of government is to empower individuals, not to impede them. 

The same holds true for civil society. The arc of human progress has been shaped by individuals with the freedom to assemble and by organizations outside of government that insisted upon democratic change and by free media that held the powerful accountable. We have seen that from the South Africans who stood up to apartheid, to the Poles of Solidarity, to the mothers of the disappeared who spoke out against the Dirty War, to Americans who marched for the rights of all races, including my own. 

Civil society is the conscience of our communities and America will always extend our engagement abroad with citizens beyond the halls of government. And we will call out those who suppress ideas and serve as a voice for those who are voiceless. We will promote new tools of communication so people are empowered to connect with one another and, in repressive societies, to do so with security. We will support a free and open Internet, so individuals have the information to make up their own minds. And it is time to embrace and effectively monitor norms that advance the rights of civil society and guarantee its expansion within and across borders. 

Open society supports open government, but it cannot substitute for it. There is no right more fundamental than the ability to choose your leaders and determine your destiny. Now, make no mistake: The ultimate success of democracy in the world won't come because the United States dictates it; it will come because individual citizens demand a say in how they are governed. 

There is no soil where this notion cannot take root, just as every democracy reflects the uniqueness of a nation. Later this fall, I will travel to Asia. And I will visit India, which peacefully threw off colonialism and established a thriving democracy of over a billion people. 

I'll continue to Indonesia, the world's largest Muslim-majority country, which binds together thousands of islands through the glue of representative government and civil society. I'll join the G20 meeting on the Korean Peninsula, which provides the world's clearest contrast between a society that is dynamic and open and free, and one that is imprisoned and closed. And I will conclude my trip in Japan, an ancient culture that found peace and extraordinary development through democracy. 

Each of these countries gives life to democratic principles in their own way. And even as some governments roll back reform, we also celebrate the courage of a president in Colombia who willingly stepped aside, or the promise of a new constitution in Kenya. 

The common thread of progress is the principle that government is accountable to its citizens. And the diversity in this room makes clear -- no one country has all the answers, but all of us must answer to our own people. 

In all parts of the world, we see the promise of innovation to make government more open and accountable. And now, we must build on that progress. And when we gather back here next year, we should bring specific commitments to promote transparency; to fight corruption; to energize civic engagement; to leverage new technologies so that we strengthen the foundations of freedom in our own countries, while living up to the ideals that can light the world. 

This institution can still play an indispensable role in the advance of human rights. It's time to welcome the efforts of U.N. Women to protect the rights of women around the globe. 

It's time for every member state to open its elections to international monitors and increase the U.N. Democracy Fund. It's time to reinvigorate U.N. peacekeeping, so that missions have the resources necessary to succeed, and so atrocities like sexual violence are prevented and justice is enforced -- because neither dignity nor democracy can thrive without basic security. 

And it's time to make this institution more accountable as well, because the challenges of a new century demand new ways of serving our common interests. 

The world that America seeks is not one we can build on our own. For human rights to reach those who suffer the boot of oppression, we need your voices to speak out. In particular, I appeal to those nations who emerged from tyranny and inspired the world in the second half of the last century -- from South Africa to South Asia; from Eastern Europe to South America. Don't stand idly by, don't be silent, when dissidents elsewhere are imprisoned and protesters are beaten. Recall your own history. Because part of the price of our own freedom is standing up for the freedom of others. 

That belief will guide America's leadership in this 21st century. It is a belief that has seen us through more than two centuries of trial, and it will see us through the challenges we face today -- be it war or recession; conflict or division. 

So even as we have come through a difficult decade, I stand here before you confident in the future -- a future where Iraq is governed by neither tyrant nor a foreign power, and Afghanistan is freed from the turmoil of war; a future where the children of Israel and Palestine can build the peace that was not possible for their parents; a world where the promise of development reaches into the prisons of poverty and disease; a future where the cloud of recession gives way to the light of renewal and the dream of opportunity is available to all. 

This future will not be easy to reach. It will not come without setbacks, nor will it be quickly claimed. But the founding of the United Nations itself is a testament to human progress. Remember, in times that were far more trying than our own, our predecessors chose the hope of unity over the ease of division and made a promise to future generations that the dignity and equality of human beings would be our common cause. 

It falls to us to fulfill that promise. And though we will be met by dark forces that will test our resolve, Americans have always had cause to believe that we can choose a better history; that we need only to look outside the walls around us. For through the citizens of every conceivable ancestry who make this city their own, we see living proof that opportunity can be accessed by all, that what unites us as human beings is far greater than what divides us, and that people from every part of this world can live together in peace. 

Thank you very much.