°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ NEWS: 2004 NEWS ITEMS
Beijing, China, 9 December 2004
The State of the Doha Development Agenda Negotiations and the Impact of the DDA on China's Economic Environment
China °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Forum
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More on the July Package
Keynote address by
Dr. Kipkorir Aly Azad RANA
Deputy Director-General
World Trade Organization
Mr. Minister,
Excellencies,
Distinguished representatives from the public and private sectors and from
the academic community,
Honoured Guests,
Ladies and Gentlemen,
I am extremely happy to be with you on the third anniversary of China's
accession to the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. It is indeed an important day today and I am sure that
many of you will look back at what your country has achieved in this period
with a great deal of pride. In my view this pride in your achievement is
completely justified. China has achieved what many developing countries
aspire to achieve. A stable economic growth; an attractive base for foreign
direct investment; and since 2001, an important Member of the World Trade
Organization. But the path to that success must not have been easy. I am
sure it would have required dedication, patience, self belief and above all
perseverance, including during the fifteen years that China was in the
process of negotiating its accession to the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
As you are all aware, China completed its long process of accession to
become a Member of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ in December 2001, just a few weeks after the
launch of the Doha Round. Three years later, we are celebrating China's
integration into the multilateral trading system. The continuing story of
outstanding economic success is a tribute to the vision and professionalism
of China's policy makers. Progressive liberalisation of trade and investment
has played a key role in China's economic growth and development over the
past 25 years. China has always been an economic force to reckon with and
for years has played a central role in contributing to global economic
output. This role has only become stronger with China's entry into the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ,
where it now is increasingly providing inspiration to other developing
country Members.
It is a happy coincidence that this third anniversary celebration is taking
place amidst the conduct of the transitional review in connection with
paragraph 18 of the Protocol on the accession of China to the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. The goal
of the transitional review is to allow °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members to examine and report on
China's progress in meeting its obligations under the various Agreements.
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members are encouraged by China's implementation of its °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ commitments,
which have progressed and are now in an important phase. China has made
noteworthy strides in promulgating laws and regulations, and building
transitional administering authorities. In a period of evolving regulations,
the importance of regulatory transparency, predictability, stability and
consistency is paramount. Many efforts have been made by China to fully
conform to °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ rules and each day brings in new changes. While on the flight
to Beijing, I read that China is to open five new cities to foreign banks as
part of its commitment to gradually open up its domestic banking sector.
What was specially noteworthy is that this is being done ahead of the
schedule that China agreed with °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members. These efforts are praiseworthy
and the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ will be more than willing to assist China in these efforts.
China has been, and will remain, an important recipient of °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ's technical
assistance and capacity-building activities.
China has made important strides in the three years since it joined the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
Recently compiled international trade data by the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ shows that China
already imports more goods that Japan and it is expected that China will
surpass Japan's total merchandise exports in 2004. China is also likely to
very soon become the world's third largest trading nation behind the United
States and Germany. The growth in communications, so essential in today's
world, is equally impressive. China already has the fourth largest internet
market in the world. And judging by the communications infrastructure being
put in place, there is no doubt that China will quickly vault to the top of
the league.
Personally, I have always been an ardent admirer of China's stupendous
growth. China has achieved a great deal in the last few years. But the
potential of benefiting from the multilateral trading system is far from
exhausted. It is fortuitous, and many would say even providential, that the
launch of the Doha Development Agenda broadly coincided with China's entry
into the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. As you are aware, Ministers at Doha adopted an ambitious
agenda with development issues and concerns of developing countries at the
heart of this agenda. It is the current status of this Doha Development
Agenda, commonly referred to as the DDA, that I will now focus on.
We have come a long way since the Doha Ministerial meeting. Members have
seen periods of progress and consensus; but there have also been times when
divergences of views have not been able to be resolved. Many feared the
worst when Members failed to reach an agreement at the Cancun Ministerial in
September 2003. The °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ found itself in a precarious situation. There were
strong pressures on the multilateral trading system from a proliferation of
prospective regional arrangements. A target to resuscitate the DDA by
December 2003 did not produce any significant results. Elections in some key
countries also diverted attention away from the DDA. Members had no choice
but to inject substantial momentum into the negotiations by the summer of
2004.
It was clear that this could only be done by restoring confidence in the
process. The General Council Chairman and the Director-General of °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ made
renewed efforts to move the stalled negotiations, while continuing to
emphasise the principles of transparency and inclusiveness not only in their
consultations, but also in their entire process. Clearly, seeking consensus
amongst 148 Members at diverse levels of development and a negotiating
agenda as complex and sensitive as the Doha round, was never going to be
easy. Nevertheless, the concerns of all the Member countries had to be taken
on board, since a process which did not associate all its constituents would
never be sustainable. Moreover, past experience had shown that while strong
political commitment from the major trading nations was a necessary
condition for success, it would not be sufficient. All Members had to play
their part. And this they did, responding very positively and constructively
to this challenge, reflecting their support of the multilateral trading
system.
In the lead-up to the July 2004 General Council, Ministers met in various
formats and groupings around the world. This intensive ministerial-level
activity provided much needed political support for the DDA, there were
still considerable problems in translating it into concrete progress in the
negotiations in Geneva. Consensus remained elusive. As common ground was
being reached on some issues, on others the gap seemed to remain as wide as
before, if not wider. Even though time was running out and nobody wanted a
failure, yet Members did not seem willing to yield ground from their
favoured positions.
The various negotiating groups and the Trade Negotiations Committee met
frequently and in a variety of formats in order to narrow the differences in
preparation for the final push. The Director-General, as Chairman of the
Trade Negotiations Committee, worked in very close coordination with the
Chairpersons of negotiating groups and the membership in a joint effort to
build common ground.
All these efforts yielded results and, I am happy to say, the multilateral
system prevailed. Members showed they were committed to making progress on
the DDA. Perhaps nothing symbolised this better than the recently concluded
agreement late July 2004, commonly referred to as “the July Decision”.
Members collectively demonstrated a spirit of co-operation and goodwill.
This Decision, formally adopted by the General Council on 1 August 2004, has
put in place framework agreements ensuring continued progress in the DDA
negotiations, and while it may not be perfect, the July Decision did achieve
a text which reflects a very fine balance of interests.
The main elements of the Decision are as follows:
On Agriculture, while far-reaching commitments were reached on all
three pillars of the negotiations — domestic support, export competition and
market access — there remain a number of gaps to be filled and thorny issues
to be resolved. On export competition, despite the important commitment to
eliminate export subsidies, Members will still need to fix an end date. With
respect to domestic support, while it is accepted that countries with higher
subsidy levels will reduce much more than those with minimal subsidies, the
actual level of commitments to be assumed still needs to be carefully
negotiated. On market access, while agreement was reached that reductions
would be made through a tiered formula, Members will need to negotiate the
actual percentage reductions to be made by developed and developing
countries. The Decision also calls for tariff reductions to be made through
a tiered formula that takes into account the different tariff structures of
developed and developing countries. All countries, other than
least-developed countries, are expected to undertake substantial
improvements in market access for all agricultural products, including
sensitive products. Special and differential treatment for developing
countries will include not only longer time-frames and lower reduction
commitments, but also the ability to designate some products as Special
Products which will be eligible for more flexible treatment and a new
Special Safeguard Mechanism for developing countries. However, Members will
still need to establish which products can be designated as “sensitive” and
“special” and agree on disciplines to ensure that flexibility in this area
is not used to circumvent market access commitments.
On Cotton, which is so important particularly to farmers from
least-developed countries in West Africa, the Decision confirms that the
trade-related aspects of this issue will be addressed “ambitiously,
expeditiously and specifically” within the agricultural negotiations and
that work to be undertaken will encompass all three pillars of market
access, domestic support and export competition. A sub-committee on cotton
has been established. This shall report periodically to the main Agriculture
negotiating group. Work shall also continue on the development assistance
aspects of cotton.
There is no doubt that China has a big stake in the negotiations on
Non-Agricultural Market Access (NAMA). Annex B of the Decision sets out
the initial elements for future work on modalities in this area, and
provides some guidelines on the scope and approach to be taken in the
negotiations. It recognizes that a formula will be used as a tariff
reduction modality and indicates that a sectoral tariff component will also
be pursued. The principles of special and differential treatment and less
than full reciprocity in reduction commitments are to be fully incorporated
in such modalities. In fact, Annex B includes several provisions that deal
with the specific needs of developing-country Members and instructs the
Negotiating Group on Market Access to further elaborate on them. For
example, in the case of least-developed countries, it recognizes that they
shall not be required to apply the formula nor participate in the sectoral
approach, and clarifies that they are only expected to substantially
increase their level of binding commitments. The framework also establishes
the steps to be taken with regard to non-tariff barriers. It goes without
saying that much technical work and negotiations will be required in order
reach agreement on modalities in this area.
China has been particularly active in ensuring that Development
issues are an integral part of the negotiations. In the July Package too,
development permeates the whole of the text and the Decision commits Members
to fulfilling the development dimension of the DDA. Special consideration
shall be given in the negotiations to the specific trade and
development-related concerns of developing countries, including capacity
constraints. Prominence is also given in the Decision to the mandate of
making existing special and differential treatment more precise, effective
and operational. A deadline of July 2005 has been set for the Committee on
Trade and Development meeting in Special Session to review all outstanding
agreement-specific proposals on special and differential treatment and to
report to the General Council with clear recommendations for a decision. The
Committee has also been directed to address all other outstanding work,
including on the cross-cutting issues, the monitoring mechanism and the
incorporation of special and differential treatment into the architecture of
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ rules, and report, as appropriate, to the General Council.
Members also agreed that in the ongoing market access negotiations, special
attention shall be given to the specific trade and development-related needs
and concerns of developing countries, including capacity constraints, and
concerns relating to food security, rural development, livelihood,
preferences, commodities and net food imports, as well as prior unilateral
liberalization, which have been directed to be taken into consideration in
the Agriculture and NAMA negotiations. In the context of the concerns of
least-developed countries, the Council confirmed that nothing in this
Decision would in any way detract from the special provisions already agreed
to by Members in respect of these countries.
Trade in Services continues to be a very important part of the
negotiations. The Decision reaffirms the commitment of Members to making
progress in the services negotiations. Members who have not yet submitted
their initial offers are urged to do so as soon as possible. A deadline of
May 2005 has been set for the submission of revised offers. China continues
to be a major service provider, and will no doubt play an important role in
these negotiations
On the Singapore Issues, there is agreement to commence negotiations
on Trade Facilitation. To this effect, the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Trade Negotiations Committee
established the Negotiating Group on Trade Facilitation on 12 October 2004.
The aim of these negotiations will be to clarify and improve three existing
GATT Articles with a view to expediting the movement, release and clearance
of goods across borders, including goods in transit. This will help to make
international trade transactions easier and less expensive. Negotiations in
trade facilitation means that governments will soon begin to deal with the
red-tape, inefficiency and sometimes questionable practices which can, in
some cases, distort trade more than tariffs or quotas. On the other three
issues — Relationship between Trade and Investment, Competition Policy and
Transparency in Government Procurement — there will be no negotiations in
the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ during the Doha Round.
With regard to the other areas of negotiation, namely, the Dispute
Settlement negotiations, Rules, Trade and Environment and TRIPs, Members
reaffirmed their commitment to making expeditious progress in line with the
Doha mandates. They similarly reaffirmed the high priority Ministers at Doha
gave to the other elements of the Work Programme which do not involve
negotiations, particularly issues of interest to developing countries, and
instructed that reports should be made to the next Ministerial Conference.
Finally, Members agreed to continue the negotiations beyond the timeframe of
1 January 2005 set in the Doha Ministerial Declaration, and agreed to hold
the next Ministerial Conference in Hong Kong, China in December 2005.
While there is much to celebrate about the July Decision, there is still a
lot of work to be done. There cannot be any room for complacency, and
Members must show the same focus, determination and flexibility that made
the July Decision possible. In fact, the road ahead is bumpy and needs to be
carefully negotiated. While the July Decision made it possible for the
necessary decisions on key issues to be taken to ensure continued progress
on the DDA, it does not in any way herald the end of the Round. However, it
has clearly provided us with signposts. But the goals have to be achieved.
Fulfilling all the Doha mandates would require our collective commitment to
build on the July Decision and I am sure that China would continue to play a
leading role in advancing these negotiations.
Since returning from the summer break, Members have turned their attention
to the technical work which needs to be completed before modalities can be
agreed. At the last TNC meeting, the Director-General stated that it is only
when work on these technical issues is considerably advanced can we
determine with any certainty the next steps that need to be taken in the DDA
Work Programme. It would be futile and counter-productive if Members set
themselves ambitious goals at this stage of the negotiations.
Notwithstanding this, it is important that progress is made on all fronts
bearing in mind the mandate and deadlines specified in the July Decision.
Shortly, at its end-of-year meeting, the General Council will review
progress across all fronts on the basis of reports from the various °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ
bodies, including from the Director-General as Chairman of the TNC. It is
also intended to conduct a further overall review of progress next spring
when Members will begin preparing for the Sixth Ministerial Conference. The
continued engagement of all delegations, including leading trading nations
such as China, will be crucial in this new phase of work. All °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members
have a collective interest in strengthening the multilateral trading system,
as there is no credible alternative to it.
Foreign trade is crucially significant for development. Liberalizing import
markets for foreign suppliers is a way to eliminate existing market
distortions and facilitate purchasers in Member countries to procure the
goods and the services that are most cost-effective for them and of the best
possible quality. It is true that trade liberalization exposes import
competing industries in individual countries to greater competition, but
this is what will also improve the productivity of these industries through
innovation and competitiveness. Member countries themselves need to
contribute to this process chiefly by improving macroeconomic and domestic
regulatory framework, as well as the physical and organizational
infrastructure to back up trade and private-sector investment
In the final analysis, trade liberalization on its own is not enough to meet
all the economic and social challenges facing nations. However, the dramatic
importance of trade as an engine of economic growth and development cannot
be overstated. Studies done by the World Bank, the International Monetary
Fund and the Organization for Economic Cooperation and Development, all
indicate that the gains from liberalization of trade under the DDA could run
into many billions of dollars, with developing countries gaining a sizeable
share, which would help facilitate their efforts to alleviate poverty and
achieve economic growth and development.
Let me conclude by saying that China's continued engagement in the technical
phase of the negotiations is extremely important. Developing countries, like
China, must use this round of negotiations to promote their development
objectives and the July Decision of the General Council is exactly the basis
to build upon. The July Package has both rights and obligations. Countries
have to now maximise the gains, including by expanding upon the
flexibilities and special and differential treatment provisions inherent in
the Decision.
Let me once again thank the organisers of this China °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Forum. With so many
distinguished participants, this forum is indeed an excellent opportunity to
assist the public and private sectors and the academic community in their
efforts to develop the right strategies for economic growth through
participation in global trade. The theme of the Conference “China and the
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ: Meeting the Challenges Ahead” goes to the heart of the mission of the
World Trade Organization, which was created in the belief that greater
openness of world markets would improve the investment environment, generate
economic growth and be a powerful force for creating jobs and reducing
poverty. I am sure that this is exactly what this country will achieve in
time to come and will continue to play an important role in the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
I wish all of you the very best.
Ganxie Zhu Wei.