NOUVELLES: ALLOCUTIONS DG SUPACHAI PANITCHPAKDI
2 décembre 2004
CHINA AND THE °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ: CHALLENGES AND OPPORTUNITIES FOR THE FUTURE
“°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Forum of the 6th Shanghai — International Industry Fair”
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> Allocutions: Supachai Panitchpakdi
I am delighted to join you today for a discussion on the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ and the
Doha Development Agenda. The pace of China's economic development has
been electrifying and perhaps, no other Chinese city reflects this speed
of progress better than Shanghai. It is indeed fitting that Shanghai
should be the venue for this discussion.
Let me start by saying a few words about the current round of
negotiations.
As you know, the Doha negotiations have entered a new phase after the
adoption of the July Decision. I do not wish to spend too much time on
the current state of play as I would like to devote most of my time on
China and the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. Let me just say that after a period of some
uncertainty, in particular following the setback at our Ministerial
Conference in Cancún, the negotiations are back on track and moving
forwards. In July this year, we succeeded in making significant progress
in some of the areas that had been most divisive among Members in the
past, most notably agriculture.
We are now focussing primarily on the technical work which needs to be
done in each area to prepare the ground for the next major steps in the
negotiations. This work may be technical, but it is very important and
it must be done properly.
The challenge ahead of us is to negotiate greater levels of specificity.
Hard political decisions will need to be taken in capitals, particularly
as we gear up for our next Ministerial Conference scheduled for December
2005 in Hong Kong. This will require full engagement at the highest
political levels. I have heard a good deal of support for the idea of a
stocktaking in March/April of 2005, to evaluate progress in all areas as
we begin our preparations for the Hong Kong Ministerial Conference.
I remain firmly convinced that if we can maintain the momentum of July
and continue to build on the spirit of compromise, we have a unique
opportunity to re-energize the Doha round in a lasting way and establish
the conditions for its successful conclusion.
I would like to turn now to look more closely at China's impressive
integration into the multilateral trading system. China joined the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ
with extensive and ambitious commitments. China is overtaking Japan as
the world's third largest merchandise trader in 2004. The Chinese
economy of 2004 is not only bigger and stronger but it is also more
integrated with the rest of the world. China is not only a major
exporter but also a major importer. China is now the world's third
biggest importer, behind the US and Germany but ahead of Japan. Chinese
imports have also become geographically more diverse. For the past five
years Chinese imports have generally grown faster than its exports, with
import growth outpacing export by about an average of 5 percentage
points a year. This is not surprising since China's economic expansion
requires billions of dollars worth of equipment, technology and raw
materials. China's strong import growth has provided an important
stimulus for export-led growth in the world during the past few years.
China's economic boom is potentially an economic boom for the world.
In the next few years, I believe we will start to see a new phase in
China's integration into the multilateral trading system. Let me explain
why I say this. Three years ago when China joined the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, it gave an
important signal of its commitment and willingness to bring its economy
into harmony with the rules of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. To China's credit it did not
waver in its resolve. The task was not always easy but throughout this
period we have seen China, in implementing the terms of its accession to
the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, progressively lower its tariffs, phase-out non-tariff measures
and reduce restrictions on trade in services. In trade in goods, China's
simple average tariff rate dropped from 42.9 per cent in 1992 to 10.4
percent at the beginning of 2004. Overall, China's performance has been
very good.
That being said, it would be fair to say that China has not settled all
the issues and concerns of other °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members relating to bringing its
trade regime into strict conformity with its terms of accession. For
instance, I have been informed that the level of counterfeiting and
piracy remains of concern to many °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members. Also in specific
industrial and service sectors, there are still various obstacles
confronting foreign companies. Retail businesses, scheduled to be
further opened to foreign competition by the end of this year, are one
such example. I understand new regulations have left investors concerned
over vague expressions and definitions. China will have to strengthen
its efforts in terms of transparency and information on relevant laws
and procedures. This will help to alleviate any misconceptions about
China's commitment to its reform agenda. Some sensitive service
industries will have to further open up by 1 January 2005 – thus
becoming more exposed to competition. A number of restrictions will be
lifted in the areas of foreign equity participation, business scope and
geographical presence.
With more open markets Chinese businesses will certainly face more
competition but this is not necessarily a negative consequence. As the
last decade of reforms has shown, a more open economy is the best way to
boost competitiveness. With more open markets Chinese businesses will
continue to improve their overall ability to respond.
Let me take the example of agriculture, an area that is much debated in
the Doha Development Agenda. When China joined the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, many were
concerned that China's farmers would be hardest hit by the country's new
openness to trade. However, the results have not gone quite that way.
Due to greater openness China's agriculture sector is going through a
period of change. Admittedly this is difficult for some – but it is by
no means entirely negative. In fact, China's agriculture is rapidly
moving in the direction of national comparative advantage.
With more than 20 per cent of the world's population and only 7 per cent
of its arable land, China is rightly shifting towards labour intensive,
high value added production, and away from land intensive grain
production. As a result, China's agricultural sector is more competitive
and exports have improved. Agriculture productivity is increasing
because of greater openness. Opening up new market access opportunities
around the world can have potentially big gains for China. It should be
in China's interest to ensure that its trading partners also undertake
reforms in agriculture. After all, as a result of accession, China's
agriculture market is already relatively open and subsidies are used in
only a very limited way. If this is true for agriculture, it is even
more so for manufactured goods and services.
China has so far devoted much attention to implementing its accession
commitments. This year, the amended Foreign Trade Law which took effect
on July 1, changed the foreign trade rights approval system which had
been in effect for 50 years into a registration system. This means that
China has met its commitment of opening up foreign trade rights 6 months
ahead of schedule. This is highly commendable. China is also an active
player in the Doha Round. However, I believe that as China's membership
of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ matures we will need to see it participating even more
actively in the current round of negotiations. Being able to participate
in trade negotiations was one of China's key objectives for joining the
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. Many developing countries look up to China for leadership. They
also see in China's experience concrete evidence that the path to
economic openness and integration is also the path to growth and
modernization.
Let me be frank, the Doha negotiations have been put back on track but
much work remains to be done to finish the Round. Whether we can
successfully negotiate the challenges over the next period depends very
much on the commitment of all Members to build on the July Decision. Few
countries have a greater interest than China in progressive trade
liberalization and the strengthening of the rules-based multilateral
trading system. China also holds the unique position of being both a
developing country and a trading superpower. With this status, of
course, comes responsibility. In its own interests and in the global
interest, China must do even more to help bring the Doha Round to a
timely, successful conclusion.
Given the limited time that I have left, let me refer to a couple of
current trade issues that are of particular significance to China.
First, the end of 2004 will herald the historic expiry of the Agreement
on Textiles and Clothing (ATC). This puts an end to more than 40 years
of discriminatory quota restrictions and will bring considerable welfare
and efficiency gains for the global economy. There is also potential for
more South-South trade as this sector liberalizes. We should also not
forget that the abolition of quotas in this sector was a very important
objective for developing countries in the Uruguay Round.
I am therefore pleased to confirm that expiry of the Agreement on
Textiles and Clothing is on track. Restraining countries have notified
the Textiles Monitoring Body that they will eliminate all remaining
quota restrictions on 1 January 2005. I welcome the role that China
together with other °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members have played.
It would be remiss of me if I did not also mention that there is anxiety
on the part of some countries about the short-term, but considerable,
adjustment costs that may result from quota abolition. The issue has
been raised in Geneva in the Council for Trade in Goods and China's
initial reaction has been constructive and helpful. Adjustment
challenges are complex. The starting point is domestic reform. There is
a role for International Financial Institutions in facilitating a
coordinated response in support of domestic reform efforts. In °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ
discussions, China has also usefully suggested that it and other
countries could play a positive role through South-South cooperation.
All these contributions will count, but there will be no simple
solutions.
That being said, it is important to stress that adjustment and domestic
industry restructuring is a necessary part of the process of reform and
liberalization. China has had to undergo adjustment in several areas. No
country in today's global economy can afford not to undertake domestic
policy reforms. I should also highlight that there is support for
adjustment such as through the IMF's Trade Integration Mechanism, the
World Bank's Country Assistance Strategies and the World Bank and IMF's
Poverty Reduction Strategies. We need to work together in the most
appropriate forums to find solutions.
My second point relates to the strengthening of existing °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ rules. In
the current round of negotiations, we are looking at how to strengthen
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ disciplines on anti-dumping. It is important that we have strong
disciplines to prevent unfair trading practices, but at the same time
these should not be used to undermine trade liberalization. As the
negotiations progress, the rules negotiations will take on even more
significance. It is important to ensure that the rules negotiations
continue to progress in parallel with other areas under the Doha work
programme.
Sixteen °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members initiated 101 anti-dumping investigations against
exports from a total of 23 different countries or customs territories
during the first half of 2004. This is slightly more than the 98
investigations initiated in the first half of 2003. While it is
important that we protect Members' rights to act against trading
practices which the GATT condemns, we must also ensure that anti-dumping
measures are not used as a pretext for protectionism. For systemic
reasons, I believe it is vital that we use the opportunity of the
current round to clarify and improve °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ disciplines in this area.
As you know, a few major users of anti-dumping duties continue to treat
China as a “non-market economy”. I know that this is a vexed issue and
it would not be for me, nor for the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, to comment on it. This is an
issue between China and its trading partners. But I do think that the
best answer that China can give is to stay firmly on its impressive road
of reform. Membership of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ and participation in the current round
of negotiations has proven China's firm commitment to the market economy.
By powering ahead with its programme of broad and continuing reforms,
China will make it clear to all its trading partners that the process is
irreversible.
Let me conclude by reminding us all that we all share a joint
responsibility to strengthen the multilateral trading system and to keep
international trade policies liberal. I look forward that as a major
trading nation China will do its utmost to maintain a strong commitment
to the DDA and together with all the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Members ensure further
progressive momentum of the negotiations in 2005 that will pave the way
for the final success of the Round in the near future.