°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ NOTICIAS: DISCURSOS DG SUPACHAI PANITCHPAKDI
Beijing, 10 November 2003
“Putting the Doha Development Agenda back on track: why it matters to China”
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ and China: 2003 Beijing international forum
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> Discursos: Supachai Panitchpakdi
Let me begin by saying how pleased I am to be in China, especially as I
am the first °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Director-General to visit this great country since it
entered the organization just two years ago.
Despite being a frequent visitor to China over the years, I am still
struck each time I return by the sheer speed and scale of China's
economic expansion. For nearly two decades China has recorded an average
annual growth of about 10 %, while its merchandise trade has been
growing at about 14 %, three times faster than world trade during this
period.
No country in history has burst unto the world economic stage as
dramatically as China. I remember that it was not so long ago, back in
December 1978, that Chinese leaders first adopted their initial economic
reform programme. That year, China's total foreign trade amounted to
only US$20.6 billion and it ranked 32nd among the world's trading
nations. Foreign investment into China was also negligible. Today, just
two years after its historic entry into the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, China has become the
world's fourth largest trading nation after the United States, the
European Union and Japan. In 2002, China's total foreign trade in goods
and services amounted to US$693 billion and the stock of accumulated
foreign direct investment was nearly US$450 billion.
By any measure these are impressive results. Indeed, they are so
impressive that it has raised concern in some quarters that it will be
impossible to compete effectively against China's immense export
capacity and market size. Personally, I believe that these fears are
largely exaggerated. Trade is not a zero-sum game. China is not only a
major exporter but also a major importer. China's modernization
programme and export industries have required, and will continue to
require, billions of dollars worth of equipment, technology and raw
materials. We should not overlook the fact that in the first nine months
of 2003, China's exports rose by 32% while its imports surged ahead by
41 %. On these figures, China will soon overtake Japan as the world's
third largest importer, behind the United States and Germany. At a time
when the global economy remains fragile, China's robust economic
performance should be welcomed as an engine for global growth. It should
also be a source of inspiration for other developing countries.
I say this because China's experience shows in the most concrete terms
that developing countries can and do benefit from economic openness and
integration. Those who warned that China's integration into the global
economy might lead to a “race to the bottom” or that the country would
be flooded by imported agricultural and manufactured products have been
proven wrong. The reduction of tariffs has increased competition in the
domestic market with the arrival of new suppliers. This has led to lower
prices and larger choice for consumers, and has lowered the prices of
essential inputs for many industries, thereby enhancing their
competitiveness on domestic and foreign markets. The number of absolute
poor in China also dropped by about 200 million during the first two
decades of reform. This is a number which is almost as large as the
entire population of the United States. Per capita income has grown by
sixfold, and farmers and city dwellers are now buying goods that they
previously could only dream of.
Of course, not all countries can be as fortunate as China and be endowed
with a market that represents nearly a quarter of humanity. But this was
not the only reason behind China's success. Size matters in economic
development, but it is not everything. China's success today is directly
attributable to its unfailing commitment to wide-reaching domestic
reform aimed at modernization and growth. Over two decades ago, China's
leadership took a bold decision to lock the country into a programme of
broad and continuing reforms; reforms that spilt into its legal system
and governmental administration. Despite all the painful adjustment
required by these reforms, China kept powering ahead by opening up the
economy to domestic and foreign competitors. Domestic reform was in turn
aided by a liberal international trading environment which for the most
part kept markets open for Chinese exports. This in turn boosted China's
economic growth and strengthened the hand of the Chinese leadership to
further advance the reform programme.
But this is not the end of the story. China is now fast approaching a
critical juncture in its development and integration into the global
economy. To continue on its impressive path of rapid modernization, and
to realize its goal of doubling its GDP by 2010, China will have to face
up to a number of important challenges. These challenges, in many ways,
reflect the growing pains of success. Let me highlight several, which I
believe will have an important impact on China's future development and
its economic relations with the rest of the world.
First, as China's economy transforms from an overwhelming agricultural/rural
society into an industrial/urban society, a major challenge for the
economy will be to create enough jobs in the industrial and services
sector to absorb the surplus labour from agriculture. Agriculture still
makes up 17% of China's GDP and 50% of employment. Another related
challenge is to spread the benefits of rapid development and to avoid a
widening of income differences between regions, and between rural and
urban areas. As long as these differences remain, Chinese cities will be
under tremendous pressure to accommodate people trying to find more
opportunities and higher incomes.
Second, the last two decades have seen a parallel shift from an inward-oriented
command economy based on state-owned enterprises to a more outward-oriented
open market economy with a rapidly rising number of collectively or
privately owned enterprises. The private sector now accounts for a very
high share of economic activity, and is now China's main economic driver.
The rapid development of the private sector brings with it the challenge
of institutional change. To reach its full potential, growth in the
private sector has to be matched by an equal development of a stable
market-oriented legal framework and financial sector. This will be
important in determining the ability of the private sector to thrive. In
turn, private entrepreneurs will also have to improve their
competitiveness and efficiency, and seek to compete on all fronts, and
not just on cost.
Third, China has been remarkably successful at preserving stability
while recording outstanding growth. China has managed to handle these
profound structural changes while ensuring that it sustains a stable
social environment. It must continue to meet this challenge. Throughout
the world, as in China, there must be a concerted effort to see that
more of globalization's benefits go to the poor. This is a moral
imperative and a political necessity. If economic growth mostly helps
those who are already more or less well-off, the resulting backlash
could be disastrous for the entire reform programme.
Fourth, China has become a major player in the global trade arena. As
its economy expands in the future, so too will its ties with the global
economy and other trading nations. These ties mean that further trade
liberalization undertaken in the context of °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ negotiations could prove
the biggest stimulus yet to China's economic growth. I know that this is
fully appreciated in China. As a leading trading nation, China needs the
opportunity of market access and the legal guarantee of consistent and
non-discriminatory trade rules offered by the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ. And the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, in turn,
needs China, as a leading trading nation, to play a full and active role
to help open markets, strengthen multilateral trade rules and keep
international trade policies liberal. China cannot afford to stand on
the sidelines and let others write the trade rules of the 21st century.
This was why China joined the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ and now as a fully fledged member of
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, it is in its interest that China uses its position to help ensure
that the Doha Development Agenda succeeds.
Let me dwell a bit on this last point, as I believe it is key to the
evolution of China's integration into the multilateral trading system
and in turn, its future development. What I have said, so far, shows
that the value of China's membership in the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ goes well beyond the
business of trade. Membership signalled China's commitment and
willingness to play by international trade rules and to bring its
economy into harmony with the rules and disciplines of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ.
With its hard-fought-for membership in the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, China has in front of it
a unique opportunity to strengthen the rules of the trading system and
to further drive down barriers to trade. This opportunity is the current
Doha Round of multilateral trade negotiations launched two years ago.
This Round, commonly known as the Doha Development Agenda, reflects the
commitment of Members to ensure these negotiations bring benefits to all
who participate, but most particularly to developing countries, for whom
trade can play a central role in their efforts to achieve economic
development.
The Doha Development Agenda is, without question, one of the most
ambitious rounds of trade negotiations yet attempted. Never before have
there been so many Members involved. Never before have there been so
many negotiating subjects on the table. And all areas of the
negotiations need to be agreed together in a final “single undertaking”
package. This means that a successful result on services, for example,
depends upon successful results in agriculture and other areas of the
negotiations. These are, of course, all ingredients for a balanced
outcome and one that could bring very significant results. The breadth
of the negotiations offer opportunities for trade-offs and something of
interest to everyone.
As you know, last September, we had our Fifth Ministerial Conference in
Cancun. At this meeting, Ministers were expected to bridge gaps at a
higher political level, and to take decisions on issues mandated by the
Doha work programme, in particular on the future of the so-called
Singapore issues. What we were hoping to achieve was agreement on a text
which would serve as a roadmap for the final phase of the negotiations.
A draft text, commonly called the “Derbez text”, was put on the table
and I would say that Members were in agreement with about three quarters
of this text. Towards the end of the meeting we tried to bridge the gaps
where positions remained apart. We did see a lot of flexibility being
shown. But in the end it was not enough, and time ran out.
There has since been a lot of talk of “catastrophe”, the “collapse of
the round” and in some more extreme cases “the end of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ”. I can
say quite frankly and openly that the meeting in Cancún was a
disappointment. But terms such as “collapse” are completely
inappropriate. The Doha Development Agenda is intact and the
negotiations are continuing. At the end of the meeting in Cancun,
Ministers reaffirmed their commitment to the Doha Development Agenda and
they gave us until December 15 to decide how to move forward. I have
since been engaged in intensive consultations with Ministers around the
world and their Ambassadors in Geneva. The overwhelming message I have
been hearing from both developing and developed country Members is of a
strong commitment and determination to get the negotiations back on
track. This indicates to me that Cancún has served as a wake-up call for
Members and there is willingness to work harder and to reach deeper to
find the flexibility to push ahead with the negotiations.
More than ever we need China to join in with other Members to put the
Round back on track and to move it forward. After all, it is very much
in the interest of China that the Round succeeds, just as it is for the
system overall. At a time when the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ faces an impasse, we need China
to use its influence to be a bridge between developed and developing
member countries. China holds a unique position as being both a
developing economy and an emerging superpower. China can use its
position to show to developing countries that the path to growth and
modernization is also the path to economic openness and integration. By
the same token, China as a major trading partner can help ensure that
the results of negotiations are balanced and can bring benefits to all.
In no other country is the public as aware or as interested in what the
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ is and what it means for their future. In China, countless numbers
of books and articles have been published, and numerous television and
radio programmes aired, on this subject. Just type in the words “China
and the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ” on any internet search engine and you will find hundreds of
websites devoted to this topic. In the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, China has shown a desire to
play a significant role in shaping the future direction of the
organization and to ensure success in the Doha Round. And we need China
to play this role, and support efforts to put the Round back on track,
by helping to build a bridge that will serve the ambitions of both the
developing and developed world.
Failure to advance the Doha Round would certainly be a lost opportunity
for China, as well as for other countries, to benefit from the economic
growth that further liberalization can generate. The absence of new
progress in the Doha Round would further damage confidence in our
already fragile global economy. Despite China's strong economic
performance, many of you, will of course, have felt the impact of the
global economic slow-down. Global investment flows in 2002 fell for the
third consecutive year to US$651 billion dollars - half the peak reached
in 2000. Trade flows recovered last year after a decline in 2001 – but
they are still well below levels achieved in 2000.
Let me briefly now touch upon some of the elements of the Doha
Development Agenda Work Programme which are critical to advancing the
Round. Indeed, the challenges China faces highlight some of the pressing
issues confronting the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ as it tries to live up to its mission of
facilitating global prosperity.
Notwithstanding the major achievements made in past rounds, there remain
serious impediments to trade in agriculture, in industrial goods and in
services. Tariff peaks and developed country tariffs which escalate with
the level of processing are of particular concern for developing
countries. But so too are high tariffs between developing countries.
Barriers to trade tend to be concentrated in agriculture, food products,
textiles and clothing and other manufactured goods in which developing
countries have comparative advantage. In agriculture, these impediments
are also severely compounded by the fact that developing countries also
have to compete in markets where huge subsidies abound – to the tune of
1 billion dollars a day in OECD countries.
Delivery on the Doha mandate on agriculture should help China to address
its concern to raise rural incomes in order to avoid excessive migration
to urban centres. It would broaden existing, and open new, avenues for
China's agricultural exports, while at the same time levelling the
playing field by reducing or phasing out trade-distorting domestic
support and export subsidies. As a result of trade liberalization, no
doubt some sectors in China may contract but others will expand.
Moreover, under the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ framework effective ways to support rural areas
exist, such as research into improving productivity and introducing the
results of that research, market information, pest and disease control,
credit programmes, as well as measures to promote diversification of
production away from the least efficient sectors. As a member of the
G-20 and in its own right, I would urge China to exercise its
considerable influence to help establish a framework in agriculture by
mid-December. Overall, full delivery on the Doha mandate for further
reform in agriculture will ultimately improve China's competitive
position relative to other countries.
In industrial goods, it goes without saying that as a major exporter and
importer of manufactured goods, China stands to gain very substantially
from further liberalization in the non-agricultural sector. Although
following reductions made in successive trade rounds, tariffs are less
of an issue for market access in industrial products, they are still
important impediments to trade. And we should not forget that the impact
of high tariffs is borne by domestic consumers as well as user
industries in the form of more expensive goods and services. These costs
tend to hit the poorest hardest, and hamper the competitiveness of user
industries. The negotiations offer the chance for Members, who have not
already done so, to increase the level of their tariff bindings to help
create a more predictable climate for trade and investment. It also
offers the opportunity to tackle non-tariff barriers which have grown as
industrial tariffs come down.
Equally, further liberalization and rule-making in the services
negotiations offers great scope to China just as it does for other
countries. The °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ's General Agreement on Trade in Services (GATS) is a
relatively new agreement and hence the commitments made in the last
round of trade negotiations generally reflect the status quo of market
opening. The World Bank has estimated that welfare gains from a fifty
per cent cut in protection in the services sector would be five times
larger than for non-services sector trade liberalisation. Ranging from
accountancy to telecommunications, and to construction and tourism,
services are the largest and most dynamic component of both developed
and developing country economies.
China has a service sector which is growing in importance. In the
future, more jobs will need to be created in the service sector in order
to absorb China's adjustment from an agricultural/rural society to an
urban society. Apart from being a potentially huge exporter of services,
China also stands to gain very significantly from an improvement in its
own service infrastructure. All the more developed economies have an
efficient services sector which accounts for more than one half of GDP.
It is impossible for any country to prosper today under the burden of an
inefficient and expensive service infrastructure. Producers and
exporters of any product will not be competitive without access to
efficient banking, insurance, accountancy, telecoms and transport
systems. China's financial services sector, in particular, has a huge
potential to expand and to provide key services to companies and
consumers. Without the spur of competition they are unlikely to excel in
this role and this will be to the detriment of overall economic
efficiency and growth. China's services sector also needs to obtain the
know how and technology applied in services industries in more developed
countries. China has, so far, played an active role in the services
negotiations. It needs to maintain this constructive approach and help
convince other developing country members to be more active in the
services negotiations.
The Doha Round also covers strengthening of existing °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ rules as well
as the possibility of extending them to other areas. Amongst other
things, 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 liberalisation achieved. Clearly, China has a lot to gain
from strengthening the disciplines on anti-dumping. As an exporter,
China is subject to far more anti-dumping measures than any other
country. Since 1995, its exports have been subject to 324 anti-dumping
investigations.
We are also looking to make special provisions for developing countries
more precise, effective and operational to assist these countries to
participate more actively in international trade. We are exploring ways
of accommodating the concerns many developing countries have about the
implementation of °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ agreements that were negotiated in the last round
of trade negotiations. And we are also considering ways of strengthening
the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ's dispute settlement mechanism.
The value of the Doha Round for China, like China's membership in the
°ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, however, goes well beyond the business of trade. Tremendous reforms
have been accomplished by China and much of the groundwork for further
reforms has been laid. The Doha Round by breaking down the remaining
barriers to trade and bringing economies closer together will help
ensure that the momentum for change in China continues. °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ, like China,
cannot stand still. There is much to be done to ensure that the
multilateral trading system evolves in tandem with the global economy
and meets the needs of business people and consumers around the world.
It would be a waste if the Doha Round were to go dormant and the hard
won gains made in the negotiations, so far, squandered. It would be
equally tragic if China and other Members do not fully seize the
opportunities offered by the Doha Round to improve the lives of their
peoples.
Without further progress in the Doha Round, there is a strong risk that
regional and bilateral arrangements would distract attention from
multilateral negotiations. Already bilateral and regional trading
arrangements are a prominent feature of the trading system. Today, there
are around 250 agreements currently in force and there could be close to
300 by 2005. China's economic relations with the world are simply too
large and too pervasive to be managed effectively through a maze of
arbitrary, shifting and unstable bilateral deals. China's best guarantee
of coherent and consistent international trade policies, just as it is
for other countries, is to be found inside the rules-based multilateral
trading system. This is the best way to resist bilateral pressures or
threats of unilateral action. It is also the best way to sustain and
promote domestic economic reform - knowing that China's efforts in this
direction are being matched by its trading partners who share the same
obligations under the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ Agreements.
So far, China's participation in the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ dispute settlement system has
been limited and it has yet to be a defendant in °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ dispute settlement.
However, the flipside to a slowdown in the negotiations is the potential
rise in dispute settlement activity. While the willingness of Members to
bring their trade disputes to the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ is an important signal of
confidence in the system, it also indicates that there are issues that
still need to be worked out amongst Members. Dispute settlement is a
vital function of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ but it is a tool of last resort to be used
only if rights are impaired. Members will always need the negotiating
mechanism of the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ to lead the way to find mutually beneficial
compromises to difficult issues. It is in the interest of all Members to
push ahead with the negotiations and to find ways within the Round to
deal with frictions that are likely to arise as economies come closer
together and to create new opportunities for trade.
China has achieved in one generation what in the past would have taken
countries, three, or maybe four, generations to do. This has been
possible mainly because of China's own pragmatic economic policies and
its willingness to stay on the road of reform despite having to
encounter painful adjustment. But it has also been because of China's
willingness to embrace the brave new world of opportunity and risk,
which globalization represents. China is, today, at the very centre of
this process and its future path to growth and development will be
inextricably linked to the prosperity of the global economy.
Ancient China boasted impressive technological achievements ranging from
gunpowder to paper. Modern China has only just recently joined the ranks
of a very small handful of nations able to successfully send an
astronaut into space. For many centuries, China's developed civilization
and vast population made it the world's largest economy. China's role in
the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ system is about more than trade. It is about China's role as one
of the world's leading economic nations. At a time when the °ÄÃÅÁùºÏ²Ê¹ÙÍø×ÊÁÏ system
faces important challenges, the world needs China to show that it can
play that role and help rebuild ambition and confidence in the Doha
Development Agenda.