World Trade WT/MIN(96)/ST/117
12 December 1996
Singapore, 9-13 December 1996
It is a great pleasure for me to lead the Chinese delegation to attend the First Ministerial Conference of the WTO in this beautiful State of Singapore. Let me express my heartfelt gratitude to our host for their warm hospitality and the excellent preparation which has ensured the success of the Conference. The subjects discussed at this Conference will have a major bearing on the orientation of the multilateral trading system in the coming years and will have an important impact on the development of international trade and world economy. The Chinese Government attaches importance to this Conference and wishes it every success.
I would like to take this opportunity to express our views on the international economic and trade situation since the establishment of the WTO.
Since the conclusion of the Uruguay Round Multilateral Trade Negotiations in April 1994, the international trade and economic pattern has been undergoing major restructuring with accelerating process of globalization and integration. During this process, the replacement of GATT by the WTO and the increasing regional economic cooperation are two important events having a strong bearing on the world economy. The simultaneous emergence of a strengthened and encompassing global trading system and rapidly developing regional economic groupings attract worldwide attention.
We are pleased to note that since its establishment, the WTO has made headway in improving and implementing Uruguay Round Agreements, in establishing a sound institutional set-up of the multilateral trading system, and in improving the effectiveness of the trade dispute settlement mechanism. The WTO has gradually laid a solid foundation for further strengthening the multilateral trading system and for formulating and improving international trade disciplines in the future. The Chinese Government, as always, supports the multilateral trading system as embodied in the WTO, endorses its role in promoting healthy trade and economic relations among countries, and believes that the WTO should make due contributions to the establishment of a fair and rational international economic order.
However, the WTO is facing great challenges. These challenges have arisen mainly because of the major change of its membership composition. When the GATT was provisionally applied almost 50 years ago, there were only eight developing countries among the original 23 contracting parties, accounting for one third of the total membership. Along with the development of the world multilateral trading system, there were 52 developing countries which became the Members of the WTO when the Uruguay Round Agreements took effect as of 1 January 1995. Today, the number of developing countries has raised to 96, taking up four fifths of the total membership of the WTO. This not only reflects a simple change of the composition of the WTO membership, but also demonstrates the great changes of international economic structure. We believe, if the WTO were to play a positive role, it must adapt to such changes and be ready to meet the challenges brought about by this new international economic and trade structure. In fact, in the past two years, the WTO has encountered difficulties in such areas as the implementation of the Uruguay Round Agreements, balance of the multilateral policy-making process, expansion of new areas of trade liberalization and coordination of the development of regional groupings and the acceptance of new Members. These difficulties reflect the extent of seriousness of the challenges facing the WTO. We believe that the following areas have reflected such challenges and are therefore worth our attention:
Firstly, the implementation of various Agreements of the Uruguay Round is not balanced. Developed countries have made greater efforts to push for the rapid implementation of those Agreements which are of vital interest to them, and in the meantime, have shown little interest in implementing various Agreements which are of great interest to developing countries, such as the Agreement on Textiles and Clothing. Since the efforts in implementing the Agreements differ greatly, it is of the danger to damage the delicate balance of rights and obligations of Member countries in the Uruguay Round Agreements. The victims of such imbalance will most likely be developing countries.
Secondly, there has been little change in the situation where a few major players dominate the multilateral decision-making process. They tend to disregard the reality of the development of world economy and unduly exert pressures on others to incorporate issues irrelevant to trade into the mandate of the multilateral trading system. Meanwhile, they are proceeding from their own interests and taking a selective approach in expanding new areas for trade liberalization. Such trade liberalization approach has gone beyond the limit of present development stage of many developing countries and have a detrimental effect on the economic development of these countries.
Thirdly, in the implementation of the Uruguay Round Agreements and in promoting trade and investment liberalization, reciprocal principle is unduly emphasized and most-favoured-nation principle has often been neglected. The same pace of trade liberalization has been advocated in spite of the diversity of economic development of Member countries. Some major players continuously demand to make new rules covering new ground while neglecting the irrationality of some existing rules. The rules of origin is a case in point. With the expansion of international investment, the development of international trade and the increase of re-exportation, the rules of origin is totally outdated. The irrational trade statistical reporting method has led to many unnecessary disputes in economic trade relations. The WTO should review and revise these rules and should not indulge only in making new rules.
Fourthly, the accession of the applicants to the WTO has been slowed down due to political considerations and the excessive demand for immediate commercial benefits. The scope of some accession negotiations has gone beyond the provisions of the WTO Agreements and has sometimes become a symposium to undertake inclusive review of economic and trade regime of the applicants. Some Members have taken advantage of the accession negotiation as a means to resolve bilateral trade and economic disputes not relevant to the WTO rules. As a result, some accession negotiations have encountered undue delay, which has slowed down the process of economic globalization and universality of the multilateral trading system.
There is no doubt that should the WTO turn a closed eye to the above abnormal phenomenon and fail to take effective measures to curb and correct them, the enthusiasm of developing countries in participating in the multilateral trading system will be dampened and the implementation of the Uruguay Round Agreements will be delayed, and as a result the operation and authority of the WTO will be jeopardized. When we emphasize that the WTO should seriously cope with the changes of the composition of its membership and pay more attention to the interests of developing countries in the multilateral trading system, we are aiming at, in the final analysis, strengthening the multilateral trading system. With the increasing interdependence between countries today, the negligence of the interests of developing countries may end up by damaging the interests of developed countries. Over-emphasis on trade liberalization, in disregard of the development of developing countries may lead to a situation where one finds open but non-existing markets. If this is the case, it would be the biggest failure of trade liberalization.
China, like the majority of the WTO Members, is of the view that the WTO should not make haste in expanding the coverage of trade liberalization, the pressing task of the WTO is to ensure effective implementation of the Uruguay Round Agreements. Effective implementation and accomplishment of the built-in agenda and follow-up negotiations will be the WTO's central task for a long time to come. As a Chinese saying goes, "More haste, less speed".
We believe the expansion of the scope of the WTO activities and the coverage of trade liberalization should be based on consensus. Undue expansion is inappropriate. It will not only divert the WTO from focusing its attention to deal with major substantial issues, and thus affect the effectiveness of the newly established WTO, but also overburden the Member countries, especially the developing countries. All the subject matters, including the Investment Agreement, should be fully discussed among all parties. We do not want to see something worked out behind closed doors by a small group of people, and then impose decision as fait accompli on the other Members. At the same time, we should define the role of the WTO in an objective and realistic way and there should be a proper division of labour between the WTO and other international organizations. They can complement and reinforce each other. WTO should not, and cannot substitute the roles played by other international organizations.
The Singapore Ministerial Conference has provided an opportunity for all of us to make an assessment of the implementation of the Uruguay Round Agreements, express views on the roles of the WTO as well as its future trend of development. It would be premature to define a rigid framework for future multilateral trade negotiations.
The Singapore Conference should accelerate the admission of new members. Ten years have passed since China applied for the resumption of its contracting party status to GATT and negotiating for joining WTO. The process has drawn attention from all quarters. As you are all aware that since 1978, China has taken economic reform and opening up to the outside world as its basic policy. This policy, we believe, will promote the establishment of a socialist market economy in China to participate in the rules-based multilateral trading system, and it will be a boost for China's opening up to the outside world to join the WTO which has more than 100 Members. Therefore, the Chinese Government has overcome many difficulties and obstacles, in the past years, adhering firmly to its goal ever since the negotiation started. The Chinese Government has consistently held a positive attitude towards joining the WTO not because we believe the membership will bring about miracles to our economy and foreign trade. This attitude shows the consistency and perseverance of the Chinese Government in pursuing the policies of reform and openness to the outside world. It also reflects China's conviction in safeguarding the integrity of the multilateral trade framework and its efforts to avoid trade wars which are in nobody's interests.
Recently, more and more countries realized that China's participation in the multilateral trading system is not only in China's own interest, but also to the benefit of the WTO and its Members as a whole. They realized that as an increasingly growing economy, China's participation in international economic affairs will contribute to the rational allocation of global resources, and provide a predictable huge market for international trade and investment.
China participated in the whole process of the Uruguay Round Negotiations and signed the Final Act of the Uruguay Round Agreements in 1994. This represents the firm commitment of the Chinese Government to abide by international economic and trade rules. In respect of market access, the Chinese Government has taken a series of substantial measures to reduce tariffs and non-tariff barriers and expand the opening of markets including trade in services, consistent with its own needs of reform and opening policy. We are ready to carry on the negotiations on the protocol and market access with all Members on the basis of the Uruguay Round Agreements and in consistence with China's own economic development level and the principle of achieving balance between rights and obligations. Recently, some major players of the WTO expressed their readiness to accelerate the process of China's accession into the WTO. We welcome this initiative and hope the positive attitude will be translated into actions in resolving specific issues in the negotiation. On our part, we shall take a flexible, pragmatic and forward-looking attitude and in the hope that other Members will do likewise. We are willing to work together to accelerate the process of negotiations and bring it to a successful conclusion as soon as possible.
The First Ministerial Conference of the WTO has provided an opportunity to further strengthen the multilateral trading system. At the same time, we should not lose sight of the formidable challenges. As a big developing country, China will make unremitting efforts with a view to establishing an equitable, just and rational international economic order and meeting the challenges together with all of you, and bring a stable and prosperous world into the 21st century.