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Following is the full text of the speech (English only) delivered by the Financial Secretary, Mr Donald Tsang, at the opening of Geneva-HK Conference on "Global Production : Specialization and Trade" today (Wednesday):
Professor Cheng, distinguished guests, ladies and gentlemen,
Introduction
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It is my privilege and honour to speak at this International Conference on "Global Production: Specialization and Trade". I am encouraged to see that experts in Hong Kong have taken the lead to pull together a group of internationally distinguished scholars to study the important subject of globalisation, and its implications on production, specialization and trade. With just some 60-odd days to go before the beginning of a new millennium, it is timely for us to explore the trade challenges that lie ahead. I understand you already had two days of very intensive and valuable discussions on the subject.
Globalisation
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Technology and transportation are transforming the world into a "borderless" economy as the world markets become more and more integrated through the ever increasing mobility of knowledge, capital and goods. Globalisation has now become an irreversible force.
Manufacturers are increasingly able to source from anywhere, manufacture what makes the most sense to them, and market their finished products where they choose. This new world marketplace gives new meaning to the terms "competitiveness" and "innovation".
Individual economies must, in turn, respond by exercising their specific comparative strengths and looking beyond their national and regional boundaries to tap into the global market.
In Hong Kong we must all ask ourselves how we can best benefit from this. Hong Kong is a relatively small economy. It is rich in human resources and infrastructure but has only very limited natural resources. We must learn to be keenly aware of the opportunities and potential offered by globalization to small players like ourselves, if we are to continue to prosper.
Relevance of Rules of Origin in a Globalised Economy
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In the eighties, globalisation manifested itself most significantly on the production side of manufacturing. The financial crisis in Europe in the early nineties, followed by the Mexican crisis in the mid- nineties and the Asian financial crisis in the late nineties have underlined the deeper globalisation taking place in the financial services sector, and indeed on the services front.
I have spoken on the impact of globalisation on the services industry on many occasions. Let me concentrate today on its impact on the trade in goods and its bearing on the next trade round of negotiations at the World Trade Organisation. Nowadays in the production of goods globalisation has made multi-country manufacturing the norm. Products are much less likely to be wholly manufactured in one jurisdiction and much more likely to come from multiple sources. Production is no longer purely a domestic concern of one single country.
As production is increasingly dispersed over multiple individual economies, it becomes increasingly difficult to refer to the place of production of a product. As a result, rules of origin, which have historically given each product a "nationality", have become blurred.
This Conference offers a unique opportunity to examine the world trends of globalisation and the various approaches to address such challenges, including the application of the concept of "multiple countries of origin".
Preference for Free Trade
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In an ideal world where all trade is conducted under the principles of most-favoured-nation and non-discrimination, and where there is absolute free flow of goods, it can be argued that there should be no need for rules of origin. In the absence of market access barriers like quotas and other protectionist trade instruments like anti-dumping, the relevance of rules of origin will vanish and international trade will no longer be distorted by artificial trading regimes. In a truly liberalized global trading economy, the origin, or origins, of a product will no longer be meaningful or of concern. Rules of origin are only relevant when there is some sort of discriminatory treatment based upon origin. Only in a world with trade barriers does it matter where a product is manufactured.
For the time being, however, we do see merit in studying ways to facilitate international trade through harmonisation of rules of origin in the WTO and the acceptance of a multiple-countries of origin concept. But in these studies we should not lose sight of the ultimate goal. This goal is to create a world where trade flows freely. The First Ministerial Conference of the WTO set this vision in December 1996. Achieving this goal must always be our number one priority.
The Road Ahead
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The Government of Hong Kong is committed to continuing our efforts to promote free trade and investment in the world economy. It is only through continued trade liberalisation that we can ensure economies are open, that we can keep pace with our fast-changing world and that we can ensure sustained economic growth.
The Third WTO Ministerial Conference to be held in Seattle - which is just one month away - will provide us with a golden opportunity to push ahead and push hard for further trade liberalization. We are hopeful that trade ministers will launch a new trade round of global negotiations at Seattle and not later and this will lead to further trade liberalization in the world economy improving access to the world's largest markets.
We must work to enhance our competitiveness in order that we may reap the benefits brought about by the new trade round. The HKSAR Government is unequivocally committed to transforming Hong Kong into a knowledge-based economy in the 21st Century. It fully recognises the importance of innovation and technology in driving our future. We have a firm and committed policy. A commitment to better education, investment in infrastructure, and sound and transparent public policies. We must provide an ideal environment for new ideas to thrive and to flourish. We are looking forward to a new millennium with great anticipation.
Conclusion
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I am happy to know that there has been a candid and productive exchange of views and opinions over the past two days. The views and priorities expressed were diverse, reflecting originality and intellectual vigour. The views comprise a very potent force in Hong Kong's response to the challenging demands of our globalised economy.
Thank you for inviting me to this Conference and I wish you every success.
End/Wednesday, October 27, 1999
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