STI's statement at the Third WTO Ministerial Conference

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Following is the statement by the Secretary for Trade and Industry, Mr CHAU Tak Hay, at the Plenary Session of the

Third WTO Ministerial Conference on Tuesday(US time, November 30):

As we stand on the threshold of a new Century, it is worth reflecting on what the major achievements have been in the second half of the 20th Century. One major achievement must certainly be the attainment of self-governance by many peoples who were formerly under colonial rule. But together with that must rank the crucial part that world trade has played, both in terms of bringing people of different cultures together, and improving living standards in many parts of the world. The General Agreeement on Trade and Tariffs (GATT) and now the WTO have made a huge contribution over the last 50 years to peace, prosperity and the rule of law in international commercial relations.

Far too little recognition is given to the achievements of this Organisation. More and more Members have put in place increasingly liberal economic and trade policies, in Asia and in South America for example, and reaped the benefits. Many nations seek to join the WTO in order to pursue and cement their integration into the world economy. While of course the picture is not uniform, huge numbers of people are experiencing a new freedom in economies which are becoming more and more free and open.

But just when we should be celebrating the benefits of global trade expansion and a more inter-dependent world economy, segments of society in some countries have come to the view that globalisation is responsible for many of the world's ills. This reflects ignorance, misunderstanding and, sometimes, misinformation.

In fact, globalisation is neither evil nor a creation of the WTO. Globalisation is a very positive force, integrating trade and economies and promoting growth in a way that can only benefit the world. Globalisation flows from a combination of freer markets for goods, services and investment, improved communications and transport, and technological advances. It allows for specialisation in areas of comparative advantage by countries in different stages of development. The WTO provides a predictable framework of rules in which this can all take place. Without it, the law of the jungle would prevail.

Against this background, the multilateral trading system today faces three major challenges:

* first, to sustain the momentum of liberalisation, which is vital for global growth, peace and prosperity;

* secondly, to update and develop the framework of existing rules;

* and thirdly, to ensure that the WTO becomes truly universal and inclusive, while maintaining its present character.

Taking the first of these, we are here in Seattle precisely to sustain the momentum of liberalisation - by launching a new Round of negotiations.

Let me mention one aspect of liberalisation of particular concern to Hong Kong, China, which is, Services. Trade in Services occupies an increasingly large proportion of international trade. In many economies, the Services sector comprises more than two thirds of GDP. For Hong Kong the figure is over 84%. We are the most Services-oriented economy in the world. Clearly, anything which promotes the efficiency of Services industries will have a major impact on the efficiency of the overall economy. We shall be pushing vigorously for further liberalisation in Services.

Sustaining the momentum of liberalisation also means ensuring that existing agreements are properly implemented. Let me draw attention to the Joint Statement which has been issued by the Ministers of the International Textiles and Clothing Bureau regarding implementation of the Uruguay Round Agreement on Textiles and Clothing. This Statement makes it painfully clear that the progressive liberalisation we were promised has not been delivered. Developed countries will face an uphill task in carrying the developing world with them into a new Round so long as they are seen as so begrudging in liberalising one of the few areas in which the poorer countries enjoy comparative advantage, and which, contrary to the norms of the multilateral trading system, have been restrained by quotas for 40 years already.

If we are serious about maintaining the relevance of the WTO to our fast changing world, we must also be prepared to update key WTO rules, many of which are now seriously showing their age. Like it or not, that means looking at rules on Regional Trading Arrangements and Anti-Dumping. All Members ultimately suffer when outdated rules in these and other areas weaken the WTO's effectiveness.

There are now 135 WTO Members and 32 are in the process of accession. No international organisation can truly be considered universal if it does not include China. We thus welcome the bilateral agreement reached between China and the United States and look forward to other negotiations being completed speedily and to China becoming a member in the next few months.

Let me clarify also that China's entry into the WTO will have no effect on Hong Kong's participation in the WTO. Hong Kong will continue to be a separate Member of the WTO using the name of "Hong Kong, China". This is provided for in our Basic Law. We will continue to be a separate customs territory. Our trade and economic policies will continue to be separate from China's, under the "one country two systems" principle. We greatly look forward to working with China, on the same friendly basis as we work with other delegations in the WTO.

The WTO has a very full agenda of issues directly related to trade that we need to tackle. These will more than fully occupy us in the years ahead. In any case, the WTO cannot be the forum to solve all the world's problems, as some seem to want. Nor is the WTO as well equipped to study some of these non-trade issues as other institutions.

Labour standards is one issue which has the potential to polarise the WTO and could do the organisation irreparable damage. As we already acknowledged and decided at Singapore, the International Labour Organisation is the competent body to deal with labour issues. Let there be no doubt that Hong Kong, China strongly supports labour standards and the work of the ILO. The WTO's contribution to the improvement of social conditions is indirect, through raising the prosperity of people everywhere through increased trade. That is the only relationship there can be between trade and labour standards. We should concentrate on our core business of progressive multilateral trade liberalisation and leave labour standards to the ILO.

Hong Kong, China believes that we must seize the opportunity here in Seattle to take forward our trade agenda with vigour and commitment. There should be no resting on our laurels or aiming for second best. We need to push the agenda forward so that, in the 21st century, the benefits of trade will reach every corner of the globe and our collective aim of raising the standards of living of all peoples will finally be realised.

End/Wednesday, December 1, 1999

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