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Speech by SCIT at OECD Ministerial Council Meeting
in Paris


    Following is the opening remarks by the Secretary for Commerce, Industry and Technology, Mr John Tsang, at the session of "Trade negotiations under the Doha Round" at the Organisation for Economic Co-operation and Development (OECD) ministerial council meeting ? Enabling Globalisation, in Paris on May 4 (Paris time): (English only)

Mr Chairman and Ministers,

    Thank you for inviting me here to join this timely session to review progress in the Doha Development Agenda (DDA) negotiation.  I do not intend to detail where I think we have got to but allow me instead to offer a few broader reflections about "Enabling Globalisation" and the vital role, which the multilateral system has to play in furthering development. These are very much personal reflections, but they are reflections, which are informed by both the bruises and the benefits of Hong Kong's development experience under the umbrella of that system. They are by definition the reflections of a small and possibly vulnerable economy.

    The first point that I would like to make is that our faith in the rule-based multilateral system remains undiminished. The open liberal economic thought of its founding fathers chimes with our own view that the invisible hand of the market is infinitely preferable to the heavy hand of Government. We recognize its imperfections and we are committed to working to remove them, but we have no difficulty with the overall design. Above all, we value the protection it affords the small and the weak against arbitrary action by the large and the powerful.

    My second point is that while globalization represents the victory of liberal economic thought over various discredited attempts to manage markets, it is far from being a triumph. As a small but moderately successful economy, we have experienced at first hand the occasional lapses of those who first espoused the faith. We are all now dealing with the double distortion inherent in such futile attempts to manage trade and investment flows.

    The changes to economic policy all around the globe since the beginning of the last Round have produced quite extraordinary results. New wealth has been created and new capital accumulated at a staggering speed. Trade and investment flows have expanded radically and healthy new mutual dependencies have been forged in ways unforeseen as little as a decade ago. Commerce has both ridden and driven this process in ways, which pay scant attention to borders.

    So my third point is that Government needs to be increasingly wary of domestic industries pleading injury.  In a globalized world, what on earth is a "domestic" industry? Some of you may recall how, in the late eighties, various manufacturers of copying machines entered into transnational marriages of convenience with erstwhile rivals on the other side of the globe, simply to apply for Anti-dumping relief against other transnational corporate couples doing exactly the same thing in another continent. Take the elevator industry; take the auto industry; I challenge you to tell me where their products originate. And yet in this globalized world we are still encouraging legions of learned and diligent customs officials to define such things.

    My fourth point, building on the last, is that a combination of autonomous liberalization and the proliferation of free trade agreements has reduced applied tariffs to a level at which, for much of the industrialized world, they are insignificant in comparison with the other frictional costs of bureaucracy at the border. If we are serious about "enabling globalization", we should be cementing these gains and discussing how fast we can get to zero instead of postponing the possibility.

    The potential gains from a successful conclusion of the Doha Round are huge. The need to reform the grotesquely distorted market for agricultural products is self-evident. The gains from that alone to developed and developing economies alike would make this Round worthwhile, even though agriculture accounts for less than a tenth of world trade. The biggest potential gains lie in non-agricultural market access and services, and there is balance of interests between all parties across these three areas which spells success. It spells success, but does not guarantee it. Real success will depend on the political will to shoot for an ambitious outcome.  And right now, let me remind you: we need your political will to resolve the Ad Valorem Equivalents (AVE) issue in Agriculture, and to resolve it fast, lest it should block progress on other fronts.  And from informal discussions yesterday, let me say that there is a real risk of the negotiations stalling unless this matter is resolved today.  

    So we need to resolve it and we need to move on.  We agreed on a big and bold agenda at Doha; we need a big and bold outcome. We need it not least because only an ambitious result will impart the sort of impetus to global growth needed both to justify and to ameliorate the pains of adjustment which flow from reform.

    Mr Chairman, in my view an ambitious outcome is a necessary outcome, but it is not a sufficient one, and this brings me to my final point. The middle name of DDA is "development". Everyone here knows that the biggest gains to developing and least developed countries will come from the removal of market destroying distortions and the creation of new commercial opportunities in the key market access negotiations. However, we also need to ensure that the rule-based system, which was designed to offer certainty to commerce and facilitate the smooth functioning of global markets, both better protects, and is made more user-friendly for, these economically weaker players. This is an area, which has been ignored for far too long and to which, I believe, this organization has much to contribute.

    Thank you.

Ends/Friday, May 6, 2005


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