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Following is a speech by the Under Secretary for Commerce and Economic Development, Mr Gregory So, at the trade session of the Ministerial Council Meeting of the Organisation for Economic Co-operation and Development (OECD) in Paris today (May 28):
Chairman,
The world economy has recently endured the most severe recession it has experienced in 60 years. In its April World Economic Outlook, the IMF estimated that global growth will reach four and a quarter per cent in 2010 and 2011. Yet, the recovery up till now has largely been a jobless one. The unemployment rate in some countries, developed and developing alike, has not gone down significantly and has even edged up in some cases. It is timely for us to look seriously at this important aspect of our economies and reassure the world that trade can and will help.
There is often a misguided view that trade liberalisation dissipates jobs. It is true that trade encourages the development of sectors with a competitive advantage, and may inflict short-term pain on those in less-efficient sectors. The job losses during the transition process are more often played up in the media, and trade is always demonised as the key cause of unemployment. To rectify this misconception, we must first take on the challenges arising from such structural adjustments. There is certainly a need for governments to ease the transition. We should seek to reduce job mismatch and enhance the adaptability of our workforce through comprehensive training and skills upgrading, so that the economic growth brought about by trade can be more broadly shared by the people.
We must also communicate to the public clearly the full picture of the relationship between trade and jobs. As evident in many studies, while the short-term effect on employment brought by structural adjustment depends mainly on economy-specific factors such as the agility of the labour market, trade liberalisation will benefit the labour market in the longer-term. Hong Kong is a good example. As one of the world's freest trading economies, with the gradual recovery of the global economy, Hong Kong has witnessed steady signs of improvement in our unemployment rate following the downtrend since mid-2009. Downward pressure on labour wages and earnings that once prevailed after the crisis has also by and large eased.
Freer trade will promote specialisation and more efficient allocation of resources; that will only lead to improvements in the employment market, both in terms of quantity and quality of jobs. At the end of the day, the benefits will outweigh the costs. What governments have to do is to ensure that the right message is preached and heard. We have to do it individually as well as in collaboration with one another and with international organisations such as the OECD.
Meanwhile, we must continue resisting the temptation to fall into the old trap of closing the door to protect local employment. History tells us that doing so would instead stifle opportunities and hinder growth. We must learn from our painful past experience. At last year's meeting, Hong Kong, China, together with 10 other like-minded members, made a declaration against protectionism. Looking back, over the last year we have witnessed the recovery process on track; yet, as I underlined at the beginning, we have to remain vigilant and resist vigorously any rise in protectionist measures.
An effective guard against the surge of protectionism is of course the conclusion of an ambitious and balanced Doha package. While we have yet to reach the finishing line, we should continue to do our utmost to advance the negotiations and exercise maximum flexibility in breaking the deadlock.
Lastly, I would like to commend the OECD's efforts in addressing the financial crisis and examining the effects of government policies on economic recovery and growth. This work has enhanced public understanding of the benefits of trade liberalisation, which holds the key to prevent the culmination of protectionist sentiments and generate support for opening trade further. Only with this wide support from the community can the multilateral trading system function to its full, strengthen the recovery process and sustain economic growth.
Thank you.
Ends/Friday, May 28, 2010
Issued at HKT 19:30
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