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The following is a transcript (English portion) of the press briefing by the Secretary for Trade and Industry, Mr CHAU Tak Hay, and the Director-General of Trade, Mr Joshua Law, on Hong Kong's preparation for the World Trade Organisation Third Ministerial Meeting today (Tuesday):

Reporter: Why haven't we signed the agreement?

Secretary for Trade and Industry (STI): Because there is no need to sign the agreement. Because there is no question of Chinese Taipei's entry now. So we do not believe that there is a need right now to sign the agreement.

Reporter: You've just mentioned that there are some protectionist moves there in the United States. You've cited some examples. Can you go more in depth into that?

STI: For example, the AFLCIO in the United States which is one of the biggest labour organisations in the United States, has formally stated its opposition to further a new round of multilateral trade negotiations. For example, the AFLCIO has formally stated its opposition to China's entry into the WTO. We believe that these moves on the part of the AFLCIO are totally misguided and based on fallacious arguments. We believe that international trade has not damaged American labour interests but over the last 50 years or more has clearly demonstrated the benefits to the United States' economy of trade liberalisation. You only have to look at the booming American economy to arrive at this conclusion. And the record low unemployment rate.

Reporter: And the point of the issue of labour rights and the other issues that are being raised. You said the more appropriate forum would be the ILO. But the argument that we hear from the AFLCIO and the other organisations is that if a country allows unsafe working conditions, doesn't require living wages. That is an unfair trade practice. And therefore, it needs to be rectified in a trade environment, rather a labour ...

STI: This is a totally hypocritical argument. It has taken the industrialised countries one or two hundred years to complete their industrial revolution and was over a long period that they managed to raise the worker standards, labour standards, to their present levels. But to say less expensive production costs in other countries represent unfair trade is totally to deny the whole basis for international trade. The basis for international trade is that certain countries have comparative advantage in the production of certain goods over other countries and therefore they exchange goods through trading. We also do not agree with the proposition that WTO should be used for protectionist purposes. What the AFLCIO is advocating is that the rules of the WTO should be used for their own selfish hypocritical protectionist uses. And we totally oppose that.

Reporter: What is your reading of why the situation is like that? Why are the developed countries and the developing countries so far apart when really the economic growth in the world is probably never been better. And I think the IMF just said the world growth has finally reached its potentials.

STI: I think one of the reasons is that the gap between the rich and the poor, the really poor, is becoming bigger, not narrowing. One of the major complaints of many developing countries is that the Uruguay Round has benefited mainly the developed countries and some of the, many of the developing countries were complaining that they have not benefited from the Uruguay Round results. And one of their accusations for example is that textiles and clothing represent their main exports. For example, the likes of India and Pakistan. And yet in the five years since the conclusion of the Uruguay Round, in spite of an agreement to phase out restrictions on textiles and clothing, the developed countries have actually not undertaken any meaningful reduction of quotas because the agreement allows them to phase in these liberalisation methods. Many of them are waiting until the last moment to do it and that is the midnight on 31st of December, 2004, which means that many developing countries have not benefited from trade liberalisation and the Uruguay Round. That is one of their grievances and they claimed also that because of the Uruguay Round for the first time opened up the services market. And the developed countries are much more advanced in the provision of services and the main beneficiary has therefore been the developed countries.

Reporter: (inaudible)

STI: To a certain extent. On the question of international trade, Hong Kong is a actually a bit schizophrenic because our per capita GDP is equal to or even bigger than those of many developed countries. And our services are advanced, but our exports, for example, textiles and clothing, are still being subject to quota restrictions by developed countries. In other words, where trade in goods is concerned, the developed countries are still treating Hong Kong like a developing economy. And therefore, where trade in goods is concerned, Hong Kong's positions are more or less identical to those of other developing economies. Where trade in services is concerned, of course, our services are so well developed, and we welcome greater and greater liberalisation in services markets. We have positions more similar to those of the developed countries. That's why I said we are a bit schizophrenic.

Reporter: Do you think the textiles and clothing business will deteriorate in view of these world-wide restrictions. If they ... the trade system to set up?

STI: You mean in Hong Kong? Well, that's one theory. But, if you look at it from the point of a free trade purist. Not in existence in the first place. Textiles and clothing quota have existed for 40 years. The first country to impose restrictions on textiles was the United Kingdom and it was against Hong Kong 40 years ago. And yet 40 years later, these abnormal departures from the normal rules of the WTO still exist.

Reporter: Whether this agreement is signed or not signed. What makes Taiwan's accession to the WTO? Is it WTO specify that all members should actually sign into an agreement all agreed ?

STI: No. There is no such rule. As long as Hong Kong, China does not object formally to Taiwan's entry because of the lack of a signed agreeement. There is no need for an agreement to be signed.

Reporter: Would you sign an agreement subsequent to the entry?

STI: The fact is without the signing of the agreement the matters negotiated between Chinese Taipei and Hong Kong have now been included in Chinese Taipei's schedules for the purpose of acceding to the WTO. What is now delaying its entry is the fact China is not yet in the WTO and there is this understanding in 1992 that China should enter first.

Reporter: What are the progress of the entry of China that..... the European Union and Canada?

STI: Yes. There are a number of countries which have asked for bilateral trade negotiations with China. And those negotiations have not yet been all completed. Most noticeable among them are Canada and the European Union, of course. As far as I understand the European Union is now trying to get hold of a copy of the agreement between China and the United States to study what it covers. The conventional wisdom is that the agreement between China and the US covers perhaps about 80 per cent of the European Union's interests. If that is the case, then there still remains 20 per cent or whatever percentage might be the result of their studying of the agreement. It is over the remaining percentage of the European Union's interests that they would have to negotiate with Beijing over and those negotiations have yet to be resumed. Canada is in the same position and we do not know how much more the Canadians will be asking of China before it would sign or conclude an agreement with China. We expect that the remaining negotiations between China and her trading partners would take may be one or two months, two to three months and then the multilateral procedures in Geneva, in the WTO, would then have to be completed. New schedules of concessions would have to be compiled. Each and every trading partners of China would want to check and double check the schedules to ensure that what they have agreed to have been included. And then a protocol has to be written. And only after all those procedures have been satisfactorily completed will the General Council of the WTO meet and pass the motion to admit China into the WTO. That's likely to take until the end of the first quarter of next year or might go into the second quarter. I think the Chinese Chief Negotiator, Mr Long Yongtu himself recently said that China will enter the WTO before the middle of next year. I think that is a fair estimate.

Reporter: I want to go back to some of the protectionist group said ... besides the labour movement in the United States there is also the problem of environmentalists. I have been seeing at their web pages that they are going to be out and force. Can you address the whole environmental issue and trade?

STI: On this subject we also objected to the use of WTO rules to impose sanctions for environmental protection purposes. We believe that would open the WTO to the risk of disguised protectionism. People are using the WTO and environnmental protection issues to impose trade sanctions on other countries. We do not agree with that.

Reporter: First of all, some housekeeping question, apart from yourself and Mr Law here, who is going to attend the WTO Ministerial Meeting (from Hong Kong)?

STI:The permanent representative of Hong Kong, China, to the WTO Stuart Harbinson and his colleagues from our Geneva Office. They are the ones who have been handling the discussions in Geneva on the Seattle meeting. So a number of them will be going to Seattle from Geneva. Also our Commissioner to the USA from Washington Jacqueline Willis will also be going. Chris Jackson who is also based in Washington. And of course there will be a big team from the Trade Department under Mr Law.

Reporter: Which hotel will you be staying in?

STI: Four Seasons.

Transript of STI's press briefing (Chinese Part)

End/Tuesday, November 23, 1999

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