Defining moment for WTO

By Mike Moore

With the successful conclusion of negotiations on China's and Chinese Taipei's terms of entry to the World Trade Organisation, the way is clear for the WTO Ministerial Conference in Qatar in November to formally adopt the texts of the agreements. Thirty days after China and Chinese Taipei notify their acceptance of their respective agreements, they legally become members of the WTO.

It's difficult to overstate the importance of these developments. Taken together they constitute a defining moment for the WTO and for the international economic, political and security arrangements that will influence our world in this century and beyond. After the recent horrific events in New York and Washington, such cooperation is more important than ever before.

In joining an organisation which is based on binding rules, mutually agreed by consensus and enforceable through the dispute settlement system, China's leaders are locking in economic reforms that have been unilaterally put into place over more than 20 years. Moreover, in embracing WTO rules and our member- Governments' stated objective of ongoing trade liberalisation Beijing has accepted that openness not only to goods and services, but also to people and ideas, is the best way to ensure a prosperous future for her citizens.

Exposure to competition will ensure that Chinese enterprises become more efficient and productive. It is almost certain that this greater competition will lead to some dislocation and hardship for some. But with the surge in competition that will accompany increased trade and investment will come an influx of new technology and a tremendous boost to domestic innovation that will lead to greater opportunities for better paying jobs and a wider selection of goods of services for the vast majority of China's people. These positive changes are already clearly visible in the Chinese economy as a result of the impetus provided by the process of China's accession to this organisation.

China's entry to the WTO will mean immense opportunities for entrepreneurs around the world. China was the world's fifth leading importer last year, buying some $225.1 billion worth of foreign merchandise and $34.8 billion worth of services from foreign providers. In 1999, China was the world's 11th largest importer of agricultural products, purchasing nearly $14 billion worth. As China's people become richer through policies of greater openness and as China's market opens to foreign producers of goods and services those figures will rise substantially.

China's average bound tariff level for goods will fall to 8.9 per cent while the average tariff on agricultural products drops to 15 per cent. Foreign telecoms service providers will be able to own up to 25 per cent of companies operating in China immediately and up to 49 per cent within three years. Within five years foreign operators will be able to conduct business across the nation.

Foreign banks can provide foreign currency services to Chinese customers immediately, and within five years they will be able to provide domestic and foreign currency services to all Chinese customers.

As important as the specific commitments China has made to open her markets, is the fact that foreign entrepreneurs will now have a far greater degree of certainty as to the rules of the game of doing business in China. Chinese officials have also pledged to establish contact points within the Government where foreign business can go to register complaints or to learn more about new regulations and laws.

Critics of China's accession have charged that China's human rights record and its relations with Chinese Taipei are grounds for keeping China out of the WTO. Thankfully, this has not been the view of our member-Governments. Even those Governments critical of China in those areas have made clear that China's membership to the WTO should be decided on the basis of trade considerations. Those who have advocated such a course of action, have failed to understand that bringing China more closely into the international community has heralded positive developments in the past 20 years. Membership in the WTO will unquestionably continue this trend.

The WTO is an instrument of peace insofar as it acts as a mechanism to facilitate greater understanding between China and her trading partners, including Chinese Taipei.

Senior Government officials in Chinese Taipei have said that Taipei will establish direct trade and transport links with China after each becomes a member of the WTO. The removal of these barriers could not help but foster closer cooperation and understanding between the two.

The WTO offers as well, a forum in which disputes can be brought, argued and settled in a measured and equitable manner. In the past, trade disputes have had, in all parts of the world, a nasty tendency to flare into armed conflict. This becomes unnecessary when both parties know they will have a fair hearing in court. Such an international forum will help nurture stable relations between China and Chinese Taipei.

For the WTO, the accession of China and Chinese Taipei is also a great step towards becoming a truly world organisation. Now that they will both become members, the rules by which the great majority of global trade operates have been extended. Moreover, all of us will benefit by having officials from both places participate in the process of shaping new rules for the 21st century.

(The writer is Director, World Trade Organisation)

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