WORLD TRADE WT/MIN(98)/ST/47
18May1998
ORGANIZATION(98-2003)
Original: English MINISTERIAL CONFERENCE
Second Session
Geneva, 18and20May1998
HONG KONG, CHINA
Statement Circulated byMr.Chau TakHay,
Secretary forTrade andIndustry
1. FewMembers 'economies aresodependent upon external trade asHong Kong, China 's.
Thewell-founded prosperity resulting from oureconomic growth overthelast50years bears vivid
testimony tothebenefits oftheopenandnon-discriminatory multilateral trading system. Hong Kong,
China 'sownpolicies, particularly ouradherence totheprinciples ofopenmarkets andfreetrade, have
certainly made amajor contribution tooureconomic growth but,without themultilateral trading system,
theopportunities toexpand trade might havebeendrastically reduced. Weoweagreat debtindeed
tothefounding fathers oftheGeneral Agreement onTariffs andTrade.
2. Themultilateral trading system hasincontestably beensuccessful infostering thegrowth of
international tradeingeneral tothebenefit ofallMembers. What Hong Kong, China canattest from
itsownexperience isthatthesystem hasbeenparticularly important forsmaller economies. The
fundamental strength ofthesystem isthatitisrule-based, operating transparently andproviding
predictableoutcomesforallparticipants.Thebasicprincipleofnon-discriminationguaranteesMembers
equal rights under therules, independent oftheirpolitical weight. Thesystem 'scommitment to
consensus indecision-making haskeptthescope forcoercion within bounds andensured thatultimately
thesystem depends onthewillingness ofallitsMembers tosustain it.
3. Inthethree years since itcame intoexistence, ithasbeen evident thattheWorld Trade
Organization hasestablished itself convincingly asthepre-eminent forum fortheconduct oftrade
relations. Thetransition from theGATT, afundamental change, hasbeensuccessfully achieved.
NotonlyistheWTO 'scoverage farbroader, butalsoitsnature issignificantly different totheGATT 's.
Notably therule-based multilateral trading system nowhasamoredistinct legalunderpinning, providing
automaticity andpredictability. Thenewrules andprocedures fordispute settlement areworking
effectively andhaveyielded tangible benefits inmany areas. Wewelcome thereview ofthedispute
settlement system tobeconducted thisyear, butitwould bepremature toembark onradical changes.
Atthisstage, allthatwould beappropriate issome refinement inthepractical working ofthesystem.
4. Asbefits itspre-eminent status, theWTO ismaking progress towards becoming universal,
butthere arestillsignificant gapsinitsmembership. 31applications arepending anditisimportant
thatthese arehandled efficiently. Weparticularly support theearly accession ofChina, amajor
economy andourlargest trading partner, onthebasisthatChina isprepared toaccept WTO principles
andrulesandtooffermeaningful access commitments, commensurate withthelevelofdevelopment
inChina.
5. Theincreasing membership oftheWTO ismuch tobewelcomed, butthisbyitselfmeans that
intheconduct ofitsinternal affairs there hasbeenamajor change from earlier daysintheGATT.
There isaneedtoreflect onhowbesttomanage proceedings intheenlarged WTO. TheaimsmustWT/MIN(98)/ST/47
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beefficiency andtransparency without anycompromise ofthecommitment toconsensus in
decision-making.
6. There isonerespect inwhich theMarrakesh Agreement establishing theWTO hasnotbeen
fulfilled. Wearedisappointed thatthere hasnotyetbeen anyagreement onthequestion ofthe
Secretariat. Weaccord averyhighpriority tothesuccessful conclusion oftheWorking Group 'sremit
andlooktotheformal establishment oftheSecretariat by1January 1999 atthelatest.
7. Overall, given thebreath andcomplexity oftheUruguay Round Agreements, itmustbesaid
thatwehavehadrelatively fewproblems overimplementation todate. There iscause forsome
satisfaction, butcertainly notcomplacency. There arestillanumber ofareas where implementation,
inourview, hasnotbeenentirely satisfactory.
8. Wetookamajor stepinintroducing multilateral rulesontrade inservices when welaunched
theWTO. Services make upanincreasingly large percentage ofalleconomies, andwelloverhalf
inmany, including Hong Kong, China ’s:infact84percent. Butwealsoleftmany gapsandunfinished
business. Itisveryimportant thatwemake progress onthemany rules issues thataremandated in
theGATS: emergency safeguards, subsidies andgovernment procurement. Ondomestic regulation,
theWorking Party onProfessional Services hasmade agood startindeveloping disciplines in
accountancy andwehope thatitcancomplete itswork onthatintheverynearfuture. Itcanthen
move ontodevelop multilateral disciplines forother professional services andahorizontal approach
seems themostpromising. Butthere stillremains themuch broader question ofdomestic regulation
ingeneral anditseffect ontrade. Thisisrecognized tobeoneofthekeybarriers totrade, andone
weneedtotackle ifwearetrulytoachieve progressive liberalization ofservices trade.
9. Onesector forwhich theWTO represents aclear advance overpractice under theGATT is
textiles andclothing. Under theAgreement onTextiles andClothing (ATC) discriminatory quantitative
restrictions must beterminated by2005. TheATC laysdown aphased programme forachieving
thisandalsorequires Members toallow forcontinuous autonomous industrial adjustment andincreased
competition intheirmarkets. Theaimisthatthereshould beasmooth transition fromtheATCregime
tonormal GATT rules. Unfortunately, ATC implementation initsfirstthree years gives no
encouragement thatthisaimwillbeachieved. Restraints, dueinparttomisuse oftransitional
safeguards, haveactually increased onbalance asthephase-out programmes havehadlittlepractical
effect todate; trade hasbeenhindered byunilateral actions; disciplines havebeenundermined by
bilateral arrangements circumventing theATC; andsmall suppliers havenotbeentreated fairly.
Ultimately itistheresponsibility ofeachMember concerned toensure thatitsdomestic industry is
prepared forthecomplete transition in2005, butsince other Members willbeaffected bythefailure
ofanyMember toachieve this,allMembers havealegitimate interest inseeing thatATC obligations
arefullyobserved. Weexpect theCouncil forTrade inGoods faithfully tocarry outitsmandate for
regularly evaluating progress under theATC.
10. Asoneoftheearlyproponents oftheAgreement onRules ofOrigin, weattach greatimportance
tothecompletion oftheHarmonization Work Programme, although weappreciate thatthiswillrequire
amassive effort byallMembers. Political willandmore flexibility inconsensus-building willbe
required ifsuccess istobeachieved.
11. Increased andongoing attention isalsorequired tothemarginalization ofleast-developed
countries. Wesupport theprovision oftechnical assistance tothese countries andwere pleased to
announce adonation forthisattheHigh Level meeting lastyear.
12. Hong Kong, China firmly supports thevarious aspects ofongoing work intheWTO related
tobringing therules up-to-date sothattheyarerelevant tocurrent andanticipated developments.
Oneareawhere there havebeen, andcontinue tobe,major developments isintheproliferation ofWT/MIN(98)/ST/47
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Regional Trade Agreements (RTAs) inrecent years. Three quarters ofthe91RTAs currently inplace
haveentered intoforce inthelastfouryears. Itisnotsurprising thatthelimited exceptions tothe
rules formost-favoured nation trade drawn upforRTAs 50years agolookill-equipped todealwith
thisproliferation when membership ofaRTA hasbecome thenorm rather thantheexception. Even
before this,thecompatibility ofmany RTAs withtheexisting rules hadbeencalled intoquestion.
13. Notonlydotherules forRTAs needtobebrought uptodate, butalsoconsideration needs
tobegiven totheimplications theirproliferation hasfortheprimacy ofthemultilateral trading system.
There areissues atstake beyond legal conformity withthemultilateral system. Wedoubt whether
regionalism canmeetthechallenge ofdeepening global economic integration. When regional groupings
provide preferences, theresult isacomplex webofdiffering regional andmultilateral rules withan
inevitably adverse impact ontheintegration oftheglobal trading system.
14. Looking ahead, asweapproach the21stCentury, Hong Kong, China expects theWTO tochart
anagenda inbothfurthering trade liberalization andstrengthening ofruleswhich willfullymeetthe
needs andchallenges ofanincreasingly globalized andtechnology-driven economy. Thisshould be
thefocus oftheWTO ’sfuture activities.
15. Although thebuilt-in agenda already comprises asizeable work programme, itdoesnotprovide
anoptimum basis forfuture work because itisnowslightly dated, lacks linkages thatprovide the
opportunities fortrade-offs, andwould benefit from anagreed deadline toimpose discipline onthe
negotiations. Inthelightoftheselimitations, theWTO needs tocomplement thebuilt-in agenda through
developing abalanced andmore comprehensive package ofmultilateral trade negotiations, inorder
tosustain themomentum forfurther tradeliberalization. Suchaninitiative should alsoembrace issues
arising fromimplementation ofpastcommitments, where theseareidentified byMembers asrequiring
further action.
16. Futureworkwouldincludeallareasofworkenvisagedunderthe“built-inagenda”.HongKong,
Chinawouldaccordprioritytothemandatednegotiationsontradeinserviceswhichareduetocommence
before 2000. Preparations forthese negotiations needtobeintensified, including accelerating the
information exchange programme, developing negotiating guidelines, reviewing themethodology of
GATS schedules, andclarifying theambiguities arising from theapplications ofthefourmodes of
supply.
17. TheGATTprovidesthatnegotiationsshouldtakeplacefromtimetotimedirectedatthereduction
oftariffs. Inaddition tothecontinuing work ontheInformation Technology Agreement, theover
40percentoftrade ingoods stillsubject totariffs deserve ourfurther attention inthisregard, aiming
especially tolower tariff peaks andeliminate nuisance tariffs.
18. Prior totheSingapore Ministerial Conference, Hong Kong, China launched amajor proposal
which wecalled "WTO Rules inaGlobalizing Economy". Theconcept wasthatworkshould bestarted
intheWTO withavieweventually toformulating newrules, andreforming oldrules, inorder totake
intoaccount therapidly changing business environment. Wenoted inparticular thatsomeoftheexisting
GATT rules arelooking lessrelevant, orlessadequate, inthemodern globalizing world. Wewere
pleasedthatsomeimportantaspectsofourproposalwereincorporatedintwoWorkingGroupsestablished
under theSingapore Ministerial Declaration.
19. DependingonprogressintheWorkingGroupontheRelationshipbetweenTradeandInvestment,
consideration should begiven tothepursuit ofglobal liberalization ininvestment, going beyond existing
rules which cover onlylimited aspects oftherelationship between trade andinvestment.WT/MIN(98)/ST/47
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20. Depending onprogress intheWorking Group ontheInteraction between Trade andCompetition
Policy, various inconsistencies between trade andcompetition rules needtobeaddressed. Theaim
should betodevelop acoherent framework toensure thefreeplayofcompetitive forces inmarkets,
without distortion bygovernmental measures.
21. Inasomewhat similar vein, negotiations onamultilateral agreement ontransparency in
government procurement, asforeseen atSingapore, should commence assoonasthecurrent study
process intheWorking Group onTransparency inGovernment Procurement iscomplete.
22. Wealsoregard theWTO 'scurrent exploratory workonTrade Facilitation asimportant. Subject
toagreement ontheneedandclarification onthescope fornegotiations, weareinprinciple prepared
tosupport future negotiations.
23. Furthermore, future broad-based negotiations would provide atimely opportunity andcontext
forclarification and/or modification ofexisting disciplines toensure thatregional trading agreements
arecoherent withandcomplementary tothemultilateral trading system.
24. Modern telecommunications andcomputing technology arerevolutionizing thewaywedo
business. Electronic commerce isgoing tohaveahugeimpact onallMembers. Hong Kong, China
firmly supports having acomprehensive work programme tolookintotheissues andtoconsider the
multilateral rules which mayberelevant tothistrade.
25. Overall, itisessential thatanyagenda tobedeveloped forfuture work isbalanced and
manageable. Interms ofbalance, thedissatisfaction which many developing Members arecurrently
expressing overaspects ofimplementation ofsome Uruguay Round agreements should notbeignored.
Implementation isinsome cases placing severe strains onresources. Itisnatural, too,thatincertain
contexts some Members mayfeelthatanticipated benefits maynothavebeenfullyrealized. While
wemustbecareful nottogivetheimpression thattheUruguay Round isstillopen, itwould behealthy
forthesystem ifthose Members whoareexperiencing genuine difficulties could develop concrete
proposals inparticular areas ofconcern.
26. Interms offuture manageability, abalance should bestruck between theneedtokeepproducing
positive results atregular intervals andtheneedtomake progress onabroad front. Thesystem will
notbeseenasefficient ifitappears either tobeincapable ofdecisive action ortobeignoring important
issues.
27. Thecurrent Ministerial Conference inGeneva isnotfaced withanydecisions withregard to
thepossible launching offuture broad-based negotiations. Itscentral taskismerely, without inany
wayprejudging future decisions, tosetintrainthedevelopment ofacomprehensive range ofoptions.
Ministers meeting attheThird Ministerial Conference would then, onthisbasis, bewellplaced to
make aconsidered decision onthescope andpaceoffuture negotiations inthenewmillennium. For
Hong Kong, China, weexpect suchfuture negotiations tobebroad-based, balanced andcomprehensive,
inorder toensure thecontinued leadership andrelevance oftheWTO.
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