WORLD TRADE
ORGANIZATIONWT/MIN(99)/ST/11
30 November 1999
(99-5197)
MINISTERIAL CONFERENCE
Third SessionSeattle, 30 November - 3 December 1999Original:  English
HONG KONG, CHINA
Statement by Mr. Chau Tak Hay
Secretary for Trade and Industry
1. As we stand on the threshold of the new Century, it is worth reflecting on what the major
achievements have been in the second half of the 20th Century.  One major achievement must
certainly be the attainment of the governance of their own futures by many peoples who were
formally under colonial rule.  But together with that must rank the crucial part that world trade has
played, both in terms of bringing people of different cultures together and improving living standardsin many parts of the world.  The GATT and now the WTO have made a huge contribution over the
last 50 years to peace, prosperity and the rule of law in international commercial relations.
2. Far too little recognition is accorded to the achievements of this Organization.  More and
more Members have put in place increasingly liberal economic and trade policies, in Asia and inSouth America for example, and reaped the benefits.  Many nations seek to join the WTO in order to
pursue and cement their integration into the world economy.  While of course the picture is not
uniform, huge numbers of people are experiencing a new freedom in economies which are becoming
more and more free and open.
3. But just when we should be celebrating the benefits of global trade expansion and a more
inter-dependant world economy, segments of society in some countries have come to the view thatglobalization is responsible for many of the world's ills.  This reflects both misunderstanding and,
sometimes, misinformation.
4. In fact, globalization is neither evil nor a creation of the WTO.  Globalization is a very
positive force, integrating trade and economies and promoting growth in a way that can only benefit
the world.  Globalization flows from a combination of freer markets for goods, services and
investment, improved communications and transport and technological advances.   It allows for
specialisation in areas of comparative advantage by countries in different stages of development.  The
WTO provides a predictable framework of rules in wh ich this can all take place.  Without it, the law
of the jungle would prevail.
5. Against this background, the multilateral trading system today faces three major challenges:
(a) To sustain the momentum of liberalization which is vital for global growth, peace and
prosperity;
(b) to update and develop the framework of existing rules, which in some respects has
become outdated, in order to ensure that regulations are relevant, trade orientated and
no more burdensome than necessary;
(c) to ensure that the WTO becomes truly universal, while maintaining its present
character and keeping the agenda focused on its core activities.WT/MIN(99)/ST/11
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Sustaining the momentum of liberalization
6. We are here in Seattle to launch what many have called the Millennium Round.  We should
not sell the new millennium short.  Our peoples are not so much concerned about globalization or
liberalization.  It is the pace of the change that unsettles them.  The bigger picture, that there are more
jobs available and that they pay more, is lost in the understandable but ultimately wrong-minded wish
to delay or postpone change.  Such thinking during the 1930s led to the worst recession this century.
We Members have a major job to do to carry the good story to our publics.  We have not been doing it
adequately.  Increased trade and liberalization can never be taken for granted.  We urge all to defend
vigorously the multilateral trading system, to promot e its further development and to retain its focus
on matters directly related to trade.
7. What specific trade issues should be tackled to sustain liberalization?  The list is impressive
but achievable – if we work hard together.
8. The process in Geneva leading up to this week has, regrettably, shown little sign that
Members are willing to put substantial liberalization and the long term good of their people before
some narrow special interests.  Hong Kong, China supports a broad-based and balanced New Round
which:  fully encompasses the built-in items of agriculture and services;  tackles the still large number
of tariff and non-tariff barriers in the non-agricultural goods sector;  develops rules in the importantarea of investment;  and takes some immediate decisions which show our publics that we mean
business.
9. Agriculture is a central issue for many countries and clearly has been one of the main
stumbling blocks so far in the preparations.  It is  perhaps inappropriate for Hong Kong, China to enter
the fray on this issue but we urge those most closely involved to respect the underlying purpose of the
WTO.
10. Hong Kong, China does, however, have a very strong interest in another vital part of each
Member's economy and the world trading system - services.  Trade in Services occupies an
increasingly large proportion of international trade.  In many economies, services comprises more
than two thirds of GDP.  For Hong Kong the figure is over 84 per cent.  We have the most services-orientated economy in the world.  Clearly, anythi ng which promotes the efficiency of services
industries will have a major impact on the efficiency of the overall economy.  This is part of what the
new Round of negotiations in services should be about:  ensuring that the regulations in place both
internationally and domestically are the least tr ade restrictive necessary and provide for the most
transparency and consistency of application.  Of equal importance in providing efficiency is allowingmore access to and competition in services markets.  This means broadening commitments under the
GATS in both the market access and national treatment areas.  We shall be pushing vigorously for
both.
11. On the goods side, although important strides have been made in the last 50 years to reduce
tariffs and non-tariff barriers, regrettably there are still far too many.  We place the highest priority on
launching negotiations on non-agricultural market access.  Such negotiations should achieve
comprehensive liberalization through substantial tariff reduction and substantial reduction or
elimination of tariff peaks and tariff escalation, particularly in products of interest to developing and
least-developed countries, as well as the eliminations of nuisance tariffs.  Hong Kong, China itself hasbenefited enormously from the fact that is has no tariffs.  In this connection, we also firmly support
the "advance tariff liberalization" package, initiated by APEC, which aims to eliminate tariffs in a
wide range of products.WT/MIN(99)/ST/11
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12. As regards non-tariff barriers, I have to record our great disappointment at the lack of
progress in liberalization of trade in textiles and clothing, one of the few sectors of trade in which
developing countries enjoy comparative advantage.  In  this connection, I wish to draw attention to the
Joint Statement which has been issued by the Ministers of the International Textiles and Clothing
Bureau.  The begrudging manner in which the Agreement on Textiles and Clothing is beingimplemented – including back-loading of integra tion, minimum growth rates, unjustified safeguard
actions and harassment through anti-dumping – is probably more responsible, more than almost any
other single factor, for the feeling which has emer ged among developing countries that they have so
far been denied the anticipated benefits of the Uruguay round.  A feeling which has poisoned the
atmosphere for future liberalization across the board.
13. Hong Kong, China also believes that the time is ripe to take steps to bring investment under
the WTO umbrella.  A significant step on the services side has already been taken in respect of the
commercial presence provisions under the GATS.  But the disciplines regarding other types of
investment are either non-existent or inadequate.  In vestment and trade go hand in hand.  It is time to
have international rules governing investment.
14. There are also important immediate decisions we should take in Seattle.  Several concern
ensuring that developing countries' needs are better met by the WTO - and are detailed below.
Electronic Commerce is becoming a central part of trade:  we should extend the moratorium on
imposing customs duties on electronic transmissions until our next Conference.
Updating Rules
15. Hong Kong has long been urging a fresh look  at key WTO Rules.  In Singapore we proposed
a review of "WTO Rules in a Globalizing Economy".   We believe these ideas are still pertinent.  What
could be more appropriate, as we enter the new Ce ntury, than to update rules which are 50 years old
and seriously showing their age?  Key areas are in respect of regional trading arrangements and
anti-dumping.  But other issues which are now be ing tackled within the WTO agenda also involve
issues in rule making - such as services, government procurement, and trade facilitation.
16. With regard to Regional Trade Agreements (RTAs), the existing framework is no longer
workable and has resulted in a dangerous state of paralysis in the WTO.  It is in everyone's interests to
work together to devise a clear set of rules which will ensure that RTAs make a positive contribution,and are complementary, to the multilateral trading system.
17. As regards anti-dumping, nearly all reputable commentators and institutions recognize
Article VI of the GATT as outdated and inappropriate.  It is all too often abused as an instrument for
protectionism.  There is a strong need for it to be reformed in a more pro-competitive manner.
18. It is our firm belief that it is such anti-competitive aspects of governmental trade measures
which should be the focus of our attentions in the WTO.  This is the traditional GATT/WTO
approach.  Proposals for introducing new competition rules on private anti-competitive practices will
remain lop-sided and lack credibility so long as governments themselves continue at the same time toimplement policies which undermine the quality of the competitive market.
19. Government procurement represents a sizeab le proportion of most countries' GNP and it is
appropriate for the WTO to do more to bring government procurement within its framework of rules.
We strongly support the proposals for rules currently being considered on Transparency inGovernment Procurement.  We also support the work being done to try to make the Government
Procurement Agreement more acceptable to the wider body of WTO Members – and more in tune
with the basic WTO principles of most-favoured-nations and national treatment.  Trade facilitation is
another key area in ensuring that the administrative and border measures which regulate andWT/MIN(99)/ST/11
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administer trade do so with the least restricting and inhibiting effects.  Again Hong Kong, China fully
supports the work being undertaken.
20. Market access and rule making issues are, generally, inextricably interlinked and we believe it
is right to tie together these tow stands of negotiation in such a way as to maximize results.Hong Kong, China thus favours a three-year Round in the form of a single undertaking.  We also
support the early implementation on a provisional basis, where agreed, of results of both market
access and rule making negotiations.
21. Before leaving rules, let me state that one area which is by and large working well is dispute
settlement.  No major overhaul is needed, but there are one or two key provisions which do need
adjustment.  We believe that, subject to these few necessary modifications, the DSU is well-equippedto serve the needs of the Organization.
Universality and maintaining character of the WTO
22. When we met to launch the Uruguay Round in Punta del Este, there were just 93 Contracting
Parties in the GATT.  Now there are 135 WTO Members with some 32 countries seeking to join.
Clearly the WTO is seen as a very worthwhile body and it is only right that its membership should
reflect its key role in global affairs.
23. No international organization can truly be considered universal if it does not include China.
We thus welcome the bilateral agreement reached between China and the United States and look
forward to other negotiations being completed speedily and to China becoming a Member in the next
few months.
24. It is worth repeating here the factual and legal result of China's entry on Hong Kong, China's
participation in the WTO.  In brief there will be no change to Hong Kong's status and Hong Kong will
continue to be a separate Member of the WTO using the name of "Hong Kong, China".  This is
provided for in the Basic Law of Hong Kong.  We will continue to be a separate customs territory.
Our trade and economic policies will continue to be separate from China's under the "one country two
systems" principle.  We greatly look forward to working with China, on the same friendly basis as we
work with other delegations in the WTO.
25. but having a wide and representative membership does not mean that all Members
automatically have the ability to participate effec tively in the WTO.  We must take very seriously
Members' abilities to exercise not only their obligations but also their rights.  All Members must feel
that the system works to their benefit.  This issue is behind the many implementation proposals which
have emerged in recent months at Geneva, as an expression of frustration felt by many developing
countries that the benefits envisaged in the Uruguay Round have not accrued to them.  It is clear to
Hong Kong, China that these issues must be addressed seriously – some here this week and some in
the coming months and years – if the WTO is to retain the trust and support of a large number of
Members.
26. But there is also another element.  That is, to ensure that developing countries have the
administrative structures and understanding in order properly to participate in the trading system.
There are proposals before us specifically to address the concerns of the least-developed countries,
who, perhaps, have benefited least thus far from th e multilateral trading system.  We strongly support
the EU initiative to grant duty free access for all goods of least-developed countries.
27. We must also do more in terms of technical assistance and cooperation in order to provide
developing countries with the help and assistance they need both to understand the various rules and
issues and to participate in their development and implementation.  Again there is a very sensible
proposal before us to increase the WTO budget devoted to this area and Hong Kong, China firmlyWT/MIN(99)/ST/11
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supports it.  The dispute settlement mechanism is ri ghtly viewed as the jewel in the WTO crown.  But
it is not an area all Members are equally equipped to use, either for offensive or defensive purposes.
28. There is a third excellent initiative to form a Legal Advisory Centre to provide greater
certainty that developing countries will have the resources and expertise, properly to argue their case.Hong Kong, China is proud to be a founding member of this Centre.
29. The agenda outlined above is a very substantial one and one which, if managed well, will set
out the WTO on an excellent track for the 21
st century.  But it is clear that the organization and the
system are already creaking under the strain of issues that need to be tackled.  We have the excellent
principle of decision-making by consensus.  This is something we cherish and which we should strive
to maintain.  But it is also becoming clear that, with 135 and soon 160 or 170 Members, this process isbecoming more difficult.  We saw such difficulties in the selection exercise for the Director-General.
Hong Kong, China does not have a panacea for this issue.  We should simply state that the inter-
governmental nature of the WTO must be maintained;  the universality and the ability of all Members
to feel they are part of the process must remain;  but at the same time we need to find ways to
streamline what we do.  This matter should be given some priority in the coming year.
30. It should be clear from the above that the WTO is in no position to take on extraneous
activities which are not directly related to trade.  We have been somewhat alarmed at the suggested
proliferation of working groups to study areas of activity which may not be central to the WTO's
functions.  There are proposals for working groups on biotechnology, on new technologies and ontrade and labour.  All these are no doubt very important subjects in their own right which deserve to
be looked at in an appropriate forum.
31. But the WTO is not an appropriate forum to solve all the world's problems, nor is it as well
equipped to study some of these issues as other institutions.  The introduction of matters such aslabour into the WTO would do the Organization irreparable damage.  As we already acknowledged
and decided at Singapore, the International Labour Organization is the competent body to deal with
labour issues.  Let there be no doubt that Hong Kong, China strongly supports labour standards and
the work of the ILO.  The WTO's contribution to the question of improved social conditions is
indirect, through raising the prosperity of people everywhere through increased trade.  That is the only
relationship there can be between trade and labour standards.  We should concentrate on our core
business of progressive multilateral trade liberalization and leave labour standards to the ILO.
Conclusion
32. Hong Kong, China believes that we must seize the opportunity here in Seattle to take forward
our trade agenda with vigour and commitment.  There should be no resting on our laurels or aimingfor second best.  We need to push the agenda forward so that, in the 21
st century, the benefits of trade
will reach every corner of the globe and our collective aim of raising the standards of living of all
peoples will finally be realized.
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