Ten years in the WTO sees turnaround in philosophy

PUBLISHED : Monday, 12 December, 2011, 12:00am
UPDATED : Monday, 12 December, 2011, 12:00am


A nation's changing economic influence and fortunes can alter its economic philosophy, and that is what is happening between the United States and China in regard to global free trade and economic globalisation, former vice-minister of commerce Wei Jianguo says.

'In the decade since its admission to the World Trade Organisation, China has become a keen supporter of further trade liberalisation and economic globalisation, while adversely, the US, long the advocator of these doctrines, has been tilting toward protectionism and bilateralism,' Wei (pictured) told the Post last week before the 10th anniversary of China's entry into the global trade family.

Wei put the blame squarely on Washington for the failure of the WTO's decade-long talks to deepen trade reforms.

China's admission to the WTO a decade ago coincided with the launch of the Doha round of trade talks, which is theoretically seen as dead as the 153 members failed to agree to a watered-down global trade deal by this month.

WTO director general Pascal Lamy said it was up to the US and China, the largest and second-largest economies in the world, to decide the fate of the Doha Development Agenda, which had been billed as the next leap forward in freeing trade until it collapsed earlier this year.

Trade experts say one consequence of Doha's failure is a splintering of efforts to liberalise world trade, with countries increasingly striking bilateral and regional free trade agreements (FTAs) instead of pushing for one global deal.

Wei was involved in talks with the US and other countries regarding China's WTO admission and other trade agreements during his career as a senior Chinese official in charge of foreign trade and investment. He said that while China was well prepared for the further opening up of markets, it was the US which had shown little interest in the talks, preferring FTAs instead. Wei said the WTO embraced globalisation, while FTAs applied to countries with bilateral deals with the US.

'The US has long been an advocate of free trade and a promoter of globalisation ... but while China has succeeded in this regard, the US is tilting towards trade protectionism,' Wei said, adding that this was the chief reason for Doha's failure.

Wei, now secretary-general of the China Centre for International Economic Exchanges, a think tank headed by former vice-premier Zeng Peiyan , said while the trade deals meant market openness was applied to a few participating countries, WTO rules applied to all 153 members. The Doha round meant more than US$3 trillion in business and investment opportunities.

The US also recently agreed long-sought free-trade pacts with South Korea, Colombia and Panama. If ratified, they would bring to 20 the number of countries enjoying FTAs with the US.

Meanwhile, besides trade pacts with Hong Kong, Macau and Taiwan, Beijing also reached agreements with the Association of Southeast Asian Nations, New Zealand, Pakistan, Peru and Costa Rica. It is also pursuing more deals with countries including Japan, South Korea, Australia, Iceland and the Southern African Customs Union.

'China has become a keen supporter of the Doha agenda and is well prepared for further trade liberalisation, and opening its markets to foreign agricultural products and services, while the US is defensive in this regard,' Wei said. 'China is now more eager than the US to embrace economic globalisation, and that is also what pushing forward the Doha agenda within the WTO framework would mean,' he said.

Wei cited US President Barack Obama's recent proposal for a US-led free-trade deal in Asia-Pacific.

The Trans-Pacific Partnership (TPP) aimed to open Asia-Pacific markets to the US, he said. On the sidelines of the annual Asia-Pacific Economic Co-operation forum in Honolulu last month, the US-initiated TPP received a substantial boost when the US and its eight other members - Chile, New Zealand, Brunei, Singapore, Australia, Malaysia, Vietnam and Peru - agreed on a framework to be finalised next year.

Support for the partnership rose sharply after Japan, Canada and Mexico declared they wanted to be included. As a market of 800 million consumers, it could be the world's largest free-trade zone.

Wei said China did not fear a US offensive, but he warned Washington should not use FTAs or the TPP to replace the role of Doha or the WTO in promoting free trade and economic globalisation. Wei said Washington had adopted what he called the three-nos policy in Doha talks: 'No position, no initiatives and no response [to other's initiatives].'

Wei said joining the WTO was the highlight of China's three decades of reform and opening. In response to domestic criticism that too many concessions had been made to gain admission to the trade body, such as accepting 'non-market economy' status that allowed other WTO members to put restrictions on goods from the mainland, he said the gains exceeded any losses.

'What is more important is that we seized such a rare, historic opportunity,' Wei said. 'Joining the WTO will prove to be the shining point in China's history of development.'


Tariffs on this many goods were lowered as part of China's admission to the WTO in 2001

- 3,000 trade rules have been passed since