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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)Implications of China's WTO Accession for UK Trade Policy |
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I am delighted to address this conference at a time when China's membership to the World Trade Organisation looms so near - even if it sometimes seems fated to remain tantalisingly just out of reach. Clearly, judging from reports, the recent China Working Party meeting, envisaged as the final one, was disappointing. A number of key issues remain outstanding and it looks likely that further detailed meetings in Geneva will be required to resolve them. But let's put things in perspective. If it had been predicted, when I was in Beijing in June last year, that China would be as close to joining as it is now, we would have been very satisfied. Likewise, if we could have predicted that the terms of market access which China has agreed would be as favourable as they are, we would have been delighted. And let's not forget the recent good news in the form of the positive US vote in favour of Permanent Normal Trading Relations status for China. Understandably, China is eager to join the WTO as soon as possible, and preferably by the end of this year. But, the UK, and other WTO members, believe that rather than striving to meet an artificial end of year deadline, the important thing is to resolve the outstanding issues to the satisfaction of all before China joins. The WTO is a rules-based organisation and one with teeth, in the form of the WTO dispute settlement mechanism. But the dispute settlement mechanism should only be used as a very last resort. It is much better to pre-empt this process by ensuring that any ambiguities in the terms of China's accession - covering key issues such as licensing procedures, intellectual property rights and trading rights;are clarified now, in order to avoid future misunderstanding. In this context, welcome though China's market access undertakings are, it is even more important for foreign business to have a clear understanding of the precise rules and conditions that will prevail. It is therefore important that negotiations should not be rushed on issues concerned with the fundamental WTO requirements of transparency, non-discrimination, uniform administration of rules and recognition of the general right to trade. Of course, in reaching agreement, it is likely that there will have to be some compromise both from China and WTO members. To China's Ministers and officials, I would urge even more patience as you approach the home straight. However many more meetings in Geneva may be required and however arduous this process is, it is important to reduce the scope for future misunderstanding. But we should also bear in mind that however thorough the negotiations on China's WTO documentation may be, the complexity, size and state trading history of China's market mean that there will inevitably be gaps. Implementation of her commitments against a background of major domestic structural reform, with all the attendant social concerns, and the need to introduce a mass of new legislation, will be not be easy for China. This is why the UK very much welcomes the plans to establish a Transitional Review Mechanism to assess China's progress in meeting her WTO commitments. It makes no sense to expose China to the full weight of the WTO's dispute settlement mechanism from her first day of accession. But at the same time we must give WTO members a level of assurance and security in the case of problems. The UK has always supported China's accession to the WTO. Everyone stands to benefit from China's full integration into the multilateral trading system. China's membership on the right terms will help to reinforce the multilateral trading system as well as support her own internal reform process. China will enjoy more secure access to some 138 overseas markets. And an end to the need for repeated bilateral negotiations with her trade partners, who will no longer be able to impose barriers on specific Chinese goods. China will have a say in the rule making process;and should have much to contribute to the new Round of WTO multilateral trade negotiations which I hope will commence as soon as possible. China's trade partners will benefit from increased market access for both goods and services and from a more secure legal foundation for doing business. The greater security and comfort for foreign investors afforded by China's membership should lead to increased levels of foreign direct investment in China. Investors will enjoy freer operating conditions. There will be greater clarity or transparency in the rules, regulations, procedures for doing business and in the awarding of contracts and licences, whilst the scope for discrimination will decrease. No longer should foreign business be subject to unwritten local regulations or sudden, unexpected changes in rules, tariffs or licensing requirements. There should be better protection for intellectual property rights given that China has agreed to implement the WTO's (TRIPS) Agreement. China's WTO accession will make life easier, even if not wholly easy, for foreign companies in all sectors. I would strongly encourage UK companies to examine the new opportunities that will exist now or in the near future. As ever, the China Britain Business Council will be on hand to provide you with high quality professional assistance. As I said earlier, the level of market access we have negotiated is very satisfactory for UK business - for goods, services and investment. Let me give you some examples There will be lower import tariffs on a host of products including alcoholic spirits, footwear and clothing, cosmetics and dairy products. Barriers to imports of products such as medicines and spirits will be removed. There will be greater freedom for foreign insurance companies. Restrictions on foreign brokers and banks will be phased out over time. China has agreed to open up its distribution sector, a particularly sensitive area given the large number of people employed. And state trading monopolies on a number of commodities will be eased. Rules on foreign lawyers and accountants will be relaxed. Given the need for these services by potential foreign investors, for example to audit factories where investment is proposed, this too should help increase China's attraction as an investment location.
China's commitment to remove a number of onerous requirements on foreign investors - covering areas such export performance, local content and technology transfer - are also very welcome. And finally, China's undertaking to make her procurement system non-discriminatory and open should increase opportunities for UK companies. Welcome though China's market access commitments are, there have inevitably been some disappointments and there are also areas where we need greater clarity. For example, we would hope in time to see the possibility of majority foreign ownership of non-life insurers. Equally, it's not yet clear the extent to which foreign participation in chain stores may be limited or the precise benefits of concessions for foreign lawyers. And;whilst recognising that it is still in its infancy in China - we would have liked majority foreign ownership in the mobile telecommunications sector. Intellectual property rights is a vital issue for foreign business in China. We very much welcome China's WTO commitments in this field and her major progress in recent years in reducing copyright infringement of music products and other published works and tackling pirated versions of branded goods and electronic products. But, inevitably, there remains more to be done. Experience shows a close link between market access and a country's ability to tackle infringement of intellectual property rights. This is particularly the case in relation to foreign companies;ability to distribute and produce published works such as music products and books. We would therefore encourage China to consider permitting such market access. More generally, we welcome China;s revisions to its Patent Law this year but would encourage China to introduce the other necessary IPR legislation - covering copyright and trademarks - as soon as possible. But despite these points, we must not overlook the importance of China;s accession to the WTO. As we saw in Prague last week, the backlash against globalisation and global trade is real and it is gaining momentum. An unholy coalition has been cobbled together. Media aware pressure groups and old-fashioned protectionists stand together shoulder to shoulder. Clearly we need to do far more to make the case for open trade. So that our people can realise the opportunities and benefits that globalisation has to offer. We must do this because in a democracy we will not be able to embrace globalisation if too many individuals and organisations feel they are being left behind. I believe that with the right international structures in place and working effectively then globalisation can be a bringer of opportunity and not a threat. Open trade boosts economic growth. It provides greater opportunities and improved standards of living for millions rather than privileges for a few. Let us be clear, protectionism anywhere is a threat to prosperity everywhere. Closing off national economies only increases national and international instability. We must never forget that the path of open trade and open capital markets that we have travelled in the last 30 or 40 years has brought unprecedented growth, greater opportunity and a better life for people across the world. China;s entry into the WTO provides a great opportunity to extend those benefits further. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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