China stands to benefit greatly from the World Trade Organization’s (WTO) Doha Round of negotiations and should play a more active role in securing an agreement, says US Trade Representative (USTR) Susan Schwab.
Schwab, in her first official visit to China as USTR, addressed a gathering of the American Chamber of Commerce and the US-China Business Council in Beijing August 29.
“It is my firm belief—that China has an unprecedented stake in the successful conclusion of a robust agreement, and that a successful Doha Round will only be possible with vigorous and positive Chinese participation,” she said.
The Doha negotiations, which began at a WTO ministerial conference in the Qatari capital in 2001, have faced an uphill struggle from the outset. The talks collapsed in 2003 as parties disagreed on the handling of agricultural subsidies and market access. They were resuscitated by intensive negotiations in 2004 and 2005, but were suspended indefinitely once again in July 2006 as ministers from the “G-6” major trading entities—the United States, the European Union, Australia, Brazil, India and Japan—deadlocked over reductions in tariffs and subsidies.
Schwab called the breakdown of the talks a “major disappointment.”
“Indeed, the Doha Round is our generation’s best opportunity to lift millions of people out of poverty and to raise living standards for millions more,” she said.
The USTR expressed hope that Chinese officials would “carry out a clear-eyed assessment of the costs and benefits of a successful Doha Round and conclude that it is in China’s long-term self-interest to play an active role in ensuring the Round’s ultimate success.”
China’s stake in enforcing WTO disciplines
Schwab said the results of China’s decision to implement market-oriented reforms and join the rules-based international trading system have been “nothing short of breathtaking.”
With annual growth rates averaging nearly 10% over the last 20 years, the USTR said, China has experienced a total growth in real gross domestic product (the market value of all final goods and services produced within a country) of more than 500%.
“Importantly, the people of China have benefited greatly from China’s engagement with the rest of the world, with an estimated 377 million people lifted out of poverty,” she said.
China has demonstrated a capacity to play an “influential and constructive” role in the trading system when it wants something to happen, Schwab said.
She pointed out that Beijing hosted a meeting of trade ministers of the member economies of the Asia-Pacific Economic Cooperation (APEC) forum in June 2001, helping to “lay important groundwork” for the WTO Doha Round. In addition, she said, China hosted an informal trade ministerial in Dalian in July 2005, using the opportunity to push for the elimination of agricultural export subsidies.
“But it is also clear that at present, China is still assessing its role in the WTO and in the [Doha] Round,” Schwab said.
She questioned China’s continued passive role in the informal international groupings it has joined, including the G-20, a forum on international financial concerns for key industrial and emerging market countries, and the G-33, a group of developing countries seeking continued protection for subsistence farmers in WTO negotiations.
“In both groups, other countries—with trade interests decidedly different from China’s—are playing the leading roles,” Schwab said. “Is it really in China’s best interest—to have these other countries appearing to speak for China?”
China’s interests give it an important stake in supporting an international trade system that is effective in enforcing rules, the USTR said.
Those interests, she suggested, include gaining the trust of trading partners and promoting increased trade among developing countries that have significant potential as future markets.
“Now is the time for China to play a greater role, commensurate with its status as the third largest trading nation in the worl