China standing by multilateral system for trade

Regional pacts merely supplements, WTO deputy director-general says

China should stand firm in pushing the Doha round of talks with other emerging economies while the multilateral trade system is challenged by the growing regional free trade movement, China's ambassador to the World Trade Organization has said.

WTO members are now busy negotiating how future talks should be carried out after a trade facilitation agreement was reached last December on the island of Bali in Indonesia, and a work schedule is expected by the end of the year, Yu Jianhua told a group of Chinese reporters.

China believes future talks should differentiate policies for developing countries and developed countries, he said.

Yi Xiaozhun, WTO's deputy director-general, told reporters that members also are discussing the implementation timetable of the Bali Package, which is considered a breakthrough in the WTO's marathon trade-liberalization negotiations. "The Bali Package offers us confidence in the Doha talks, and members are serious in pushing it forward," he said.

The Doha round, launched in 2001 to boost the free flow of goods and help poor nations overcome barriers to global trade, failed to achieve a pact, and there is growing skepticism worldwide about an eventual deal. Many countries have since turned to regional free-trade talks, such as the Trans-Pacific Partnership, a United States-led initiative to create a free-trade zone, and Europe's proposed trade accord with the US, the Transatlantic Trade and Investment Partnership. China also is participating in some free-trade zone talks with neighboring countries such as Japan and South Korea.

Yu acknowledged there is a growing passion for regional free-trade agreements of different size and scale, and they are threatening the multilateral trade system. "The multilateral talks are lacking oxygen, while the regional talks have too much of it," he said.

Yu said a growing number of emerging economies in the WTO are challenging the traditional authority of Western countries, because the WTO requires that any agreement should receive universal support.

Song Hong, a researcher at the Beijing-based Institute of World Economics and Politics, said developed countries are having an uneasy time in adjusting to a changing world trade order.

On Thursday, seven leading industrial nations, including the US, Britain, Germany, Japan and Canada, vowed to seal a series of free-trade deals, which Song said is an example of how Western countries try to maintain their authority in world trade rule-making.

Yu said the Doha round of talks touch on sensitive subjects such as subsidies for farm products that involve domestic political policies, which increases the difficulty in reaching a deal. But both Yu and Yi said China should stand firm on the multilateral trade system and play a constructive role with other emerging economies in shaping new global commerce.

"We must be clear that regional pacts can never replace multilateral ones," Yi said. "The multilateral system is the backbone and main channel of free trade and rule-setting, while regional cooperation serves as a supplement."

Yu said many subjects could not be negotiated under the regional system, such as farming subsidies. "Global issues can be solved only under a global system," he said.

"And the WTO is the only trade system with teeth," he added, referring to the WTO's dispute resolution function.

Yu also said it's easy to start regional talks but they might be hard to conclude, as the regional trade agenda is already hitting hurdles. The TPP is stalled over agriculture, and an EU-Canada deal has not been reached despite five years of talks.

"When the regional pacts are hitting the wall, it's time that countries return to the multilateral system," he said.

But Song Hong added that it's still hard to predict how seriously the regional system would affect the multilateral one. "I suggest China use the WTO as the main channel to push forward free trade but also actively participate in regional negotiations."