DISCUSSION PAPER FOR
LEGISLATIVE COUNCIL PANEL ON TRADE AND INDUSTRY
World Trade Organisation :
First Ministerial Conference at Singapore
(9 - 13 December 1996)
Purpose
This note informs Members of the outcome of the first Ministerial Conference of the World Trade Organisation (WTO) held in Singapore in December 1996.
Details
2. The Agreement establishing the WTO provides that a Ministerial Conference should be held at least once every two years. The Ministerial Conference has the authority to decide on matters related to any of the multilateral trade agreements under the umbrella of the WTO, as well as to take actions necessary to carry out the functions of the WTO, including negotiations for further global trade liberalisation.
3. The first Ministerial Conference took place in Singapore from 9 - 13 December 1996. The Secretary for Trade and Industry led the Hong Kong delegation to the Conference.
Outcome and assessment
4. The outcome of the Singapore WTO Ministerial Conference (SMC) was reflected in a "Singapore Ministerial Declaration" (MD) endorsed at the close of the Conference. A copy is at the Annex. Generally speaking, the SMC was considered a success by WTO members. From Hong Kongs perspective, we achieved largely our objectives on issues of significant concern to Hong Kong, as set out below.
(A) Role of World Trade Organisation (paragraph 6 of MD)
5. Our objective was to get the WTO to commit itself to the ultimate goal of free trade. We managed to secure language in the MD to the effect that Ministers "envisage a world where trade flows freely", and are committed to progressive elimination of tariff and non-tariff barriers, rejection of all forms of protectionism, and elimination of discriminatory treatment in international trade relations. While this language will have little immediate impact, it is a step in the right direction and will be helpful to our work in pushing for further and more ambitious multilateral liberalisation.
(B) Regional Trade Agreements (paragraph 7 of MD)
6. Our aim was to pursue in the WTO Committee on Regional Trade Agreements an examination of the systemic implications of regional trade agreements (RTAs) for the multilateral trading system, and the strengthening of the WTO rules governing RTAs. The text in the MD provides sufficient scope for us to pursue this objective.
(C) Textiles and Clothing (paragraph 15 of MD)
7. We aimed to secure -
- a political commitment by Ministers to full compliance with the provisions of the Agreement on Textiles and Clothing (ATC);
- more meaningful integration programmes by importing members to phase out quota restrictions; and
- improved functioning of the WTOs Textiles Monitoring Body.
We were able to achieve items (a) and (c) above to a large extent and with some positive pressure exerted on item (b).
(D) Trade and Environment (paragraph 16 of MD)
8. Ministers decided to continue the work of the Committee on Trade and Environment to examine the relationship between the multilateral trading system and trade-related environmental measures. We are content with this outcome which represents a balance between trade and environmental concerns while maintaining the integrity of the WTO system.
(E) Services Negotiations (paragraph 17 of MD)
9. We are satisfied that Ministers injected fresh political impetus to the ongoing work in various services sectors, in particular, the negotiations on basic telecommunications and financial services. There were intensive discussions among major players on basic telecommunications in the margins of the SMC. These discussions, in which Hong Kong played a leading role, provided an opportunity for clarifying positions and enabled us to gain an insight into the possible outcome of the negotiations.
(F) Information Technology Agreement (paragraph 18 of MD)
10. The most immediate and concrete achievement of the SMC was the tentative agreement by 28 members , including Hong Kong, to eliminate tariffs on a wide range of information technology products by the year 2000. The tariff elimination will be implemented on a Most-Favoured-Nation basis. The first stage of tariff reductions will be made no later than 1 July 1997 if the level of participation reaches 90% of world trade in information technology products and the staging of tariff reduction is agreed to the participants' satisfaction. Technical discussions on, among other things, the staging of implementation and the product list are being held in Geneva. We estimate that in 1995 value terms, at least HK$30 billion worth of our domestic exports will benefit from the agreement.
(G) Built-in Agenda (paragraph 19 of MD)
11. Ministers reaffirmed their commitment to carry out all the future negotiations and reviews mandated in the Uruguay Round agreements. They also agreed to a process of analysis and exchange of information to prepare for these negotiations and reviews. Hong Kong fully supports this approach.
(H) Investment and Competition Policy (paragraph 20 of MD)
12. Ministers reached a consensus to establish two working groups to examine respectively the relationship between trade and investment, and the interaction between trade and competition policy. The mandate of the two groups would largely cover the substance of a proposal put forward by Hong Kong for consideration at the SMC. In particular, the broad remit of the working group on trade and competition policy would provide an opening for us to pursue one of our key objectives - namely, to set in train a process leading eventually to a fundamental review of the anti-dumping rules of the WTO, which have increasingly been abused for trade protectionist purposes.
(I) Government Procurement (paragraph 21 of MD)
13. The WTO will begin a study on transparency in government procurement practices which, we hope, will eventually lead to the establishment of some multilateral disciplines in this area. This represents a first step towards our objective of concluding a multilateral agreement that will provide a level playing field for all suppliers on a non-discriminatory basis. Before the SMC, Hong Kong reached agreement with signatories to join the plurilateral Agreement on Government Procurement. In her formal statement delivered at the SMC, the Secretary for Trade and Industry announced Hong Kongs decision to accede to the Agreement.
(J) Trade Facilitation (paragraph 21 of MD)
14. Ministers directed the WTO to undertake an exploratory and analytical work on the simplification of trade procedures. We support this work which may lead eventually to the development of WTO rules in this area.
(K) Labour Standards (paragraph 5 of MD)
15. Some developed country members pressed strongly to introduce the subject of labour standards into the WTO. Their attempt was strongly resisted by Hong Kong and many developing country members. A number of developed country members also maintained opposition with varying degrees of intensity. In the end, the two sides struck a compromise. On the one hand, Ministers renewed their commitment to observe internationally recognised core labour standards. On the other hand, the MD affirmed that the International Labour Organisation was the competent body to deal with labour standards, categorically rejected the use of labour standards for protectionist purposes, and agreed that the comparative advantage of low-wage developing countries must in no way be put into question. The SMC Chairman further clarified in his concluding remarks that the text of the MD did not inscribe the relationship between trade and labour standards onto the WTO agenda.
Overall assessment
16. The SMC was an important step in the evolution of the multilateral trading system. On the one hand, it took stock of the WTOs activities in its first two years of existence and, on the other hand, looked at how future challenges could be addressed. The reaffirmation of the WTOs mission of progressive trade liberalisation, the renewed impetus given to the ongoing work, the favourable outcome on the Information Technology Agreement, the consensus to start work on important new issues like investment and competition policy, and the spirit of compromise that eventually prevailed in both developing and developed camps, have enhanced the credibility of the WTO as an effective organisation. As a strong supporter of the rule-based multilateral trading system, Hong Kong welcomes these developments.
17. Hong Kong participated actively both in the preparatory process in Geneva and elsewhere and during the Conference itself. We were engaged in almost all the formal or informal processes as an important player on subjects of concern to us. We achieved most of our objectives and our positive contributions were recognised by other WTO members. In particular, our proposal on "WTO Rules in a Globalising Economy" aroused considerable interest and recognition in many quarters of the validity of our concerns. It was a major factor leading to the establishment of the working group on trade and competition (para 12 above) and has enhanced our standing in the WTO.
Trade and Industry Branch
February 1997
Last Updated on 21 August 1998
