In the 12 years since ministers completed the Uruguay round of world trade negotiations, the most important change in global commerce has arguably been China’s emergence as a manufacturing power and its inclusion in the World Trade Organisation (WTO).
Yet as ministers prepare to travel to Hong Kong next week to try to keep on track the Doha multilateral trade talks – billed as a development round – China and most of its east Asian neighbours have been remarkably quiet in the negotiations.
Instead, the round’s fate probably hinges on whether the European Union, the US, Brazil and India can resolve their differences, especially over Europe’s controversial offer to grant more market access to farm products.
While China is the most notable absentee from the heart of the Doha debate, other big Asian trading nations and blocs – including Japan, South Korea and the Association of South-East Asian Nations (Asean) – have also kept a low profile, in spite of their growing participation in world trade.
Doha on the ropes series: Part 1
In east Asia only Hong Kong, which is hosting the WTO ministerial meeting and wants it to be a success, and Singapore, another Asian city-state with an interest in international free trade, have joined the Doha debate with any vigour.
The diffidence of Japan and South Korea is partly a reflection of the fact that both are intensely protectionist in the hotly contested area of agricultural trade. Even so, trade experts are surprised that Japan, which wants lower tariffs for its industrial exports and which played a pivotal role in the final days of the Uruguay round talks in December 1993, only recently joined the meetings of the so-called G4.
Stephanie Henning, a trade expert who is a former deputy chief counsel of the US Senate foreign relations committee, said: “Japan, which used to be very active, has been very quiet and I think that is to the detriment of the negotiations.”
In a recent FT interview, Seeichi Kondo, Japan’s leading negotiator in the WTO technical talks, recognised that Japan might have been less vocal than in the previous round, but he insisted Tokyo was now moving up a gear in its negotiating stance:
“Since November 7, Japan has been participating much more actively and I certainly think that Japan is going to play an important role because we are concerned by many of the issues.”
China is also being asked to play a bigger role in the Doha round. Rob Portman, the US trade representative, told reporters that the Chinese had a responsibility to play a more significant role in the negotiations, pointing out that they were “huge beneficiaries” of the open trading system.
China, however, despite its increasing dependence on net exports as an engine of economic growth, has a better excuse than most for its inactivity. Beijing has taken a calculated decision to keep its head down in the Doha round, arguing that the government’s plate is full overseeing the raft of market openings dictated by accession to the WTO in 2001.
Many of those commitments, notably in the banking and finance sector, have an end-2006 deadline, and the government sees little need to take on a new set of issues.
China’s assertive regional diplomacy has also helped fill the country’s trade in-tray. Beijing is negotiating a host of preferential trade agreements, mostly inspired by political and diplomatic imperatives, which have distracted its focus from the multilateral agenda.
So overburdened is the division managing these deals that the commerce ministry’s WTO section, which is responsible for Doha, has been forced to take control of bilateral trade negotiations with Australia.
China’s Doha vision is also clouded by its potentially conflicting priorities in the round. As a member of the G20, a group of developing countries dedicated to cutting farm protection, it finds common cause with prominent members in the group such as India and Brazil. But as a significant industrial power, it has as much interest in cutting industrial tariffs as it does in further dismantling protection for its vulnerable farmers.
Last month Beijing joined the other 20 members of the Asia-Pacific Economic Co-operation forum, which accounts for nearly half of world trade and 60 per cent of the global economy, in a strongly worded appeal for the success of Doha. Like most of the other Asian economies, however, China is not taking any bold steps to ensure that success.
Additional reporting by Victor Mallet in Hong Kong and Edward Alden in Washington
This is the second article in a series, with the previous report available on ft.com/doha
