With the rise of emerging countries represented by China and some other countries, the current international trade system is embracing a reform. A prominent feature of this reform is the participation of an increasing number of countries and regions.
It is noteworthy that the repeated setbacks in the Doha Round talks are a vivid reflection of the difficulties of the reform. The Doha Round, which World Trade Organization (WTO) members started in November 2001 with the aim of lowering trade barriers around the world, has not been completed yet. The talks also exposed the problems of the current international trade system.
Problems
The current international trade system was established within the frameworks of the General Agreement on Tariffs and Trade and its successor, the WTO. It has served as a significant pillar for the sustained and stable growth of the world economy after World War II. Also, it has greatly promoted economic globalization and trade liberalization. Thanks to its orderly operation over the past decades, the overall environment of international trade has been dramatically improved. The size of the world economy, as well as international trade volume, has grown exponentially.
However, now this system has numerous problems. A major problem is the conflict between developed countries and developing countries. Developed countries control the decision-making system and the setting of standards, while developing countries are in a subordinate position. The pattern has created a big difference in the power exercised by the two camps.
Traditional sensitive issues pose another problem. On the one hand, developed countries won’t stop offering export subsidies to their own agricultural products. But on the other hand, they force developing countries to open up markets. This has caused dissatisfaction among developing countries. These issues not only put WTO members’ economic interests at stake, but may also affect their security and stability. However, they have never been solved.
Burgeoning regional trade cooperation also calls for reform in the international trade system.
In addition, the current trade system has not successfully curbed trade protectionism. Protectionism practiced by a number of countries and regions has hindered the progress of the reform.
China’s role
As a major participant of international trade and an active force in trade system reform, China seeks a reasonable, fair and equitable international trade order, while strengthening cooperation with other developing countries.
China advocates reaching its goals through well-planned and efficient reform based on equality and harmony, instead of a revolutionary subversion. China insists the reform should be carried out under the principle of maintaining the positive parts and abandoning the negative parts of the traditional system.
A major reason for difficulties in the Doha Round is developed countries’ long-term dominance over the multilateral trade system and decision-making for negotiation targets.
China’s participation will change the traditional dynamic in the system, with more importance attached to protecting the interests of developing countries as well as less developed countries.
For instance, China is a member of the Group of 20 Developing Countries, which was established in August 2003 in the run-up to the Fifth WTO Ministerial Conference in Cancun, Mexico. The bloc consists of developing nations from Asia, Africa and Latin America, including Brazil, India, Argentina, South Africa, Indonesia and Thailand. The group aims to safeguard the interests of developing nations, eliminate the distorted trade policies of developed countries, and urge developed countries to further open up markets and offer special treatments to developing countries. It has been a significant force in the Doha Round talks.
Also, China is an observer of the Group of 33, a bloc that includes Indonesia, Cuba, Kenya, Nigeria, Pakistan, the Philippines and Turkey. Member countries are committed to fighting for rules that will allow them to use special safeguard measures to protect domestic producers of agricultural products of strategic importance to their food security from the effects of subsidized food imports.
All in all, within the framework of the WTO, China tries to seek as many preferential treatments for developing countries in the international trade system as possible. Its efforts will help level the playing field for developed and developing countries alike.
China will play a more significant role in the new international trade system. As a leading trade power and a representative of developing countries, it has already pushed the international trade system toward profound adjustments. Also, it has promoted the development of a framework for multilateral trade cooperation.
More importantly, China will turn from a mere participant in the reform into an ac- tive coordinator. It will even be an important leader in certain areas. For instance, during the trade in services negotiations of the WTO, China was invited to talks of all levels, including various small-group meetings.
As the reform is a gradual process, new problems have kept emerging. For example, some countries attempt to bring climate change into multilateral trade negotiations. In this way, they have created new barriers for developing countries and slowed down the reform.
China regards addressing these new problems to safeguard the core interests of developing countries as one of the major obligations in its participation in the international trade system. This also creates opportunities for China to enhance its international influence.
In this regard, China’s participation will help expand the reform from structural adjustments to specific issues such as fighting against international trade protectionism.
China’s struggle against trade protectionism and its positive attitude toward promoting trade liberalization will contribute to the development of a new, fairer trade system. As a major participant in the Doha Round talks, China has been making persistent efforts to push the talks toward a successful ending.
Domestic initiatives
Of course, while taking part in the international trade system reform, China has attached great importance to its domestic market. Faced with severe challenges in the multilateral trade system, the country has to shift its focus to domestic demand.
China has benefited greatly from economic globalization and trade liberalization. The great achievements it has made since reform and opening up in 1978 are, to a large part, due to global trade liberalization.
But China’s traditional export-oriented economic development model is mainly supported by low labor costs. This makes China a frequent target of trade protectionism. China’s efforts to change its economic development model not only are crucial for the country’s sustainable development, but will also help promote adjustments in the global trade pattern.
Through this transition, China aims to change its current economic growth model featuring high resource input, high pollutant emissions and low efficiency into one featuring low input, low emissions and high efficiency.
Moreover, the further opening up of the Chinese market will provide a solid platform and a strong driving force for the development of free trade around the globe. Also, it will contribute to smooth progress in the reform of the international trade system.