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Mitchell, Arthur "International Symposium on Legal Issues in the WTO Doha Agenda" [2003] ADBLPRes 9 (21 November 2003)

International Symposium on Legal Issues in the WTO Doha Agenda

Arthur M. Mitchell
General Counsel
Asian Development Bank

Shanghai, People’s Republic of China
19-21 November 2003

Vice Minister Ma Xiuhong, Vice Mayor Zhou Yupeng, Vice Minister Li Shishi, ladies and gentlemen.

It is an honor to address this important Symposium on Legal Issues in the WTO Doha Agenda. I also have the honor of representing the Asian Development Bank as its General Counsel. My job brings me into daily contact with law and development issues. China, being one of our most important developing member countries, presents a number of significant success stories for these efforts as well as some interesting challenges.

Today, I would like to address the following:

  1. The role of ADB within the international monetary, financial and trade architecture.
  2. Consider why developments in China at this point are critical, particularly following the events at the Fifth WTO Ministerial Conference in Cancun, Mexico in September of this year.
  3. Explain what ADB is doing in China, particularly with respect to its WTO accession obligations.
  4. Highlight the significance of this effort for the rule of law.
  5. Consider a number of critical issues for the future.

The International Architecture

ADB, as a regional development bank, is an integral part of the international monetary, financial and trade architecture. Like the World Bank, ADB is involved in making loans and providing technical assistance to our developing member countries (DMCs), based upon our research and experience. We play a major role in the international development policy debate, while focusing our efforts on Asian nations. Our region is home to two-thirds of the world’s population.

The International Monetary Fund, on the other hand, is another key part of the architecture, which deals with macro-economic policies and balance of payment stabilization, on a worldwide basis.

The third pillar of this architecture is, of course, the global trading system, as represented by the WTO.

While the primary goal of each organization is different, we each support the functions of the others by focusing on certain critical cross-cutting issues. Nevertheless, I think it is fair to say that the IMF, the World Bank, and the ADB provide financial resources in order to achieve certain economic policy goals. The WTO, on the other hand, primarily focuses on organizing and providing a forum for global trade negotiations, developing rules and procedures which govern the terms of trade policy on a multi-lateral basis and the operation of a dispute resolution mechanism.

The Significance of China

One of the principal functions of ADB is to support the development of regional trade as a catalyst for sustainable economic development. This is intimately tied to the over-arching ADB goal of reducing poverty in Asia. According to some projections, global income could possibly increase by more than five hundred billion dollars a year by 2015. Over 60 percent of that gain will go to poor countries thereby helping 144 million people out of poverty.

Because of the success of the GATT and WTO in reducing various trade barriers, developing country exports have recently grown almost twice as fast in value terms as total world exports. A critical fact is that China accounts for a great part of this exponential growth. In my view, this is the significance of China. In other words, what happens in China over the next decade is likely to have a major impact on both the developed and the developing worlds.

The World Bank, back in the 1980s, made a major intellectual contribution by demonstrating that competitive markets can play a positive and catalytic role in economic development. ADB has further built upon these efforts through research projects and through its operations by providing loans and technical assistance for specific activities that promote trade in our region. Now ADB is able to provide sound policy advice on trade liberalization measures to our DMCs based on that research and experience.

In the course of our operations, we have noticed that developing countries face three major and inter-related challenges when they begin to address their relationship with the international trading regime:

  1. how to improve their capacity to understand very complex issues and to develop politically-sustainable policy responses;
  2. how to ensure that the domestic legal and regulatory framework is in compliance with WTO rules; and
  3. how to promote private sector development entrepreneurship so that domestic entrepreneurs are prepared to deal with international competition.

Capacity Building

Negotiations about trading rules used to focus on issues related to the movement of goods across borders. Starting with the Uruguay Round, the negotiations began to center around “behind the border” issues. The Doha Round took this movement a few steps further by putting on the agenda items such as:

- agriculture
- trade-related aspects of intellectual property
- the relationship between trade and investment; and
- trade and the environment.

Many of ADB’s developing member countries need to enhance the ability of their trade negotiators to understand these issues in a multi-lateral and multi-dimensional context so that they can become more effective negotiating partners. This problem is further complicated by the divergence of competitive positions occupied by various countries in Latin America, Africa and China itself, as evidenced by the September 2003 meeting in Cancun, Mexico.

ADB is currently working with government officials in China by holding policy consultations, preparing issue papers and sponsoring conferences such as this one, to enhance the overall understanding of the current status of the WTO negotiation process.

Legal and regulatory framework

After much preparation, countries such as China, agree to become legally bound by WTO rules once they are admitted to membership. In order to be effective, however, the rules must be understood and implemented domestically – to ensure compliance. These often include the promulgation of new laws on

- anti-dumping
- customs valuations, and
- rules of origin
just to name a few. China and other new members must decide how to change the existing domestic legal framework to make compliance a reality.

China, for example, has begun to focus on the changes that are needed in laws relating to investor rights under:

- corporate and business-related laws
- the securities law
- intellectual property statutes involving patent, trademark and copyright law, and
- land laws.
ADB has been cooperating with the Chinese government on needed reforms in each of these areas and we plan to expand that cooperation and assistance.


Of course, the most difficult challenge, from the perspective of a developing country, is how to establish a suitable environment for market forces to emerge, yet do so in a manner that does not stymie domestic industry before it can obtain a measure of market power. If mistakes are made in this area, this can cause domestic political support for the needed reforms to evaporate. Obviously, there is no perfect answer to this question, but on balance, market forces are being allowed to play a much greater role in China in determining the allocation of resources.

In the case of China, two-thirds of GDP growth is attributable to the non-state sector. More than half of all exports are completed by foreign-invested enterprises. This means the private sector and foreign direct investment have been playing an indispensable role. The experiences in China have shown that the private sector is most responsive to market competition and adaptable to changes. Foreign investment brings in new technology, market links, advanced managerial skills and many new concepts. However, I would like to point out that the potential of the private sector in China remains far from fully tapped. Further, development and reform of the legal and judicial system is critical to continued growth in private sector development.

Future Issues

Looming over the horizon are the so-called Singapore issues. The political dimensions of trade are quite significant, again, as evidenced at the Cancun meeting. ADB is prohibited by its Charter from engaging in political activities and it is certainly not our place to argue for or against the positions that the developing or developed countries took at Cancun. However, ADB is very concerned with the economic aspects of development.

- Fair competition policy (particularly with respect to the elimination of fraud and counterfeiting);
- The linkages between trade and investment;
- Transparency in public procurement; and
- Simplification of customs procedures (and the consequent elimination of corruption)
are all part of the ADB’s agenda. We are currently providing policy advice in these areas to many of our DMCs.

The promise of economic development in China is more certain than at any other time in history. Working with government agencies and other stakeholders, ADB hopes to continue to contribute to China’s efforts. It seems that now, the question for China is whether it will develop a “good” market economy or a “bad” one. If China succeeds, it will change the course of world history once again.

Thank you.

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