PACIFIC BASIN ECONOMIC COUNCIL
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Additional Info: Policy Statements Speeches Photos Speakers & Noted Participants Featured Biographies Registration Media Information Conference Statement Regional Vitality in the 21st Century April 6-10, 2001 — Tokyo, Japan Mr. Noboru Hatakeyama Chairman and CEO Japan External Trade Organization (JETRO) Thank you very much Chairman for the kind introduction. Mr. Inaba, International Chairman of PBEC International Secretariat, Mr. Murofushi, Chairman of Organizing Committee, PBEC 2001 International General Meeting, Dr. Sohmen, Chairman Emeritus of PBEC, Distinguished guests, Ladies and Gentlemen, It is my great honor to be invited and have an opportunity to speak at this Plenary Session I entitled "Global Economic Issues and the Pursuit of Sustainable Growth and Regional Vitality" today. The biggest challenge for our global economy is whether or not we can start the WTO negotiation this year. As you know well, the WTO rules are the legal framework of our global economy. Since there are many items not covered by current WTO rules and since there have been many important changes, such as the spread of IT, taking place after the completion of the Uruguay Round in 1995, we have to update WTO rules so that these rules fit the global economy as of now. It took 7 years for the Uruguay Round to be completed. Therefore we have to start the next WTO negotiations as soon as possible. A WTO Ministerial meeting is going to take place in the capital of Qatar, Doha in November this year. Doha happens to be very famous in Japan. It was in Doha that Japanese football team was caught up by the Iraqi team at loss time in the Asian preliminary for the World Cup eight years ago. So this defeat is often cited as the tragedy in Doha. Coming back to WTO, after the tragic failure of Seattle in 1999, we cannot fail twice. The tragedy in Doha should be enough just for Japan's football team. I personally think the following three points, at least, are important to start the next WTO round. First, the US should not stick to its idea of linking labor and trade. The fact that former President Clinton tried to do so in Seattle was one of the main reasons for the failure of that meeting in 1999. International trade begins from the differentials of capital, technology and labor among countries. Free trade is a principle where these three elements are assured to move freely. Nevertheless, if labor alone is picked up as something to be regulated beyond minimum globally recognized standards in the context of WTO, it would violate the free trade principle. Of course, child labor should be prohibited. The right to form a labor union, the right for workers to negotiate collectively with management and the right to carry out strikes may also be assured even in developing countries. However, these issues should be discussed internationally in ILO (International Labor Organization) not in WTO. I strongly believe that the Bush administration's fundamental stance on this issue is not to link labor and trade, although as a compromise with Democrats to get fast track authority from the Congress, it might be considering Congressional approval of an FTA with Jordan, which will include labor and trade clauses. It is also important for the Bush administration to agree to incorporate antidumping rule issue in the agenda of next WTO round. Secondly, I personally think Japan should be more flexible on its agricultural imports policy. Of course, genetically modified organ (GMO) should be monitored carefully and carry labeling requirements. However, agricultural goods, other than GMO and mad cow and foot and mouth disease related animals, should not be put under severe import controls except when necessary for security, so that especially developing countries both in Asia and Latin America can expect increased exports of agricultural goods to Japan after the completion of the next WTO round. Thirdly, developing countries should agree to establish a WTO rule on FDI (foreign direct investment). As you know well, the economic growth of most developing countries heavily depends on inward FDI. In order for FDI to enter developing countries, transparent and nondiscriminatory investment rules in recipient countries are important. Therefore, WTO rules on FDI would bring about benefits not only for investors but also for developing countries. There is an issue to be resolved even before the WTO Ministerial meeting in Qatar. That is the accession of China into WTO. Unless China is a member of WTO, WTO cannot be called a global trade rule because China accounted for 3.5% of world trade in 1999 with the possibility of accounting for around 4.5% in 2000 and its trade surplus with the U.S. last year was bigger than Japan's trade surplus with the U.S. for the first time in its history. China has committed to entering into WTO not necessarily for the short term interest to increase its exports but for the sake of promoting its domestic reform and openness policy. Therefore, if China maintains a consistent policy with this even after its participation in WTO, it will facilitate the start of the next WTO. As you know well, China will host an APEC leaders meeting in Shanghai in October this year. It would be ideal if we could give a blessing to Chinese accession to WTO on the occasion of the Shanghai APEC meeting. By the way, in the APEC meeting in Bogor, Indonesia, back in 1994, APEC leaders declared to commit to complete the achievement of our goal of free and open trade and investment in the Asia-Pacific no later than the year 2020. The pace of implementation will take into account differing levels of economic development among APEC economies, with the industrialized economies achieving the goal of free and open trade investment no later than the year 2010 and developing economies no later than the year 2020. The year 2010 is not remote from now. So I personally think that if China can take the initiative to reconfirm this Bogor declaration in the Shanghai APEC meeting, it would also facilitate the upcoming WTO negotiations. The WTO Ministerial meeting should not fail to start the next round. However it is not guaranteed. If we fail to start the WTO negotiation and we solely rely on WTO's next round for further liberalization, then unfortunately WTO would end up blocking further globalization. We should provide an alternative route to WTO just in case. That would be the FTA route. If we can have competition between WTO and FTAs for further liberalization, then liberalization would proceed much faster. In addition to this, some FTAs can be a testing ground for the future rules incorporated in WTO. Of course, consensus building between two or several countries is always much easier than that within WTO with its 140 member nations. Therefore, we can introduce competition rules in some of our FTAs and lessons from this experiment can be applied to the would-be-competition rule incorporated in WTO. In this regard, although FTAs should not and cannot replace WTO, they can complement WTO. In PBEC, there are only five economies which have never engaged in FTAs with any other economies. These five are Japan, Korea, China, Taiwan and Hong Kong. Japan, having changed its WTO alone policy, has started FTA negotiations with Singapore. These negotiations will be completed within this year. In addition to this, METI Minister Hiranuma who kindly attended this meeting yesterday visited Mexico last January and agreed with Economic Minister Derbez to study about the establishment of a governmental study group for a possible FTA between Japan and Mexico. Moreover, JETRO and the Foreign Ministry of Chile will complete their joint study on an FTA between Japan and Chile soon. With Korea also, Japan agreed to have business forums consisting mainly of business people in each country to study an FTA between Japan and Korea after completion of joint reports produced by JETRO's IDE and KIEP (Korean Institute of Economic Policies). Having said all this, however, let me emphasize in the end that the most important agenda for Japan in the trade and investment area this year is the start of next WTO round from Qatar. Thank you.