The Paper:
China has joined the RCEP and is also seeking to join the CPTPP. How does the Ministry of Commerce view the relationship between regional trade agreements and WTO? In addition, will plurilateral agreements replace multilateral agreements and become the mainstream of international economic and trade relations in the future? Thank you.
Wang Shouwen:
Thank you for your questions. We believe that the arrangements of the multilateral trading system and regional free trade agreements are the two wheels that drive economic globalization and the liberalization and facilitation of international trade and investment. These two wheels promote each other and cannot be partial and negligible. We don't think it's appropriate to leave any of them out.
The multilateral trading system, with the WTO at its core, is the foundation and core platform for promoting the liberalization and facilitation of global trade. As you all know, the WTO has 164 members, and their trade volume accounts for more than 98% of the global trade. No other agreements can reach this level. The vast majority of trade in the world is carried out between WTO members. Take China, for example: last year, our import and export volume was $4.65 trillion, among which our trade volume with WTO members reached 97.9%. That is to say, $4.56 trillion of China's $4.65 trillion foreign trade is conducted with WTO members. Therefore, it is in China's interest to adhere to the development of the multilateral trading system and maintain the effectiveness and authority of the multilateral trading system.
We believe that the regional free trade agreements arrangement is a useful supplement to the WTO's multilateral trading system and is not in conflict with the WTO. Free trade agreements are generally "WTO plus." Free trade agreements include not only the opening of trade in goods and trade in services but also the opening of investment. Moreover, the level of openness in trade in goods and services is much higher than that of the WTO. The WTO has no regulations on investment opening, while free trade agreements do. In terms of market opening and market access, free trade agreements are "WTO plus." In addition, in terms of rules, the free trade agreements also stipulate some areas that the WTO has not yet stipulated, such as in e-commerce, digital economy, etc. So, as we can see, regional trade agreements not only have a higher level of trade liberalization and facilitation but even involve investment aspects and rule aspects and can be regarded as "experimental fields" for these new rules. The results of these "experimental fields," if adopted by the WTO in the future, will be very beneficial to the liberalization and facilitation of global trade and investment. This is the benefit of free trade zones or free trade agreements.
Despite the benefits of FTAs, we should also recognize that they cannot supplant the multilateral trade regimes. FTAs cannot solve every issue. The subsidy issue mentioned by a journalist just now is such a case. The effect of FTA solutions is limited for subsidies, including agricultural subsidies and public reserves for food security, which need to be addressed within multilateral trade regimes.
Moreover, FTAs are negotiated and signed between two or more countries. According to the WTO, there are more than 350 FTAs currently being implemented, creating the spaghetti bowl effect. If the contents of these agreements are stipulated in WTO agreements, they will be universal and convenient. Hence, the spaghetti bowl effect of FTA negotiations can be solved through multilateral trade regimes of WTO agreements. It is evident that FTAs have their advantages, and the WTO agreements also have their own.
Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, said in his report to the 19th CPC National Congress that China will support multilateral trade regimes and work to facilitate the establishment of free trade areas, and build an open world economy. In this regard, the MOC has implemented Xi's remarks and upheld the multilateral trading regimes. In June 2018, we released a white paper titled "China and the World Trade Organization." In November 2018, we issued China's position paper on WTO reform. In May 2019, we submitted a proposal on WTO reform to the WTO. In November 2019, we initiated and hosted the Informal WTO Ministerial Meeting in Shanghai. All these practices show China's support for the WTO's development.
Moreover, China is open to FTAs that are open, transparent, inclusive, and consistent with WTO principles. China is also accelerating the move to implement the FTA strategy and is playing an active part in negotiations on regional trade agreements. By October, China had signed 19 FTAs with 26 trading partners. In addition, China signed the Regional Comprehensive Economic Partnership (RCEP) with the other 14 members last year, and it will come into effect early next year. Recently, China has formally applied to join the CPTPP. All these examples reflect China's high regard for the role of regional trading agreements.
In summary, I want to repeat that the multilateral trade regimes and regional FTAs are two important wheels to drive economic globalization and liberalize and facilitate international trade and investment. Furthermore, they are complementary rather than a substitute for each other. You just asked if one of them will become mainstream? Personally speaking, I think the multilateral trade regime will play a significant role in the coming period, and FTAs may play such a role in another period. They are both essential wheels driving world economic growth. Thank you.
