The agreement reached this week between China and the United States on the World Trade Organisation sets the political scene for next week's opening of the new trade round in Seattle and concentrates attention on what is at stake. It is a daring and risky move by the Chinese leadership, which clearly signals its commitment to liberalise the economy and open it up increasingly to international trade and investment. In the process many vested interests, both economic and political, have been faced down. The way is cleared now for China to reach agreements with the European Union and other major WTO players prior to its formal entry into the system.
As one of the most open economies in the developed world, Ireland has a vital interest in ensuring that the multilateral rules governing the international trading system through the WTO are fair and open to change. The EU has legal competence to negotiate on Ireland's behalf, but this State has the opportunity to influence the course of the negotiations.
The EU wants to conclude a comprehensive round as soon as possible, ideally within three years. Agriculture, further tariff reductions, the elimination of non-tariff barriers to trade, telecommunications and service-sector liberalisation are all prominent on the agenda. There are also many new issues emerging, including food safety, e-commerce, social and labour clauses and sustainable development. Non-governmental development organisations will endeavour to ensure that the poor and the poorest states are given priority. Everybody would benefit from a serious effort to present the complex issues at stake in an accessible fashion, despite the notorious jargon that usually accompanies them.
Many of these interests will on balance be served by the inclusion of China in the WTO process. Human rights organisations have welcomed the agreement with the US on the basis that it will make China's commitment to certain basic rights more binding in international law, including more openness, press freedom, workers' rights and a more independent judiciary. It will certainly open up a vast market for imports to that state and its hundreds of millions of consumers. Opportunities will open up too for Chinese exports. The agreement signals a readiness by President Jiang Zemin and the prime minister, Mr Zhu Rongji, to deliver on economic reforms of the heavily subsidised and loss-making state sector, dominated by heavy engineering, chemicals, steel and electronic companies which have good reason to fear international competition. For a government that sets such store by social and political stability this is daring indeed, but necessary if fundamental reforms are to be affected.