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Academic: China to be free trade driver
(Reuters)
Updated: 2005-08-23 20:38

China is likely to eclipse the World Trade Organization and regional market-opening pacts to become the main driver of freer global trade in the 21st century, a prominent trade academic said on Tuesday, Reuters reported.

Razeen Sally of the London School of Economics said China could set the pace of trade liberalization by tearing down barriers of its own accord and challenging others to follow suit -- much as Britain did in its imperial heyday 150 years ago.

"The image I'd ask you to bear in mind is of China assuming the role that Britain had in the second half of the 19th century -- in other words, China as the unilateral engine of freer trade that sets up competitive and emulative effects not least in the neighborhood of South and Southeast Asia," Sally told a conference organized by Beijing University and the LSE.

Sally said there was already evidence of this happening.

The steps China took to open its economy to trade and foreign direct investment (FDI) in the run-up to joining the WTO in 2001 were unprecedented for a developing country, he said.

China's import tariffs dropped to 16.6 percent in 2001 from 42.9 percent in 1992 and had since fallen further to 9.8 percent.

"It is difficult to explain the recent acceleration of Indian tariff liberalization and associated FDI liberalization without China concentrating the mind," he said.

Sally was pessimistic about the chances of increasingly complex WTO negotiations yielding much progress. The current Doha round of talks, begun in 2001, is bogged down in deep disputes between rich and poor countries, especially over farm subsidies.

"The WTO is stuck, and even if it is to work in the future the goals and the means need to be much more modest than they have been to date," he said.



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