moved that Bill C-50, an act to amend certain acts as a result of the accession of the People's Republic of China to the Agreement Establishing the World Trade Organization, be read the second time and referred to a committee.
Mr. Speaker, I am very pleased to address the House today on Bill C-50, the legislation that will allow Canada to enjoy all of the advantages of China's accession to the World Trade Organization. Before I address the legislation directly, I would like to make some mention of the extraordinary events that took place in Doha, Qatar.
As you know, on November 14 of last year, Canada and 141 other members of the World Trade Organization, WTO, agreed to launch a new round of international trade negotiations.
I am very proud to say that Canada honestly met all its objectives in Doha. We met our objectives. The program of negotiations which will take place over the next three years will be advantageous to Canadians and to our economy. I am particularly pleased with the substantial progress made with respect to development, one of Canada's main objectives.
In fact, we got this point across so well that the new round has been called the Doha development program. This show of unity illustrates the desire of all members to take into consideration the interests of developing countries and to act accordingly.
But even though Doha was a great success, we must not forget that it only marked the launch of negotiations. The real work is beginning; it will take place over the next three years. I wish to assure the House that, as negotiations advance, Canada will remain transparent and open, both domestically and with its WTO partners.
Needless to say, the accession of China to the WTO is important on many levels. The WTO has just admitted the seventh largest economy in the world, one whose GDP was $1.5 trillion in 2000. The ninth largest exporter in the world, with 3.5% of total world exports in 1999, has now joined the international trade system. A country of 1.3 billion inhabitants—one fifth of the world's population— has now become a member of the rule-based world trade system.
The WTO is an important global institution. It helps to set rules for international trade and to resolve disputes which arise between trading partners. But without China, a major and dynamic economy, the WTO was incomplete. With China's accession to the WTO, the trade system now makes more sense. But many might still wonder what it means for us as Canadians.
On a broad level, China's membership in the WTO confirms Canada's important position in both Canadian and international trade. China has officially accepted the WTO's internationally negotiated rights and obligations concerning the administration of international trade, including the fundamental principles of national and most favoured nation treatment, the settlement of trade disputes, and the continued liberalization of international trade.
In terms of market access for goods and services, the implications are significant, especially in the services sector. With respect to goods, today's accession means immediate and permanent tariff cuts on industrial and agricultural products. For industrial goods, upon accession tariffs will decrease in stages, such that by 2010 they will be roughly half of what they were in 1999. This is quite significant for our producers. Similarly, the simple average of tariffs on agricultural and agrifood imports into China will fall significantly by 2005. Indeed, for products in several other sectors tariffs will be eliminated completely.
China's services sector has traditionally been heavily regulated and protected and consequently has had minimal foreign participation. In this area, then, China's WTO membership heralds dramatic changes. All important services sectors will be opened to foreign investment with, in many cases, majority foreign ownership permitted within two to three years and, in some areas, wholly foreign owned subsidiaries within two to five years.
New market access conditions, changes in regulations and strengthened intellectual property rights will assure increased transparency and equality for Canadian commercial interests in all sectors in China, including insurance, telecommunications and banking.
In addition to the tariff cuts on agricultural and agrifood products I mentioned earlier, there will be other significant modifications to China's current quota system. To become WTO compliant, China's current import quota system is to be replaced by a system of tariff rate quotas, TRQs. The purpose of TRQs is to ensure that foreign exporters have access to a predictable, minimum share of an importer's market for goods. Under a TRQ, imports from any exporting country up to a fixed quota level enter at a relatively low tariff rate. A higher tariff is levied on any imports over this quantity.
China will eliminate quotas that currently apply to barley, soybeans, rapeseed or canola, peanut oil, sunflower seed oil, corn oil and cottonseed oil and subject them only to tariffs. The remaining existing quotas will be replaced with TRQs on agricultural products such as wheat, corn, rice, soybean oil, palm oil, rapeseed or canola oil, sugar, wool and cotton.
Another change will be that state trading entities that have monopoly import status on a number of commodities in China will have their privileges reduced or eliminated, effective today. China is committed to allowing prices for traded goods and services in every sector to be determined by market forces and multi-tier pricing practices for such goods and services will be eliminated.
Finally, I would like to touch on the implications for Canada's wholesale distributors. Within one year foreign service suppliers may establish joint ventures to engage in wholesale distribution of all imported and domestically produced products, with some exceptions. Majority foreign ownership will be permitted in two years and wholly foreign owned companies a year later. Foreign invested enterprises may now distribute products they have manufactured in China.
Normally negotiations to join the WTO usually affect only the acceding country, requiring it to make concessions and changes to its domestic laws and regulations. Amendments of Canadian legislation are normally not required. However, in the negotiations Canada and other countries sought and obtained the right to invoke China specific safeguards and to apply appropriate non-market economy rules in anti-dumping investigations on Chinese goods. The China safeguards differ from safeguards in other trade agreements in that they will be applicable only to imports from China, they will have a lower injury threshold and they will be temporary.
Legislative changes are necessary to integrate these provisions into the existing legislative framework. Amendments are also necessary so that while China makes the transition to a market economy Canada can continue to apply special price comparability rules to China in anti-dumping investigations. These amendments will allow Canada to implement fully the rights it obtained during the China accession negotiations. They are fully supported by industry and all the provinces of our country. All WTO members have the right to implement such measures.
We must not, however, delude ourselves into thinking that the accession of China will do away with all the difficulties being experienced by Canadian exporters. WTO membership will require radical changes in the structure of the Chinese economy and in the relationship between China's government and industry.
The commitments undertaken within the WTO will not materialize overnight. The process will be a slow one an uneven one, and will require WTO members to be vigilant. The tariff reductions will be carried out as planned but the more fundamental changes such as those to organizational structures, bureaucratic procedures, legislative and regulatory frameworks, and the political culture itself, will certainly require a bit of time.
The obligations binding China under the WTO rules and the related rights will reinforce and advance economic reform. Chinese exporters will be assured of definite and predictable access to foreign markets, and this will create employment and stimulate economic growth.
Liberalization of the investment rules, a more transparent regulatory framework and better access to export markets will attract foreign investors as well as the technology and employment that goes with them. In the long term, the enhanced competition in China will enhance the country's economic competitiveness and its productivity.
This all remains to be seen, of course, but the early signs are very encouraging. We will continue therefore to be vigilant and to ensure that Canadian exporters obtain the advantages agreed to as a condition of membership. Canada will make use of all available forums to ensure the respect of its rights under the WTO agreements and to ensure that China complies with its WTO obligations.
All WTO members share this same strong desire to ensure that China respects its WTO commitments. Affording it special treatment or special allowances because of its situation would undermine the fundamental principles of this organization, that is reciprocity, transparency, predictability and applicability. We would thus weaken the institution we have been involved in building up for the past 15 years, since the start of the Uruguay Round negotiations.
So far, China's progress has been promising. A lot remains to be done, but everything is going fine right now. China's customs tariffs for 2002 have gone down as expected. A number of laws and regulations were amended to comply with obligations under the WTO, including the important rules on foreign providers of services such as insurance, banking services, telecommunications, that are of particular interest to Canadian exporters. The achievements are noteworthy and are evidence of China's commitment to the WTO and its international obligations.
However, there are a number of areas where China has weaknesses. Agricultural exports are still impeded by trade barriers which, incidentally, violate the obligations that China has taken on when it joined, on December 11, 2001—quotas on agricultural exports are still not available, while new regulations on food safety are vague and seem to put considerable constraint on foreign exporters. We are continuing to look at these concerns with our Chinese counterparts, in the hope of finding a solution as soon as possible.
As I mentioned during the WTO's ministerial conference held in Doha in November, a new round of negotiations known as the Doha development agenda has been launched. This is a significant achievement that will allow Canada to pursue its interests in market access.
China clearly voiced its support for this new round of negotiations. Like other WTO members, we expect China's negotiation platform to reflect its interests. Some of these interests will undoubtedly be similar to those of Canada, while others will be different. However, we are convinced that the full participation of an economy as important as that of China, which is in full expansion, can only strengthen the multilateral trade system.
There is unequivocal evidence that the institutional framework and the principles stated in the WTO agreement contribute to sustained economic growth. The implementation will undoubtedly provide long term benefits to China. Ultimately, Canada's economic and commercial interests in China will depend on the size and strength of that country's economy.
A long time ago, China was the world's number one economy because of its huge population. Its current growth rate suggests that it could reach that status again by the middle of the century.
I am convinced that our Canadian exporters will succeed there, as they have everywhere in the world, thus making our country a great champion of the global trade system.