BIZCHINA> Review & Analysis
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BIZCHINA> Review & Analysis
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Handled with tact, FTAs can do what WTO can't
By Qiao Xinsheng (China Daily)
Updated: 2008-04-18 10:35 [The author Qiao Xinsheng is a professor with Zhongnan University of Economics and Law.] On April 7, China and New Zealand signed a free trade agreement (FTA) covering trade in goods and services as well as investment, making it the first FTA reached by China with a developed country. During his visit to China last week, Kevin Rudd, Australian Prime Minister, said that Australia and China would reopen their FTA negotiations soon. After the 10th round of FTA negotiations between China and Australia ended in October last year, the two sides had not started the 11th round which was originally scheduled in the first half of 2008.
FTA is a bilateral protocol on the terms on which to promote free trade between the signing countries based upon their negotiations. It became clear years ago that organizations promoting regional cooperation, like FTA, would take the place of the World Trade Organization (WTO) in global trade after the WTO faced huge pressures on its multilateral negotiations. Now that more countries are seeking to reach FTAs with their trading partners, the WTO would no longer function as it did. Compared with a multilateral organization like the WTO, FTAs are much more convenient in several aspects. The bilateral negotiation is usually focused on the substantial interests of each partner without paying much attention to the ideological issues. When the negotiators have to worry only about the trade terms, there is a better chance that they will reach a consensus. Such negotiations are also more flexible than the multilateral ones in many ways. Financial aids or increased trade volumes under the favorable trade terms are often added as a supplementary leverage to help reaching the FTAs. (For more biz stories, please visit Industries)
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