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Asian Development Review About the Asian Development Bank The Asian Development Bank (ADB)’s work is aimed at improving the welfare of the people of the Asia and Pacific region, particularly for the 1.9 billion who live on less than $2 a day. Despite the success 2005 ASIAN DEVELOPMENT REVIEW 22 Number 1 Volume stories, Asia and the Pacific remains home to two thirds of the world’s poor. ADB is a multilateral development finance institution ASIAN DEVELOPMENT owned by 64 members, 46 from the region and 18 from other parts of the globe. ADB’s vision is a region free of poverty. Its mission is to help its developing member countries reduce poverty and improve their quality of life. ADB’s main instruments in providing help to its developing member countries are policy dialogues, loans, technical assistance, grants, guarantees, and equity investments. ADB’s annual lending volume is typically about $6 billion, with technical assistance REVIEW provided usually totaling about $180 million a year. Volume 22 2005 Number 1 ADB’s headquarters is in Manila. It has 26 offices around the world. The organization has more than 2,000 employees from over 50 countries. WTO: Toward the Hong Kong, China Ministerial and Beyond Carla A. Hills Poverty Reduction Strategies—Lessons from the Asian and Pacific Region on Inclusive Development Shiladitya Chatterjee Promotion of Trade and Investment between People’s Republic of China and India: Toward a Regional Perspective Biswanath N. Bhattacharyay and Prabir De Quota-free Trade in Textiles and Clothing: Policy Issues and Options for ASEAN Thitapha Wattanapruttipaisan Total Factor Productivity Growth in the Philippines: 1960–2000 Caesar B. Cororaton Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org/economics ISSN: 0116-1105 Publication Stock No. 121105 Printed in the Philippines ASIAN DEVELOPMENT REVIEW Editor Ifzal Ali Editorial Assistant Cherry Lynn T. Zafaralla Editorial Board MONTEK AHLUWALIA, International Monetary Fund PETER MCCAWLEY, Asian Development Bank MOHAMMED ARIFF, Malaysian Institute of Institute, Tokyo Economic Research SEIJI NAYA, East-West Center, Hawaii JERE BEHRMAN, University of Pennsylvania M. G. QUIBRIA, Asian Development Bank PRANAB BHARDAN, University of California, MARTIN RAVALLION, World Bank Berkeley AMARTYA SEN, Trinity College, Cambridge NANCY BIRDSALL, Center for Global Development, BINAYAK SEN, Bangladesh Institute of Washington, D.C. Development Studies RAUL V. F ABELLA, University of the Philippines HADI SOESASTRO, Centre for Strategic YUJIRO HAYAMI, GRIPS/FASID Joint Graduate and International Studies, Jakarta Program, Tokyo BYUNG NAK SONG, Seoul National University ULRICH HIEMENZ, OECD Development Centre CHALONGPHOB SUSSANGKARN, Thailand YOSHIHIRO IWASAKI, Asian Development Bank Development Research Institute LAWRENCE LAU, Stanford University CHIA SIOW YUE, Institute of JUSTIN YIFU LIN, Peking University, Beijing International Affairs, Singapore The Asian Development Review is a professional journal for disseminating the results of economic and development research carried out by staff and resource persons of the Asian Development Bank (ADB). The Review stresses policy and operational relevance of development issues rather than the technical aspects of economics and other social sciences. Articles are intended for readership among economists and social scientists in government, private sector, academia, and international organizations. The Review also invites contributions from external scholars and researchers dealing with Asian and Pacific development issues. All submitted manuscripts are subject to review by two external referees and one ADB staff member. Opinions expressed in the Review are those of the authors and do not necessarily reflect the views or policies of ADB. Please direct all editorial correspondence to the Managing Editor, Asian Development Review, Economics and Research Department, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. For more information, please visit the Web sites of the Review at http://www.adb.org/Documents/Periodicals/ADR and the Asian Development Bank at http://www.adb.org Vol. 22 No. 1 © 2005, Asian Development Bank ISSN 0116-1105 ASIAN DEVELOPMENT REVIEW Volume 22 2005 Number 1 WTO: Toward the Hong Kong, China Ministerial 1 and Beyond Carla A. Hills Poverty Reduction Strategies—Lessons from the 12 Asian and Pacific Region on Inclusive Development Shiladitya Chatterjee Promotion of Trade and Investment 45 between People’s Republic of China and India: Toward a Regional Perspective Biswanath N. Bhattacharyay and Prabir De Quota-free Trade in Textiles and Clothing: 71 Policy Issues and Options for ASEAN Thitapha Wattanapruttipaisan Total Factor Productivity Growth 97 in the Philippines: 1960–2000 Caesar B. Cororaton WTO: Toward the Hong Kong, China Ministerial and Beyond CARLA A. HILLS A successful Doha Development Round has the potential to raise standards of living worldwide, alleviate grinding global poverty, remove inequities in the trading system, and enhance international stability. With it, the well-being of Asia, which is home to most of the world’s poor, would be substantially enhanced. Yet there are huge risks that the prospective benefits will not be achieved. Over the past 4 years governments from 148 nations have been negotiating whether and how to open markets for agricultural products, industrial goods, and services. On 8 July 2005 in addressing the heads of country delegations Director General Supachai Panitchpakdi declared, “these negotiations are in trouble”, primarily for lack of political support. That suggests that people worldwide are unaware of the tremendous gains that would be captured from successfully concluding the Doha negotiations and the worrisome implications if they fail. Governments need to get the message out regarding why the Doha Development Round is absolutely vital to our future economic growth and political stability. I. INTRODUCTION As we move toward the Sixth WTO Ministerial Conference in December 2005 in Hong Kong, China, five questions must be asked as to what is at stake in the Doha Round of multilateral trade negotiations: (i) Why should individuals representing nations that are members or prospective members of the World Trade Organization (WTO), care very much about the state of the negotiations in the Doha Round? (ii) Since trade liberalization and economic interdependence—sometimes called globalization—have advanced so dramatically over the past couple of decades, is it really necessary to do more now? (iii) What is the current status of the Doha negotiations? (iv) Are there risks that the Doha Round of Trade Talks might actually collapse? (v) Finally, what, if anything, can we do to maximize the prospects for Doha’s success? Ambassador Carla Hills is former US Trade Representative, and Chair and Chief Executive Officer of Hills & Company International Consultants. This Keynote Speech was delivered during the ADB High-Level Meeting on WTO Key Doha Round Issues held 3-5 August 2005 in Osaka, Japan. The informal style of presentation has been preserved. Asian Development Review, vol. 22, no. 1, pp.1-11 © 2005 Asian Development Bank 2 ASIAN DEVELOPMENT REVIEW II. WHY SHOULD YOU CARE? Our experience since World War II persuades that increased economic interdependence boosts economic growth and encourages political stability. For nearly 60 years, trading nations have worked together to open global markets and to establish a series of international organizations, including the General Agreement on Tariffs and Trade (GATT) and WTO to promote global trade. Just 23 nations participated in the first round of global trade negotiations in 1947; today 148 nations are participating in the ninth round—the Doha Development Round. The results achieved in the intervening half century have been spectacular. World trade has exploded and standards of living have soared. Developing as well as industrialized countries have benefited. Poor countries that opened their markets to trade and investment on average grew five times faster than those that kept their markets closed. Those who say that open trade will exacerbate poverty are simply wrong. In the words of economist Paul Krugman “every successful example of economic development this past century… has taken place via globalization; that is by producing for the world market rather than trying for self sufficiency.” Faster national growth is closely correlated with significant poverty reduction. Studies conducted by David Dollar, an economist with the World Bank, show that globalization over the past 20 years has raised 375 million people out of extreme poverty, and amazingly this was done while the world’s population grew by 1.8 billion (Dollar 2004). III. WHY IS IT NECESSARY TO DO MORE NOW? Since economic interdependence has advanced so dramatically over the past couple of decades, it is necessary to do more now. One reason is that disparities have been injected into the trading system. As developing countries joined successive rounds of trade negotiations, a number of them began to focus their negotiations on obtaining special and differential treatment to avoid opening their markets, rather than on securing permanent market access for their own products. As a result, tariffs on many products, which never became the subject of a negotiation, to this day remain frozen at levels generally prevalent decades ago. Similarly little effort was made to abolish tariff escalation that imposes higher
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