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CHINA AND THE WTO

The long path for the entrance of China in the World Trade Organization

Arianna Creonti Cinzia Mirri Erica Casarini

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1. Introduction Basic pieces of information Chinas background Chinese involvement in inter-government organizations 2. Working Party (the process) Conclusion of bilateral market-access negotiations; Conclusion of multilateral negotiations in the Working Party, including the draft Protocol and its Annexes, as well as the Working Party Report; Approval and acceptance of these terms of accession by WTO Members and by China, respectively. 3. Chinese accession to the WTO Protocol Part I: a. Transparency and predictability; b. Non-discrimination; c. Market opening; d. Undistorted trade; e. Preferential treatment for developing countries Protocol Part II: Protocol Part III: Pros and Cons, Permissions and Restrictions 4. Conclusions National perspective: changes within China International perspective 5. Bibliography

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Summary of Chinas Protocol of Accession

Part I General Provisions Section Summary content 1. General Agreement to become WTO member 2. Administration of trade re- Uniform administration: applies to the entire territory, includgime ing Special Economic zones, open coastal cities, economic and technical development zones, and all other special economic areas (SEAs). Local regulations and rules should conform to WTO agreement.

SEAs: China shall apply to imports from SEAs all taxes, charges and tariffs that normally apply for imports into other parts of China.

Transparency: China shall designate an official journal dedicated to the publication of all laws, regulations etc, and shall establish enquiry points for information.

Judicial review: China shall establish judicial mechanism for review of implementation of WTO agreements, including channel for appeal.

3. Non-discrimination

Commitment to MFN principle, including procurement of goods and input necessary for production and distribution in the domestic market prices and availability of goods supplied by state authorities enterprises in transport, energy, basic telecommunica-

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tions, utilities etc. 4. Special trade arrangements To be eliminated, e.g. barter trade arrangements. 5. Trading right China shall grant trading right to all enterprises in China within three years, except for goods under state trading (Annex 2A). Thus foreign individuals and enterprises will have trading rights irrespective of whether they are registered in China, and they will enjoy national treatment.

All goods traded will be accorded national treatment, covering internal sale, offering for sale, purchase, transportation, distribution or use, including direct access to end users.

For some goods, trading right restrictions will be phased out. (Annex 2B)

6. State trading 7. Non-tariff measures

Commitment to transparency Standstill commitment, to be eliminated in phases (Annex 3).

In accordance with TRIMs, eliminate foreign exchange balancing requirements, local content and export or performance requirements; not enforce contracts imposing such requirements.

The issuing of import licenses or quotas is not conditioned on existence of domestic suppliers performance requirement such as local content, offsets,

transfer of technology, R&D etc 8. Import and export licensing Improve transparency on product list, approval authorities, procedure and criteria, licensing etc.

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Need for licensing should be justified to the WTO.

9. Price controls 10. Subsidies

MFN principle applies. Market forces should prevail, except those listed in Annex 4. Subsidy programs including those to SOEs should be notified and justified.

Subsidies listed under Article 3 of the SCM Agreement should be eliminated. 11. Taxes and charges on im- Commitment to be in conformity with GATT. ports and exports

Taxes and charges on exports to be eliminated, except those 12. Agriculture in Annex 6. No export subsidy on agriculture; exceptions and transitional

arrangement to be notified. 13. Technical barriers to trade Improve transparency on technical regulation, standards, conformity assessment etc.

Conformity assessment procedures should not affect customs clearance and import licensing.

Same standard should apply for imported and domestic products.

Application: Immediate: all certification, safety licensing, quality li-

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censing agencies One year: conformity assessment agencies

National treatment applies in terms of fees, processing period 14. Sanitary and phyto-sanitand complaints procedure. Notification to WTO.

ary products 15. Price comparability in sub- Setting out the methodology in determining price comparabilsidies and dumping 16 Transitional safeguard ity. Other WTO members entitled to safeguard measures if exports from China disrupt their markets. Extent of disruption and safeguard to be negotiated and regulated by WTO.

17. Reservations by WTO

Will not apply 12 years after accession. Other WTO members non-conforming restrictions against

members Chinese imports to be listed and phased out. 18. Transitional review mech- Implementation to be reviewed every year for 8 years, with fianism nal review in year 10 or earlier. (Annex 1A and Annex 1B)

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Annexes to Part I Annex 1A Information to be provided by China for the transitional review mechanism 1. Economic data 2. Economic policies: non-discrimination; foreign exchange; investment regime; and pricing policy 3. Framework for policy making and enforcement: government structure 4. Policies affecting trade in goods, including tariff rate quotas, non-tariff measures, import licensing, customs valuation, export restrictions, safeguards, technical barriers to trade, TRIMs, and SOEs 5. Policies affecting trade in services 6. TRIPs 7. Questions on the transitional review mechanism

Annex 1B Issues to be addressed by the General Council on transitional review Three issues are specified: 1. Issues identified in Annex 1A 2. Development of Chinas trade with WTO members and others 3. Recent developments and cross sectoral issues

Annex 2

Relating to trading rights


Content as HS No, description, and

Annex Title Products Annex 2A1 Products subject to state For products trading (imports) bacco, etc.

such

grain, crude oil, sugar, to- name of SOE

Annex 2A2 Products subject to state For products such as tea, HS No, description, and trading (exports) rice, corn, cotton, silver, name of SOE etc

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Annex 2B

Products subject to des- Products such as natural HS No, description, and ignated trading rubber, timber, plywood, liberalization wool, etc program; mostly liberalized within 3 years after accession

Annex 3 Non-tariff measures subject to phased elimination

Table 1

377 products in 15 cat- import egories

license,

import HS No, description, and phas-

quota and import tendering ing out period (immediate to

Table 2

2004) and quota category 377 products in 15 cat- Product quotas initial quota initial volume (tons) or value egories volume/value and annual (dollars) and all with annual growth rate import license only growth rate of 15%. all immediate phasing out

Table 3

47 products

Annex 4 Products and services subject to price controls Descriptions on five groups of products/services with price control: 1. Products subject to state trading 2. Products subject to government guidance pricing 3. Public utilities subject to government pricing (e.g. gas, water, electricity) 4. Service sectors subject to government pricing (telecom, entrance fee for tour sites, education) 5. Service sectors subject to government guidance pricing (e.g. transport, professional services, commission agents, some bank services, residential property selling and rental, health related services)

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Annex 5 Subsidies

Annex 5A

Subsidy program that need to be notified to WTO

Total 24 programs each with descriptions of subsidy programs period covered policy objective background and authority of subsidy legislation form of subsidy how subsidy is provided and to whom subsidy per unit duration data for assessment

Example of programs: Subsidies from central budget to SOEs which are running at a loss Subsidies from local budget to loss making SOEs Priorities in obtaining loans and foreign currencies based on export performance

Annex 5B

Subsidies to be phased out

Description in same format of 3 programs:

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Annex 6 Products subject to export duty 84 products with HS number, product description and maximum export duty rate (20-40%).

Annex 7

Reservations by WTO members

Reservations by Argentina, EC, Hungary, Mexico, Poland, Slovak Republic and Turkey, showing product, HS code, quotas, special duties, and other measures.

Other schedules
Schedule of Specific Commitments on Services List of Article II MFN Exemptions

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Basic pieces of information

Chinese leaders after the civil war:

1949 1976 Mao Zedong 1976 1992 Deng Xiaoping 1993 2003 Jiang Zemin from 2003 Hu Jintao ASEAN

ASEAN is the acronym of Association of South East Asian Nations, an inter-government organization constituted in Bangkok in the 1967 with the aim of creating a common free trade area in the south east Asia (following the model of the European Union). This Association is composted by the following members: Philippines, Indonesia, Malaysia, Singapore, Thailand and Brunei, and during the years collected the adhesion of: Vietnam (1995), Laos and Myanmar (1997) and Cambodia (1999). Chinese involvement in inter-government organizations: APEC

China is not only a WTO member, in fact, on the side of economic inter-Asian terms, it is necessary to signal the presence of a big intercontinental organization: the APEC (Asia Pacific Economic Cooperation), of which China is a member, together with the majority of ASEAN countries, which pursue the intention to create a free trade area between the two sides of the Pacific Ocean, the Asiatic and the American. The success of this plan will determine new interesting scenarios, prospecting the re-launching of the USA power or the creation of a pan Asiatic isle, gravitating toward China.

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Introduction

After the positive conclusion of the agreements between China and the USA (in November 1999) and with China and the European Union (in May 2000) it seemed that the accession of China in the WTO was just a simple formality. From 1986 onward the Chinese adhesion to the GATT first, and to WTO later, has been continuously postponed, due to the fact that in that period there have been negotiated many reciprocal concessions. Among all the WTO members, 37 only have asked direct negotiations with China, and the most important bilateral agreement was the one with the United States, members, as China and the majority of ASEAN countries, of a big intercontinental organization: APEC (Asia Pacific Economic Cooperation), organization which pursue the intention to create a free trade area between the two sides of the Pacific Ocean, the Asiatic and the American. Just at the end of the Apec conference held in Shanghai, in June 2001, the China USA bilateral Agreement have been ratified. In that occasion the ex president George W. Bush expressed its political support for a rapid adhesion of China to the WTO, accelerating the end of the long negotiations between Beijing and Washington. It has been found consensus, in the end, on the degree of openness that China was ready to permit towards insurance companies activity, the limit of the single brand producers diffusion, the large scale retail trade and the absence of any prohibition against the international trade of foreign companies after a period of 3 years of activity in the country. However, the greatest obstacle was represented by the accession in the Chinese market of American agricultural products. Even if China had already committed itself in renouncing to give subsidies to its export products, the State have tried to be still perceived as a developing country, to have higher margins for subsidize its agricultural production (up to 10% of its worth), although USA have asked for a 5% limit (the limit of all the industrialized countries), but in the end a compromise have been reached, with the purpose of realize a mutually constructive engagement. With the EU China Agreements, the highlights concern telecommunications, for which the opening of its internal leasing market is expected in 3 years from the accession. Another benefit is that the foreign investment in this sector will be authorized at 25% on accession, 35% after 1 year and 49% after 3 years. Another positive development regards the insurance field, for which have been negotiated the possibility of joint ventures with con13

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tracts on 50 50 equity basis, 7 licenses to European insurers and the permission for 2 EU firms to establish in 2 new cities. Advantages involve also the decrease in Monopoly state import/export restrictions, one example above all: The state monopoly on exporting silk where China accounts for 70% of world production should have been totally removed by 2005. The other important points of the agreement concerns: import tariffs reduction for 150 leading European exports, agricultural products included, elimination of Chinese restrictions for the production of motor-vehicles, permission of the creation of large department stores, Improved market access in the fields of banking, legal services, accountancy, architecture, tourism, construction, dredging and market research. The auspice that China could progressively eliminate its trade and foreign investments barriers is weaker now, after the world crisis started in September 2008.

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Chinas Historical background

China was the first nation in Asia to develop a stable and centralized power, with the creation of the Chinese Empire in 221 b.C., the state organization lasted, despite changes in dynasties, until 1911 a.C., when the occidental superpowers partly colonized the territory. The incredible longevity of the Chinese Empire and its prestige among centuries is consequence of a complex ideological system, due to the Confucian tradition, which was stating the superior value of the Chinese culture, the central role of the emperor both in cosmological and political terms (because the universal order reflects itself in the earthly order), the importance of the rituals, social rules and their oral transmission, because they considered written laws as product of barbarian civilizations. This view led to a personal and particular conception of the law, dependent on the social position and the status of the person, which added to an extreme extension and fragmentation of the Chinese State, created a situation in which the authority with the power of solving controversies and disputes between villagers was, 2000 years ago as nowadays, the village leader, or the patriarch of the family: these figures held the real judicial power. From the XIX century until the second World War the pacific Chinese Empire had, because of the so called Unequal Treaties, which the emperor was forced to sign, some regions and open cities under control of occidental powers; those small centers have progressively changed and developed, while the main regions were almost rural and populated by farmers. This difference have brought to the creation, in the economic and commercial field, of a geographically non homogeneous application of rules and laws. Besides that, during the 80, with the open door policy, started and firmly wanted by Deng Xiaoping, the system of foreign investments roots and international exchanges progressively developed, with the creation of: SAR (Special Administrative Regions), Open Cities, Economic and Technology Development Areas, etc. In this situation the bureaucratic body was the unique source of rule-making entity and the written and jurisprudential law was considered of secondary importance.

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In the international trade field, China started to move its first steps during the civil war between the nationalist party (leaded by Jiang Jieshi) against the communist party (with Mao Zedong as leader), which lasted from 1927 to 1949. In 1947, in fact, the Chinese, nationalist government have participated to the creation of the GATT, but in 1949, after the end of the civil war with the victory of the communists and the escape of the nationalists (more than two million people), which took refuge in Taiwan island, the Taipei government decided, in 1950, to leave the GATT, acting as it was representing the whole Chinese population, both the majority of the continent and that of the isle. On the other side, the communist government of the continent for 40 years never withdrew that decision, until, when applying for becoming part of the WTO, it requested the recognition of the countrys status of original member of the GATT, with success. Another important Agreement that China issued in 1988 was the AGREEMENT REGARDING INTERNATIONAL TRADE IN TEXTILE concerned the textile import administration, made to complete Chinese obligations towards the WTO Members as a non contracting party of the GATT, following the MFN principle, in fact the document states: China is a wool producing country. However, [] the production is still hardly able to meet the domestic market demand. [] For the sake of diversifying varieties and preventing blind importation as well as for making the most effective use of the foreign exchange available, China, as from 20 September 1986, began applying the import licensing system on wool imports. The import licensing system applied in China is indiscriminatory. The long path which conducted China to the WTO started in 1986, in that year, in fact, the country first applied for being included in the GATT, therefore the process of admission started, but it was interrupted in April 1989, when, during the funeral of Hu Yaobang, a political man of the CCPs moderate wing, many students started to protest against the lack of democracy in the regime, continuing with hunger strikes and plaudits for Gorbacv. Protests continued until the days of the 16 and 17 of May, when the army intervened, shooting upon helpless people. This action caused a global moral sentence against China, also among the WTO Members. The XII Congress Party of 1992, in response, reaffirmed the necessity of political strictness and the guidance role of the party, excluding every form of dissent and of liberalization and stressing the necessity of economic reforms, to be implemented with capitalistic methods under control of the PCC, for a socialist market economy. 16

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China has registered in the decade 1991-2001 an amazing economic growth, with an increase of its GDP of 9,9% per year, which, summed with the percentage of the previous decade (of 9,7% per year) determined the rise of China to the 3rd place in the world for production level, behind Japan and United States. This incredible evolution was not followed by social and political reforms, one example is the always increasing strictness of the Chinese communist party, which is still excluding every kind of dissent, forbidding, since the Maoist period, the freedom of speech, of expression and of press. Despite these contradictions, in 2001 China entered in the WTO, committing itself to respect the rules of international trade, develop the juridical system, focusing particularly on: administrative uniformity, transparency, jurisdictional control and non discrimination, and to repeal without conditions many trade barriers against American agricultural and industrial products.

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Working Party

In March 1987 the GATT established a Working Party, a group of highly qualified people set up to decide about the accession of China to the GATT. The first meeting was held in October 1987, and the others succeeded during the years for 20 times, but no conclusion was drawn. In 1995, with the creation of the WTO, the Working Party of GATT was transformed into the WTO Working Party on the Accession of China. The WTO Working Party met 18 times. It is interesting to notice that with China and Taiwan (known in the WTO as Chinese Taipei) in 2002 there were 144 Members, including 3 separate customs territories: Chinese Taipei, Hong Kong, China - Macau, China. The final accession process of China can be divided into 3 main parts: 1. Bilateral market-access negotiations; 2. Multilateral negotiations in the Working Party, including the draft Protocol and its Annexes and the Working Party Report; 3. Approval and acceptance of these terms of accession by WTO Members and China. Before accession, China participated in the Uruguay Round negotiations, with the intention to be recognized as an original member of the WTO, but without success, no decision on its position as a GATT contracting party was taken. 1. Bilateral negotiations Many of the WTO Members - 44 - wanted to conclude bilateral market-access negotiations with China, while China had successfully prepared its consolidated Schedule of Concessions and Commitments on Goods (Chinas Goods Schedule) and consolidated Schedule of Specific Commitments on Services (Chinas Service Schedule) under supervision of the WTO Secretariat. After some time, they were reviewed in the Working Party and applied to all WTO Members, using the most-favored nation principle. These 2 types of Chinese Schedules, the Goods and Service Schedules, were annexed to the Protocol of Accession.

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After reaching successfully bilateral agreements with the United States in November 1999 and European Union Members in May 2000, China continued the negotiations with other Members of the WTO. Since that moment, China had incurred in some problems with Mexico, regarding the issue of dealing with a lot of anti-dumping orders that Mexico maintained against the Chinese products. Many countries were against the Chinese and Taiwanese accession, one example was El Salvador, that did not request bilateral negotiations with China. Of great importance to terminate bilateral negotiations with China was the US administrations agreement with Chinas market-access concessions in order to apply the permanent Most-favored Nation principle. Finally in September 2000, the US Congress approved this unconditional MFN or permanent normal trade relations to China. 2. Multilateral negotiations After successful bilateral market-access negotiations, China and WTO Members dedicated their attention to the multilateral negotiations of the Chinese accession. China was obliged to provide more consistent, updated and detailed information on its trade regime (different kinds of laws, regulations and other policy measures) to the Working Party. Consequently, the WTO Members should assess the consistency of Chinese trade laws policy with WTO rules regime. The Working Party met in order to verify technical clean-up and consistency of Goods and Service Schedule and other trade documents. The most discussed issues referred to the administration of the trade policy, taking in consideration special economic areas of interest, uniform administration, transparency and judicial regime, commitments on the principle of non-discrimination, state trading, non-tariff measures, tariff-rate quota administration, licensing regarding to import and export, different kinds of taxes on export and import, price controls, trading rights, export subsidies and domestic support in agriculture and other regulations. The special agreement on a transitional provision on price comparability in determining subsidies and dumping was also reached, that lasted for 15 years. They have established a transitional product-specific safeguard mechanism and a transitional textile safeguard. China possessed some exclusive rights for state trading of some products; for example, cereals, tobacco, minerals and fuels and some distribution restrictions of goods within the territory of China.

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All WTO Members are protected by a special mechanism called Transitional Safeguard Mechanism, in all situations when the imported Chinese products can cause a danger or threaten to provoke market disruption. We can observe the progress in textile sector, by joining of China to the Agreement on Textiles and Clothing and, consequently, China obtained a determined portion of quotas on textile that have finished on 31 December 2004. Initially, China was excluded of obtaining some of the WTO provisions in favor of developing countries referring to domestic support in agriculture and industrial subsidies. More precisely, US was against providing China with these provisions. China accepted not to obtain some of these provisions and agreed on a cap on domestic support in agriculture at 8.5 per cent. The other argument of significant interest was how to get agreement on the policy referring to trading rights, concerning especially complete liberalized rights for foreign companies to obtain trading rights in China after a three- year transition period. The exception was made for state traded products. China finally established its administrative structure for the inspection and conformity assessment measures- State General Administration of the Peoples Republic of China for Quality Supervision and Inspection and Quarantine (AQSIQ) for both domestic and imported goods. One of the Working Partys final tasks was to gain and review amendments and explanations to many of the transitional Annexes of the Protocol, basing on updated drafts of these Annexes provided by China. Some of the most important Annexes are on Products subject to State-Trading, Non Tariff Measures subject to Phased Elimination, Products and Services subject to Price Controls and Restrictions maintained against China. The Working Party Report and the Protocol contain a set of commitments (from Chinas side), but also some commitments by Other Members, referring to the non-abuse of domestic procedures in anti-dumping actions.

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3. Approval and Acceptance Initially it was up to the Working Party to give its consensus on the final accession process of China, but later it have been determined that the final decision had to be attributed to the General Council. It was decided that these documents should be approved in Doha by Ministers, rather than being decided upon by the General Council in Geneva. After some debate, the Ministerial Conference approved the Decision on Accession and the Protocol about the Chinas accession on 10 November. Consequently, China became formally the 143rd Member of the WTO on 11 December 2001.

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Chinese accession to the WTO

General China has been recognized as an original contracting party to the General Agreement on Tariffs and Trade (GATT) in 1947, this point have surely influenced the Chinese admission to the WTO, even if it is not so easy to define Chinas position toward the GATT Agreement, because in 1947 the Chinese government have participated to the creation of the GATT, but in 1949, after the end of the internal civil war between communists and nationalists and the nationalist partys refuge in Taiwan isle, the Taipei government decided, in 1950, to leave the GATT, acting as they were talking for the whole Chinese population, that of the isle and that of the continent. 40 years later the communist government requested the recognition of its status of original member of the GATT, obtaining it; China has been admitted to the WTO following Article XII:1, which states: Any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the Multilateral Trade Agreements annexed thereto. Moreover Article XI:1 of the Marrakesh Agreement Establishing World Trade Organization states: The contracting parties to GATT 1947 as of the date of entry into force of this Multilateral Trade Agreements and for which Schedules of Concessions and Commitments are annexed to GATT 1994 and for which Schedules of Specific Commitments are annexed to GATS shall become original Members of the WTO. Despite the statements in Article XII, the WTO Agreement require also that "the Ministerial Conference shall approve the agreement on the terms of accession by a two-thirds majority of the Members of the WTO", therefore following Article IX:1 of the same agreement and a 1995 decision of the General Council, all accession decisions must be approved by consensus (with a recourse to voting only where consensus is not possible). All WTO accession decisions until now, including China's, have been taken by consensus. 22

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Furthermore, in the moment of the Agreement, China had to implement a rectified, amended or modified by legal instruments version of the WTO Agreement entered into force before its date of accession, in addition the country must accept and follow the cited agreement as if China has accepted that Agreement from the date of its entry into force.

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Protocol Part I

China's Accession in the Context of the WTO's Basic Principles Generally speaking, the WTO accession process formally begins when a country informs the WTO Director-General of its desire to join. The WTO General Council then forms a working party of members to examine the application. After basic principles and policies have been resolved with the working party, individual WTO members enter into bilateral negotiations with the applicant country over the specific undertakings that the applicant will agree to as a condition of WTO membership. Upon completion of these bilateral negotiations, the working party finalizes the accession terms in three documents: the working party report, the protocol of accession and the attached schedules containing the new members specific liberalization commitments. The final accession terms are then presented to the WTO body for a vote. If two-thirds of the WTOs existing members vote in favor of accession, then the applicant may sign the protocol and join the WTO. No country has endured as lengthy an accession process to the GATT/WTO as China, nor has any country acceding to the WTO been asked to take on as many concessions as the price for admission. As one of the newest members of the WTO, China is unique in a number of respects such as:

it is by far the largest economic power among developing country members. By traditional measures, China fits well within the definition of a developing countryin most regions of the country, per capita GDP remains below $1000. During its negotiations for accession to the WTO, China argued that it should be entitled to the special and differential treatment extended to developing countries in the WTO agreements. China stands apart from other developing countries as a producer of, and a magnet for, foreign investment. According to recent WTO data, China was the seventh largest merchandise exporter in the world, with aggregate exports of $249 billion in 2000. In addition, China received an estimated $46.8 billion in foreign direct investment (FDI) in 2001, making it one of the worlds largest recipients of foreign investmentsecond

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only to the United States if FDI flows to Hong Kong are included. Thus, China is both a developing country and an economic powerhouse.

China is also unique in a second respect; it is the only major WTO member that is still Communist. In 1982, six years after the end of the Cultural Revolution, the Chinese Communist Party (CCP) adopted a new Constitution reflecting Deng Xiaopings ideas for modernization and market reform. Since that time, Chinas reform effort has continued at an extraordinary pace, as the Party has increasingly staked its legitimacy on Chinas ability to sustain high levels of economic growth. As a result of Deng Xiaopings reforms, China has largely transformed its economy. However, it remains under the control of a Communist apparatus that struggles to maintain dominance even as it embraces modernization. Jiang Zemins three represents campaign, which emphasizes the CCPs role in representing the interests of capitalists along with the interests of workers and peasants, is part of an ongoing effort by the Party to reform and revive itself. The CCP has opened its membership to entrepreneurs and may soon appoint several prominent businessmen to high positions within the Party. Recently, in 2003, China has undergone its first peaceful change of leadership in decades, as Jiang Zemin and other top CCP officials step down and cede control to Hu Jintao and a new generation of leaders. China is therefore at a turning point, both in terms of the transfer of power within the CCP and its new status as a WTO member.

The irony of Chinas situation is that the process of WTO accession, by accelerating market reform and expanding the private sector, has exacerbated income inequality in the country. China' s WTO accession implies not only advantages but also disadvantages. But, in general, the advantages outweigh the disadvantages. First, China acquires a multilateral equal and mutually beneficial trade environment under the WTO non-discrimination principle. Second, China can play a constructive role in the establishment of a new international economic order and protect its national interests through active participation in the new round of talks. Third, China's WTO accession will promote the country's reform and opening-up and expedite the establishment and improvement of a socialist market economic structure. Fourth, China can use the WTO dispute settlement mechanism to equally resolve and handle economic and trade disputes among WTO members.

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Chinas WTO obligations, in many respects, span further than the obligations of the WTOs existing members. When one takes into account the size of Chinas economy, its status as a developing country, and the degree to which China (until very recently) operated as a planned economy, the extent of Chinas commitments are unprecedented. Summarized below are some of the more significant concessions that China agreed to in its protocol: a. non-discrimination b. market opening c. transparency and predictability; d. undistorted trade e. preferential treatment for developing countries. a. There are two types of non-discrimination of interest: the MFN principle and the national treatment principle. Under the MFN principle, a Member may not discriminate between its trading partners: goods and services and service providers are to be accorded MFN, i.e. equal treatment. At the same time, a Member must provide national treatment: it may not discriminate on its internal market between its own and foreign products, services and nationals. In its Protocol of Accession, China has agreed to undertake additional commitments in order to ensure the smooth phasing in of these non-discrimination principles. Of particular note are commitments to eliminate dual pricing practices and to phase out within three years most of the restrictions on importing, exporting and trading currently faced by foreign enterprises. All foreign enterprises, including those not invested or registered in China, are to be accorded treatment no less favorable than that accorded to enterprises in China.

b.

The principle of market opening is promoted in the WTO through success-

ive rounds of multilateral trade negotiations aimed at the progressive lowering of trade barriers. New Members are also pressed to liberalize their trade regimes during accession negotiations.

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With respect to market opening, China has very significantly reduced its tariff and nontariff barriers as part of its bid to join the WTO. The breadth and depth of the cuts are there for all to see. China's willingness to progressively and substantially open up its services sectors to foreign competition is also undeniable. As for the Doha Development Agenda, China has already demonstrated its intention to play a significant role in this new round of trade negotiations. On the question of how to attract foreign investment in implementing the strategy of the Large-scale development of the western region, Shi, the Chinese Minister, said in implementing the strategy the State will adopt a series of preferential policies to encourage foreign investment in central and western regions. The measures adopted by the State include selecting advantageous industries and projects in the western region and formulating industrial catalog guiding foreign investment. Projects in the catalog enjoy preferential policies granted to items encouraged by the State in the Industrial Catalog Guiding Foreign Investment. Foreign-funded enterprises in the category encouraged by the State in the western region may enjoy a reduced 15-percent enterprise income tax in the three years following the expiration of the existing preferential taxation policies. Foreign-funded reinvestment projects in the west with foreign investment exceeding 25 percent enjoy treatments granted to foreign-funded enterprises. Open areas and projects launched on a trial basis in the eastern area can be launched simultaneously in central and western regions. Foreign-funded enterprises in the eastern area are permitted to contract for, operate and manage foreign- and domestic-funded enterprises in the western region. Economic and technological development zones in provincial, municipal and autonomous regional capitals in the west can be upgraded to State-level economic and technological development zones upon approval. In accordance with the development of the situation, the Government will formulate some policies and measures to encourage foreign investment in the west to expedite the development of central and western regions. c. Transparency and predictability are key elements of the multilateral trading system. The basic transparency principle, contained in GATT Article X, calls on Member governments to promptly publish all trade-related laws, regulations, judicial decisions and administrative rulings of general application, to administer all such measures in a uniform, impartial and reasonable manner, and to provide for independent judicial review procedures for the prompt review and correction of administrative actions. The predictability principle

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is ensured through a legal hierarchy giving preference to tariffs over less transparent and less secure non-tariff measures such as quotas and licenses, and by encouraging Members to "bind" their market opening commitments in goods and services. In the goods area, this binding amounts to setting ceilings on customs tariff rates. China has committed to abide by the WTO's transparency obligations across the board, including with respect to uniform application of its trade regime and independent judicial review, and has made additional commitments in each of these areas. While difficulties may exist with respect to variations in treatment in different parts of China's customs territory, as well as with the perceived lack of independence of the judiciary, there can be little doubt that the Chinese government is committed to carrying through the necessary reforms to implement these obligations in a uniform and impartial manner. Also, as noted, China's accession commitments will be the subject of a special Transitional Review Mechanism for the first 10 years of membership. With China as a member, her producers and exporters will more confidently be able to make long-term business decisions on the expansion of their activities. The more open the Chinese economy becomes, the more China will benefit from the legal security of the rules based trading system. Not just foreign investors, exporters and importers, but also all Chinese citizens, will benefit from the more open, non-discriminatory reforms China is currently undertaking. In terms of producing a more predictable and secure trading environment, China, in the goods area, has bound all its import tariffs. China has also committed to the phased reduction and removal of tariff barriers, mostly by 2004, but in no case later than 2010. China's average bound tariff level will decrease to 15 per cent for agricultural products, ranging from 0 to 65 per cent, with the higher rates applied to cereals. For industrial goods, the average bound tariff level will go down to 8.9 per cent, with a range from 0 to 47 per cent, the highest rates applied to photographic film and automobiles and related products. In services, China has made a more comprehensive set of initial commitments than those offered by most developed countries during the Uruguay Round. Of particular note are China's commitments in services sectors covering telecommunications, banking and insurance. China specifically agreed to translate into one of the WTO languages and make publicly available all WTO-related law, to apply such law in a uniform and neutral manner, and to 28

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allow judicial review of administrative decisions relating to such implementation. China also agreed to be subject to annual, transitional reviews of its compliance with WTO-related obligations for eight years following accession. The transparency-related obligations contained in the WTO agreements encompass not only the publication of trade-related laws, but also their accessibility as well as fair and effective implementation. In addition to these obligations, Chinas protocol of accession includes a number of specific commitments that confirm as well as supplement the obligations contained in the WTO agreements. d. The WTO principle of undistorted trade involves general disciplines in areas such as subsidies and countervailing measures, antidumping, and safeguards. The WTO system promotes undistorted trade allowing Members to respond to unfair trade through the imposition of countervailing or anti-dumping duties. In addition, the treaty allows individual Members to impose temporary safeguard measures, under strict rules, when faced with a sudden surge in imports causing serious injury to a domestic industry. China has made more stringent commitments than those normally required, including one not to subsidize its agricultural exports, and, for industrial goods, disciplines on some forms of export subsidies generally allowed in developing countries. The existing regime of antidumping and safeguards measures has troubling implications for Chinas access to export markets. The WTO rules against dumping are biased toward finding dumping exists. The situation is worse for China than for other WTO Members, because 70 percent of Chinas Exports are in products that are most vulnerable to antidumping measures. Furthermore, China could remain vulnerable, up for 15 years, to highly discriminatory provisions, they are generally much higher than the duties applied to market economies. For example, the average 40 percent duty applied by the United States against nonmarket economies was more than 10 times calculated based on actual costs. A particularly worrying feature of Chinas accession agreement is the product-specific transitional safeguards. These provisions may be applied by any WTO Member, and may then trigger actions against the diversion of Chinese exports to other markets.

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As in other areas, China has undertaken to abide by all WTO disciplines relating to subsidies and countervailing measures, anti-dumping and safeguards. It has also committed not to use export subsidies on either industrial or agricultural goods, and has accepted special provisions sought by other Members in relation to determinations of dumping or subsidies, as well as a special product-specific safeguard mechanism and a separate textile safeguard. China has also indicated its intention to join the plurilateral Agreement on Government Procurement which is aimed at ensuring fair competition rules in purchases by government procurement agencies. e. The principle of preferential treatment for developing countries permeates the entire WTO Agreement, providing transition periods to developing countries and countries in transition to market economies, to adjust their systems to many of the new obligations resulting from the Uruguay Round. A Ministerial Decision gives additional flexibility to the least-developed countries in implementing the various Uruguay Round agreements, and calls on developed country Members to accelerate their implementation of market access commitments on goods exported by the least-developed countries. Although China has not been granted across-the-board preferential treatment as a developing country, it has negotiated specific transitional arrangements in certain areas of its trade regime. Examples include the phasing out of quotas and import licenses, and the phased liberalization of the right for foreign entities to trade in China. In contrast, despite the availability of more preferential treatment under the WTO agreements, China has accepted a special cap on its ability to provide domestic production subsidies in agriculture and has agreed not to use export subsidies. It has also committed to immediate implementation of the TRIPS Agreement (for the protection of intellectual property rights). Preferential treatment was a particularly vexing issue throughout the negotiations. Although China has a much lower per capita income than many economies in the WTO that are classified as developing country provisions, in particular cases it faces tighter restrictions than other developing countries. At the same time China has obtained specific transitional arrangements in areas such as the phasing out of quotas and licenses and phasing out entry of foreign enterprisesareas that are not generally available to developing country members. Because special treatment in the form of preferential access to industrial country markets is not important for China, it has a strong interest in reducing the trade 30

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barriers in industrial countries in the only way it is ablethrough multilateral trade reform that lowers protection in the industrial countries, particularly on labor-intensive products such as textile, clothing and footwear in which China has a strong comparative advantage. China and the United States reached a bilateral agreement which was a win-win mutually beneficial agreement and a neat one without any additional conditions. To grant China the permanent trade MFN treatment is the basis and precondition for implementing Sino-US bilateral agreements, including the Sino-US agricultural agreement, and it is also a commitment of the US side. The missing of this opportunity suggests that the United States will lose the tremendous Chinese market and give this chance to its opponents for nothing. The United States, particularly American enterprises, will become the largest loss-maker. When compared with the state of affairs in 1978, China has made impressive progress in creating the legal framework necessary to support a market economy. Certainly, GATT (and later WTO) accession has proceeded alongside this massive rebuilding of Chinas legal systema system that was virtually wiped out during the Cultural Revolution. Yet it is increasingly apparent that WTO accession has also provided a catalyst for Chinas evolution away from a legal system driven by power relationships and towards a rule-based legal system.

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Protocol Part II

The terms of Chinas accession consist of its Schedules of Commitments and Protocol of Accession and Working Party Reports. These documents include legally binding commitments and market access obligations. In this connection, China will have to fulfill the following obligations within a transitional period of five years: General Obligations 1. China will grant MFN status to all WTO members and accord na-

tional treatment to all foreign companies, individuals etc. with respect to the right to trade. 2. 3. 4. China will eliminate dual pricing practices, as well as dual treatPrice controls will not be used for protecting domestic industries. Within three years of accession, with limited exceptions all enterment on sale of goods produced for domestic sales and exportable goods.

prises will have a right to import and export all goods and trade them throughout the custom territory. 5. Until 2008, under a specific safeguard instrument, for twelve years after accession, product-specific safeguard provisions will allow remedial action to be taken against surges of imports from China which damage, or threaten to damage, competing industries of importing countries. 6. China has to amend its existing legal system to make it commensurate with the WTO rules and be internationally acceptable. Table I - Selected Aspects of Chinas WTO Accession Trade in goodsall tariffs on imported goods had to be eliminated or reduced, mostly by 2004. Tariffs on industrial goods had to be reduced to an average of 9 percent, and import quotas had to be removed by 2005. Tariffs on agricultural goods had to be lowered to an average of 15 percent.

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Trade in servicesforeign access is to be ensured through transparent and automatic licensing procedures in various sectors, including banking and insurance, legal and other professional services, telecommunications, and tourism. Specifically: Right to Trade and Distributionwithin two years (by end-2003) foreign service suppliers will be permitted to engage in the retailing of all products; within three years (by end-2004) all firms had to have the right to import and export all goods except those subject to state trading monopolies (e.g., oil or fertilizers); within five years (by end-2006), foreign firms had to be allowed to distribute virtually all goods domestically. Bankingforeign financial institutions will be permitted to provide services without client restrictions for foreign currency business upon accession; local currency services to Chinese companies within two years (by December 2003); and services to all Chinese clients within five years (by December 2006). Trading and investment regimes. National treatment/non-discriminationMeasures and practices that discriminate against imported products or foreign companies will be removed. Export subsidiesUpon accession, all forms of export subsidies inconsistent with WTO rules, including grants and tax breaks linked to export performance, were eliminated. Trade-Related Investment Measures (TRIMs)Foreign investment approvals will no longer be subject to mandatory requirements (e.g., technology transfer or local content requirements). Trade-Related Aspects of Intellectual Property Rights (TRIPs)China will enforce the right protecting intellectual property within the State. Agricultural subsidiesChina has agreed to limit domestic agricultural subsidies to 8.5 percent of the value of production (i.e. less than the 10 percent lim-

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it allowed for developing countries under the WTO Agreement on Agriculture), and to eliminate all agricultural export subsidies upon WTO entry. Trading partner safeguards. Transitional product-specific safeguard mechanismAs provided under the WTO Agreement on Safeguards, a country may impose restrictions on imports if it can demonstrate that they cause or threaten to cause serious injury to domestic firms producing similar products. Special safeguard mechanism for Chinas textile and clothing exports (see Box 3). Anti-dumping. Under WTO agreement, other members can invoke non-market economy provisions to determine dumping cases for 15 years following accession. Nonmarket economy provisions imply that domestic prices cannot be used as a reference point and make it much easier to reach a positive finding in an antidumping investigation.

A tabulation of Chinas sectoral commitments under the WTO is given below: Table-II Chinas Sectoral Commitments in the WTO Sector Industrial Tariffs Automobiles Agriculture Services
o

Commitments To be reduced to 9% on average Cut import tariffs by 25% by mid-2006 Reduction in tariffs by 8.5%. Foreign banks can conduct local currency business within three years all over China. Fund management firms

Banking

will be allowed to engage in joint ventures up to 49% share after three years of accession. Foreign firms will be allowed to hold 25% share in mobile telecom, rising to 49% in three years after accession.

Telecom

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o

Insurance

No quantitative restriction on foreign joint ventures, with FDI share up to 25%, will be increased to 35% within one year and 49 % within three years. 51 % ownership to non-life insurance foreign companies, with right to establish branch or joint ventures. Reinsurance joint ventures with 50% equity will be permitted. China has agreed to lift the specific joint venture restrictions on large departmental stores and for virtually all

Distribution

chain stores Protection of Intellectual Prop- From the date of accession China will abide by fully to erty Rights Export Subsidies the rules of the TRIPs Agreement. On accession, China will eliminate all forms of export subsidies under articles 1 & 3 of the WTO Subsidies Agreement, including direct grants tax breaks linked to exports. Source: www.wto.org Chinas WTO commitments can be grouped in two macro areas: market access and subsidies.

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MARKET ACCESS On market access, China agreed on : (1) tariffs on almost all agricultural products (Tariff Barriers to Trade) and (2) use of import quotas or licenses and the use of state trading companies (Non Tariff Barriers to Trade) 1. Tariff Barriers to Trade The first type of trade change that China committed to make is to reduce tariff barriers to trade. By raising the cost of imports, Chinas tariffs are a means of protecting or supporting less competitive domestic agricultural producers, processors, or domestic distribution enterprises. Therefore, Chinas tariff cuts may be incompatible with some of its domestic policy goals or programs. The reduction in tariff duties should probably have reduced government revenues. However, the experience of other developing countries reducing relatively high import tariff rates shows that in some cases an import duty reduction may actually increase tariff revenues. This occurs because the relatively high tariff rates create an incentives to bypass the collection of tariffs, either by illegally eliciting the support of customs officials to reduce the declared value of the imports, or else evading the collection of the duties altogether (smuggling or other gray market behaviors). Reducing the incentive to cheat by lowering the average tariff rate, therefore, could result in more goods moving through official import channels and an increase in tariff revenues. However, even if there is a reduction in total duty revenue to the government, it is unlikely to have an important impact on domestic policy since tariff revenue, especially the revenue collected from agricultural imports, is quite small. Secondly, the government can relatively easily offset a decline in agricultural tariff revenue with an increase in other sources of revenue. Thirdly, and different from many developing countries in which tariff duties are one of the few effective means of collecting operating revenue for the central government, in China, tariff revenue is a very small component of the governments total tax revenue, and agricultural imports are a small component of total imports. Therefore, it seems likely that, if a reduction in tariff revenues occurs, it will not have a noticeable impact on government agricultural policy or expenditure decisions.

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2. Non-Tariff Barriers to Trade The second major commitment by China is to reduce non-tariff barriers to trade. Two of the most important such barriers are import quotas or licenses, and the use of state trading companies. Compared to tariff barriers, non-tariff barriers are much more complex forms of intervention and are closely linked to Chinas agricultural policies and institutional system in general. 2a) Import quotas or licenses Chinas import quota and licensing measures are an integral part of the system the government employs to control domestic prices, marketing and distribution of grains and edible oils. The determination and allocation of quotas was not transparent operation, either to markets or to end users of imported commodities in China. In most cases, quota-holders had no right to import directly from abroad, to choose their trading partners, or to specify a type or characteristic (such as the protein content of wheat) of a commodity. After WTO accession, China agreed to replace the current quota system with a transparent tariff-rate quota (TRQ) regime for wheat, rice, corn, cotton, and soybean oil imports. Imports within the TRQ quota amount will be at a low tariff, while imports above that quota amount will be at another much higher duty. The TRQ quantity is scheduled to rise in equal increments until full implementation in the year 2004 (2005 for soybean oil, after which the quota is eliminated and it converts to a simple low, bound duty). The over-quota tariffs gradually decline in fixed, equal increments over the 2000-2004 implementation period (2000-2005 for soybean oil). It is important to note that the TRQ quota amount is an opportunity to import given to fulfill unmet domestic demand. It is not a minimum access commitment. In addition to changing Chinas import quota system, the bilateral U.S.China agreement prohibits China from using its import licensing system to inhibit agricultural trade. China had to introduce a system whereby any company with trading rights can, according to transparent and objective rules and regulations, readily obtain an import license to bring in major agricultural commodities. China must also allow foreign companies to apply for and obtain an import license and directly import agricultural commodities. The TRQ quota system and open access to import licenses should also likely allow domestic prices to more closely reflect world market prices. For commodities such as grains, cot-

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ton, oilseeds and oilseed products, prices have probably face downward pressure as increased imports raises total supply with negative impact on the profit margins of state trading enterprises both at the national and provincial level. In general, Chinas farm prices have tended to be lower than world market prices, while the inefficient grain and other commodity distribution systems often resulted in a large marketing margin and losses to those firms (traditionally subsidized but of the central governments budget). With increased competition from imported goods and from non-state-owned or foreign companies, the pressure on the current state trading enterprises will in turn affect the implementation of government agricultural policies. 2b) State trading An important characteristic of Chinas new TRQ system is that a predetermined share of the within quota imports is reserved for private import companies, touching the stateowned enterprises. It is fixed for some commodities but rises in equal increments for other commodities over the implementation period. These features are geared towards creating competition among importers in China, as well as providing incentives for state trading companies to fully meet domestic demand and be more responsive to the needs of endusers. Although Chinas state trading companies are currently only agents acting on the behalf of quota holders, they act as another layer of government control over grain and cotton imports. As a trading agent, state trading companies behave more or less like profit-seeking enterprises. However, in its role as an instrument of the government to control trade, these companies have to follow the instructions of the government in to conducting trade in some cases importing or exporting at a time when prices cannot maximize companies profits and may even force companies to lose money. However, once the new system eliminates the monopoly of state trading companies over agricultural commodity imports, the introduction of private trade companies, including foreign-owned trade companies, will force the state trading companies to give up their multifunction roles in order to compete without extracting outsize profits with each other and with other non-state trading companies. In contrast to the current practice, end users have more control over the quality and other characteristics of product they import. In terms of the impact on Chinas domestic agricultural policy, the elimination of the state trading company monopoly over Chinas grain and cotton imports is essentially identical to the impact of the new TRQ system. It will have an indirect impact similar to the impact de38

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scribed for the TRQ quota systemincreased imports and reduced effectiveness of domestic support as domestic prices fall. However, it could provide benefits to processors to the extent that more competition between domestic output and imported commodities increases buying options and potentially drives down the prices of their inputs, and therefore their cost of production. SUBSIDIES They have been a prominent issue as well in China's negotiations with the WTO. In particular, the elimination of subsidies to loss-making state-owned enterprises was a commitment under China's accession agreement with the WTO in December 2001. But for Chinese loss-making exporters, the subsidies could remain an issue, at least until 2003. The statement and the data provide some insight with respect to the subsidy system and the difficulties of the central government in tracking down all sources and types of subsidies in a system with limited fiscal and bank regulatory oversight. The fact that a large portion of subsidies have come from local governments suggests the possibility that their use was, to some degree, not part of a central government policy to promote exports, but even that is not certain. The local governments may have had implicit or explicit central government encouragement in providing the subsidies as a way of maintaining their local SOE's production and employment. However we do not know what the interests were of the local governments in helping their local firms earn foreign exchange. Subsidies to be phased out Among the subsidies, the phased out ones were : subsidies provided to certain state-owned enterprises which are running at a loss, priority in obtaining loans and foreign currencies based on export performance, preferential tariff rates based on localization rate of automotive production

The decisions were based on the GATT Art. XVI, which states that its possible to grant a subsidy only if it doesnt determine a serious prejudice to the interest of any other contracting parties.

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Protocol Part III The Part III contains the final provisions about the Protocol. China would had have time until 1st January 2002 to accept the protocol and make it entering into force. Its common to put a condition like that where a Treaty is signed between a state and an international organization to give enough time to the state to. As the states within the WTO and China, the subscribers, are members of the UN; the Protocol had to be registered at UN Secretariat, to make possible for a state to challenge another state or appeal to the Protocol to a UN institution. Pros and Cons, Permissions and Restrictions Compared with a normal accession to the WTO, Chinas one needed more information to be provided and more attention to single policies. On one hand, the Chinese is a WTOplus obligations accession, it required more obligations respect to the ones that former members have signed at the accession. On the other hand, it could be considered as WTOminus obligations condition for incumbent members, reducing obligations of some or all incumbent members. This is shown in the Reservations by WTO members annex, productspecific safeguards against China in response to market disruption (weaker discipline than the normal), special discipline on price comparability in determining subsidies and dumping and special rules regarding trade in textile and clothing.

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Conclusions

Effects of WTO accession National perspective

Economics Not surprisingly, after accessing the WTO, China GDP grew, trade volume with the US increased, Chinas exports increased and the inflow of foreign investments rapidly increased. This last happened because of increased confidence from multinationals, low cost of labor and the opportunity of a huge market. Multinationals companies are increasingly investing in China to meet local final demand rather than solely for re-export purposes. Chinas energy and mineral imports are increasing, providing benefits to resource-rich countries. Big changes touched the banking sector, traditionally committed to saving collection and funding with criteria different from Western ones. After accessing, it opened to more sophisticated mediation and investment forms. Great advantages originate from the entering of big distribution company chains, a phenomena completely unknown in China before the accession to the WTO. Legislation Regarding legislation, WTO membership compelled China to change its current commercial laws and practices to conform to WTO rules. There has been a formal westernization in Chinese trade institutions, juridical procedures and laws. In 2006 there has been also a labour reform to get consistent with WTO rules which protect labour rights and job security. The statement that administration of TRQs shall be on a transparent, predictable, uniform, fair and non-discriminatory basis has important consequences within China. In fact, to give all the information needed by foreign investors obviously the Chinese state would give this information available to everybody, to its own citizens too.

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Human rights The WTO is an international organization, states are obliged only to what they have signed. In the protocol, annex 1A, 9.a, it is stated the necessity to increase and extend trade rights and grant the right to trade to all individuals. In other words, it is a formal right related simply to trade, no more than that. WTO entry will not likely promote democratization in China in the short run, but prospects for this are better in the long run thanks to a spillover process, something like what happened with the European project. Labor force and private sector Private sectors has seen rapid growth, after it has been barred from direct foreign trade. WTO policies forced China to treat all enterprises, whether state owned or not, equally. All domestic enterprises can trade freely and independently in foreign trade. Intensified competition within China would probably have lead to increased job losses in the short run. Obviously, WTO membership is not a guarantee against future problems but it would buttress a powerful bloc of interests within China favouring outward-oriented growth and the conditions, including peace and greater rule of law, required to secure it. International perspective

Economics The possibility to enter or to increase the presence in a market big such the Chinese one led advantages at international level. In particular, US and China are large trading partners in agricultural products, representing a US$2.7 billion market. China is the sixth largest export market for US agriculture. Chinas concessions benefit many major U.S. industries. Among those likely to gain the most are farmers, financial companies, and high-tech industries. U.S. law and accounting firms are also granted expanded access under the agreement. For example, this agreement will allow U.S. firms to make automobile loans to Chinese customers, thus promoting sales. U.S. firms will also be free for the first time to distribute their products throughout China without going through a Chinese intermediary. As new sectors of the Chinese economy are opened, U.S. export opportunities will increase work for Americans in industries such as aerospace, chemicals, entertainment, computers, waste treatment, biotechnology, telecommunications equipment, medical equipment, and other 42

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high-tech products. Those industries that are already losing jobs due to Chinese competition, such as textiles and clothing, are little affected by this agreement, because Washington agreed to no significant new trade concessions. It is likely, however, that there will be some loss of U.S. jobs as firms relocate labour-intensive manufacturing from the U.S. to China as conditions there become more favourable to foreign investment. Another face of the strong linkage between U.S. and China is clear at monetary level, the Chinese national central bank is the richest at reserves level (equal to one thousand billions of $). Intellectual Property Rights and Licenses Intellectual Property Rights were part of the Protocol and under the watchful eyes of WTO. And its mechanisms work, in fact U.S. claimed against lax Chinese enforcement of intellectual property rights, following a mixed verdict by a World Trade Organisation dispute panel. The WTO issued the report of a panel that had examined United States complaint against China Measures affecting the protection and enforcement of intellectual property rights, 2009. The panel found these inconsistent. International law The accession of new countries in general gives more strength, leverage and authority to the international organization they join. For its political and economical conditions, the accession of China has a strong effect on the WTO. Trade disputes should be resolved through the WTO adjudication procedures, giving a better promote its trade interest than with antidumping unilateral actions. China was used to prefer bilateral trade bargaining in the past because, as a large country, it is often able to gain more concessions that way. As WTO member, China need to negotiate trading terms on a multilateral basis with all members at once. At practical level, after some years China is completely in the WTO system. Proof of this statement is the main fact of the complaint by China against U.S.: United States Preliminary Anti-Dumping and Countervailing Duty Determinations on Coated Free Sheet Paper, 2008; United States Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, 2007 and United States Definitive Safeguard Measures on Imports of Certain Steel Products, 2002) The 2008 and 2008 disputes have not settled yet.

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Chinese Trade Data up to 2007 - Chart 1 Subject: Total merchandise trade Reporter China China - Chart 2 Subject: Total merchandise trade Reporter China China Flow Exports Imports Indicator Unit: Partner US dollar at current prices (Millions) 2003 2004 2005 2006 2007 Flow Exports Imports Indicator Total merchandise Total merchandise Unit: US dollar at current prices (Millions) 1998 1999 2000 2001 2002

Partner

World 183712 194931 249203 266098 325596 World 140237 165699 225094 243553 295170

Total merchandWorld 438228 593326 761953 968935 1217776 ise Total merchandWorld 412760 561229 659953 791461 ise 955950

- Charts 3 and 4 Subject: Trade in commercial services Reporter China China China China Flow Indicator Unit: US dollar at current prices (Millions) Partner 1998 1999 2000 2001 2002

Commercial services Exports (Services excl. govern- World 23879 26165 30146 32901 39381 ment services) Exports Transportation Exports Travel World 2300 2420 3671 4635 5720 World 12602 14098 16231 17792 20385 8977 9647 10244 10474 13276

Other commercial services (Commercial serExports World vices - Travel & Transport)

China

Commercial services Imports (Services excl. govern- World 26467 30967 35858 39032 46080 ment services)

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China China Imports Transportation Imports Travel World World 6763 7899 10396 11325 13612

9205 10864 13114 13909 15398

Other commercial services (Commercial serChina Imports World 10499 12204 12348 13798 17070 vices - Travel & Transport) Subject: Trade in commercial serUS dollar at current prices Unit: vices (Millions) Reporter China China China China Flow Indicator Partner 2003 2004 2005 2006 2007

Commercial services Exports (Services excl. gov- World 46375 62056 73909 ernment services) Exports Transportation Exports Travel World 7906 12068 15427 World 17406 25739 29296

91421 121655 21015 33949 36456 31324 37233 53097

Other commercial services (Commercial Exports World 21062 24249 29187 services - Travel & Transport)

China China China China

Commercial services Imports (Services excl. gov- World 54852 71602 83173 100327 129254 ernment services) Imports Transportation Imports Travel World 18233 24544 28448 World 15187 19149 21759 34369 24322 41636 43271 29786 56197

Other commercial services (Commercial Imports World 21432 27909 32966 services - Travel & Transport) Exports to major trading partners:

Agricultural products 1. Japan 2. European Communities 3. United States 4. Hong Kong, China 5. Korea, Republic of

Non-agricultural products 1. United States 2. European Community Members 3. Hong Kong 4. Japan 5. Korea, Republic of

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BIBLIOGRAPHY Bourzat Chaterine, Cinesi e Cina, Touring Editore s.r.l., Milano, September 2005; De Kathie L. Krumm, Homi J. Kharas, East Asia integrates: a trade policy agenda for shared growth, World Bank Publications, 2004; De Deepak Bhattasali, Shantong Li, Will Martin, China and the WTO: Accession, Policy Reform, and Poverty Reduction Strategies, World Bank Publications, 2004; GATT, (07.07.1988), COM,TEX/SB/1392*, Textile Surveillance Body, ARRANGEMENT REGRDING INTERNATIONAL TRADE IN TEXTILES, Notification under Article 2:4, China; Peschiera Francesca, Fashion, Italy e made in China, bachelor degree thesis, University of Bologna, June 2007. Timoteo Marina, Circolazione di modelli e riforme giuridiche: il caso est-asiatico, Libreria Bonomo Editrice, Bologna, May 2005; WTO, (2001), WT/ACC/CHN/49 REPORT OF THE WORKING PARTY ON THE ACCESSION OF CHINA, (168 pages) WTO, (2001), WT/L/432 - PROTOCOL ON THE ACCESSION OF THE PEOPLES REPUBLIC OF CHINA, (103 pages) WEBSITES

www.WTO.org (World Trade Organization) http://www.bc.edu/schools/law/lawreviews/metaelements/journals/bciclr/27_2/06_ TXT.htm http://au.china-embassy.org/eng/jmhz/t46196.htm http://www.ustr.gov/Document_Library/Fact_Sheets/2001/Background_Information_on_China%27s_Accession_to_the_World_Trade_Organization_printer.html http://people.brandeis.edu/~rmccullo/wp/China2007.pdf www.ICE.gov.it (Istituto del Commercio Estero) www.asienhaus.de (Europa und Asien - Gemeinsam fr eine gerechte Welt) www.cnachinadesk.it (Confederazione Nazionale dellArtigianato e della Piccola e Media Impresa) www.wikipedia.org (Free encyclopaedia on line)

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