China’s Accession to the World Trade Organization
After almost 15 years of negotiations, China successfully entered the World Trade Organization on December 11, 2001. In less than three years since its accession, while China’s progress has been somewhat behind schedule, the country has made very significant changes that have helped transition it to a market economy and open the country to the multilateral trading system.
Following the Uruguay Round of multilateral trade negotiations, The World Trade Organization (WTO) was established in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT). The WTO is an international organization that watches ...view middle of the document...
This report, or protocol of accession, is presented to the WTO General Council for a two-thirds majority approval. The applicant is then able to join the organization (“Membership, alliances and bureaucracy”).
The accession process for China lasted almost 15 years and resulted in a 900-page protocol of accession (“WTO Ministerial Conference”). China had to make many important commitments to open its market and to offer a more predictable trade and foreign investment situation in order for it to better assimilate in the world economy. Some of the commitments made by China included the following:
• Eliminate dual pricing practices
• Provide non-discriminatory treatment to all WTO member countries
• Eliminate price controls used to protect domestic industries or service providers
• Revise and enact domestic laws to be in compliance with the WTO Agreement
• Make it possible for all enterprises to be able to import and export all goods
throughout the customs territory (with limited exceptions) within three years
• Agree to not preserve or introduce export subsidies on agricultural products
(“WTO successfully concludes negotiations”).
China committed to eventually eliminate trade barriers and open market access to goods from foreign countries. They agreed to decrease bound tariff levels to 15% for agricultural products and 8.9% for industrial goods. China also agreed to limit subsidies to its agriculture industry to 8.5% of the value of farm output. Overall, some tariffs will be eliminated and others will be reduced by 2004. Quotas on textiles will end on December 31, 2004. The WTO, however, is implementing a safeguard mechanism until the end of 2008 that will allow member governments to impose temporary quotas on textiles imported from China if the imports are causing market disruptions in the member country (“WTO successfully concludes negotiations”).
There will also be many changes in the telecom industry. Within five years of accession, foreign investors will be able to establish joint ventures, with investment up to 49% and there will be no geographic restrictions. China has also agreed to permit foreign financial institutions to provide services to all Chinese clients within five years (“WTO successfully concludes negotiations”).
Joining the World Trade Organization will benefit China in many ways. First of all, when the market is open to foreign investment, not only will the country enjoy the increased government tax receipts and higher paying jobs that come with higher levels of foreign investment, they will also benefit from increased competition. Competition will bring technology and know-how to the different industries. It will also allow people to have more choices and higher quality while paying lower prices. Firms that are faced with competition will learn to become more efficient and productive, if they are to survive. This will enhance the ability of...