The process of China's accession to the WTO

Journal of International Economic Law

Volumn 4, Issue 2, 2001, Pages 297-328

  Guohua, Yang ^a   Jin, Cheng ^a  

^a NONE

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EID: 0035612633     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/4.2.297     Document Type: Article

References (79)

1. See Oliver Long, The Laws of GATT Multilateral Trade System and Its Limitation, (1st edn, 1989); Wang Yiaotian, General Introduction to GATT 4, 5 (1st edn, 1998); William Davey, John H. Jackson, and Alan Sykes, Legal Problems of International Economic Relations 194, 294, 29 (1st edn, 1995).
2. See Oliver Long, The Laws of GATT Multilateral Trade System and Its Limitation, (1st edn, 1989); Wang Yiaotian, General Introduction to GATT 4, 5 (1st edn, 1998); William Davey, John H. Jackson, and Alan Sykes, Legal Problems of International Economic Relations 194, 294, 29 (1st edn, 1995).
3. See Oliver Long, The Laws of GATT Multilateral Trade System and Its Limitation, (1st edn, 1989); Wang Yiaotian, General Introduction to GATT 4, 5 (1st edn, 1998); William Davey, John H. Jackson, and Alan Sykes, Legal Problems of International Economic Relations 194, 294, 29 (1st edn, 1995).
4. GATT included 23 founding members: Australia, Belgium, Brazil, Burma, Canada, Ceylon (now Sri Lanka), Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, South Africa, South Rhodesia, Syria, the United Kingdom, and the United States of America.
5. Due to its underdeveloped economy and deficiency of finance, China was in a difficult position in the negotiation. China's concessions mostly were manufactured products such as hardware, machinery, chemical industry, etc., but the concessions of the US and Great Britain mostly were primary products or raw materials such as tungsten, silk, stibium, tea, tung oil, egg products, etc. The results of these mutual concessions would surely lead to a situation in which large numbers of foreign manufactured products entered China's market and a mass of Chinese raw materials flowed to foreign countries. See Wang Yaotian, above n 1, at 246-47.
6. See Liu Guangxi, China and the United Nations Of Economy 17-19 (1st edn, 1998).
7. Countries which withdrew their concessions include: Australia, Belgium, Canada, Ceylon (now Sri Lanka), Finland, France, India, Luxembourg, Netherlands, Pakistan, Switzerland, the United Kingdom, the United States of America, etc. The other ten countries did not. See Wang Yaotian, above, n 1 at 247.
8. See GATT Article 27: Any contracting party shall at any time be free to withhold or to withdraw in whole in part any concession, provided for in the appropriate Schedule annexed to this Agreement, in respect of which such contracting party determines that it was initially negotiated with a government which has not become or has ceased to be a contracting party.
9. Above, n 4, at 19, 20.
10. 'GATT was still controlled by imperialist countries, and became an instrument which was used by strong countries to bully and exploit weak countries.' See Handbook of International Knowledge (Vol 1) 153 (1st edn, 1981).
11. See GATT Article 35: This Agreement, or alternatively Article 2 of this Agreement, shall not apply as between any contracting party and any other contracting party if: the two contracting parties have not entered into tariff negotiations with each other, and either of the contracting parties, at the time either becomes a contracting party, does not consent to such application. As when China applied to resume its status in the GATT, Contracting Parties, such as South Africa, were bound to invoke this clause. China could also invoke this clause to make the GATT not apply between China and such countries.
12. A point that must be mentioned is that Taiwan once became an observer of the GATT in the 1960s. In November 1971, the GATT ceased the observer status of Taiwan according to the principle of following the United Nations Resolutions in politics.
13. Multi-Fibre Arrangement (MFA) is an international trade multilateral arrangement of textiles and clothing under the GATT. It was signed on 30 December 1973 and continues to this day. Its goal is to offer a chance for the adjusting structure of developed countries' textile industry whose competition was weakened by measures for developed countries to temporarily restrict textile import, or for developing countries to automatically restrict textile export. This arrangement clearly contravenes the GATT principle of free trade. See Xia Shen, The Dictioary of the GATT 157 (1st edn, 1993). According to the regulations of the WTO Agreement on Textiles and Clothing, textile export will not be restricted by quantities of quotas from 1 January 2005, so MFA will be terminated at that time.
14. See Zhang Xiangchen, The Political and Economic Relation between Developing Countries and World Trade Organization 173 (1st edn, 2000).
15. See Feng Yushu, The GATT and China 216-18 (1st edn, 1992).
16. With the proposal from developed countries such as the US, EU, etc., the GATT launched the Uruguay Round at Punta del Este, Uruguay, in September 1986. This round was the most complicated and most extensive multilateral trade negotiation, with the biggest number of countries and territories involved in the history of development of multilateral trade system. The scope of the negotiations included not only trade in goods, but also trade in services and intellectual property rights (IPR). One of the Round's great achievements was the founding of the WTO. See WTO Secretariat, Trading into the Future (1st edn, 1999). As an observer, China sent a delegation at the ministerial level to attend the conference and, for the first time, expressed its desire to apply to resume China's contracting status in the GATT. According to the Marrakesh Declaration, China acquired the status of full participation in the Uruguay Round multilateral negotiations.
17. Some people thought that whether or not it was legal for Taiwan to represent China in withdrawing from the GATT that year (China had not attended GATT negotiations since the 1950s and most laws and regulations of China were not in conformity with the WTO when the WTO was founded in 1995), China had to renegotiate. See Frederick M. Abbott, China in the World Trading System -Defining the Principles of Engagement 5 (Kluwer Law International 1998).
18. GATT 33 (1994).
19. Agreement Establishing the World Trade Organization 22 (1995).
20. WT/ACC/13.
21. WT/ACC/7/Rev.1 (19 November 1999).
22. This is a standard clause. The limits of authority are the same as this for all members of working parties.
23. The scope of working parties may be quite different from one another. Of all 20 working parties that had convened the first meeting, the largest two had 68 and 54 members respectively (China and the Russian Federation), while the smallest two had only 23 and 25 members respectively (Seychelles and Vanuatu). Usually a working party has 40 members.
24. In practice, many memoranda do not fully meet the requirements of the WTO, so Working Parties very often ask applicants to supplement and perfect their memoranda.
25. If documents are relatively short, applicants should translate all of them into one of the WTO working languages (English, French, or Spanish); if the documents are long, applicants should submit a detailed summary in one of the working languages.
26. On 18 March 1996, the WTO Secretariat worked out a note called Information to be Provided on Domestic Support and Export Subsidies in Agriculture Technical Note. It stipulated in detail what information needed to be provided. See WT/ACC/4 (18 March 1996).
27. On 31 October 1996, the WTO Secretariat worked out a note called Information to be Provided on Policy Measures Affecting Trade in Services Technical Note. It stipulated in detail what information needed to be provided. See WT/ACC/5 (31 October 1996).
28. See above, n 17, at 12.
29. See id.
30. If an applicant or a contracting party does not agree to apply the WTO Agreement mutually, it can invoke the thirteenth article of mutually non-applicable provision in the Agreement Establishing the World Trade Organization.
31. In subsequent working party meetings, the attending members varied in number. For instance, 29 members attended the fourth Working Party Meeting on China's accession to the WTO on 23 May 1997. The Chairman of the Working Party was Pierre-Louis Girard from Switzerland.
32. The Supplementary of China Trade System, See Du Houwen, WTO Rules and China's Strategy 2165-78 (1st edn, 1999).
33. See id, 2178-96. There were 97 questions involved in China's reply to the questions on The Supplementary of China Trade System by GATT Contracting Parties in the tenth China Working Party Meeting.
34. After the end of review, the working party may require China to update relevant information. For instance, China submitted an updated memorandum including updated relevant laws and regulations to the 9th Working Party Meeting of China's accession to the WTO on 21 March 2000.
35. The draft may be continuously updated according to the progress of multilateral and bilateral negotiations. At present, the latest draft was formed on 28 May 1997.
36. These countries include: Argentina, Australia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, Czechoslovakia, Ecuador, the European Union, Guatemala, Hungary, Iceland, India, Indonesia, Japan, Kirghizstan, Latvia, Malaysia, Mexico, New Zealand, Norway, Pakistan, Peru, the Philippines, Poland, Singapore, Slovakia, South Korea, Sri Lanka, Switzerland, Thailand, Turkey, Uruguay, the United States, and Venezuela.
37. See above n 4, at 66-70.
38. In order to promote the negotiations on resuming GATT-contracting status and strengthen national coordinated work, China set up the Coordination Group at Ministerial Level under the State Council on the GATT, led by Zhang Jinfu. Thereafter it was changed into the Coordination Committee at Ministerial Level, with vice-premier Tian Jiyun as director (later replaced by vice-premier Li Lanqing in 1992). In 1993, this committee became the Negotiation Committee on the GATT. When governmental institutions were adjusted in April 1998, it was dismantled and the negotiation work of accession to the WTO has generally been coordinated by MOFTEC.
39. In November 1993, President Jiang Zemin put forward three principles on China's accession to WTO negotiations during his participation at the APEC conference. (1) As an international organization, WTO is incomplete without China's membership; (2) China must undoubtedly attend as a developing country; (3) The principle of China's attendance is the balance of rights and obligations. See above n 12, at 176. China's status as a developing country is an important problem, which can affect the process of negotiations. GATT/WTO has some special provisions for developing countries, such as a longer transitional period for implementing obligations; special consideration in negotiations and dispute settlements; special technical assistance, etc. Since GATT/WTO did not give a definition to developing country, whether a country is a developing country or not is up to its own declaration and concretely reflected in negotiations. China insisted on its status as a developing country, but western countries required China to undertake the obligations of developed countries, so the negotiations became much more complicated.
40. GATT/WTO has a different attitude to small and large countries. Due to their small volume of trade, it is relatively easier for small countries to enter. But big countries have a huge volume of trade, and they will have significant effects on the operation of GATT/WTO, so it is more difficult for them to enter through negotiations. During the negotiations, China is also confronted with a special problem. GATT/WTO is based on a market economy, but for quite a long time, western countries regarded China as a centrally planned economy and now as a transition economy, which refers to the state changing from a centrally planned economy to a market economy (both a planned economy and a transitional economy are non-market economies). Early on, Western countries held that GATT/WTO rules could not be applied to non-market economies. For instance, the negotiations on tariff concessions were a main means to promote free trade. Every country negotiated and reduced its tariff levels in order to realize the free flow of goods. But to non-market economy countries, even when tariff levels may be very low, they might not have any effect on opening the market. Enterprises in China are not based on commercial considerations; but are under the control of the state so the state can regulate the import quantity of enterprises. Furthermore, state-controlled trade might create a situation in which, in a short period of time, it could export large quantities of commodities to another country, disrupting another country's market. So the GATT rules were not applied to non-market countries. Afterwards when the GATT approved accession to such countries, it designed some extraordinary rules to avoid the above-mentioned situation. For instance, when Poland entered the GATT in 1967, it committed to increase its imports to 7 percent annually, and when a country's imports from Poland greatly increased, that country could take special safeguards to restrain the imported products from Poland. The non-market economy issue, which China was confronted with, became more conspicuous due to 17 similar countries (especially the former Soviet Union and Eastern European countries). Western countries hoped to set an example for other countries with China's accession. Afterwards similar countries could follow suit if they wanted to enter the WTO. See Mark A. Groombridge and Claude E. Barfield, Tiger by the Tail - China and the World Trade Organization 42-49 (1st edn, 1999).
41. In order to extricate itself from and break this vicious circle as early as possible, and increase every negotiating parties' feelings of responsibility and urgency as well as make China an initial founding member of the WTO, China made a significant decision that the end of 1994 will be the deadline for finishing substantial negotiations of China's resumption in the GATT on 28 November 1994. But because a few western countries still asked too high a price, this goal was not achieved.
42. The WTO Director-General, Michael Moore, who visited China on 18 February 2000, said that China's accession to the WTO would be a historical event. He said that the day that China acceded to the WTO would be a great day for both China and the world. The WTO will not be a true world organization until China's accession. See People's Daily (18 February 2000) at 1.
43. MFN is a form of reciprocity in trade between countries. The US has already given MFN to many countries. But in US law, MFN has very important exceptions for so-called Communist countries. The US gave MFN to the Soviet Union in 1937, but in 1957 the US Congress demanded the revocation of MFN status from the countries which were controlled or dominated by Communism. After the US-Soviet Summit in 1972, the American President announced that it would start to negotiate with the Soviet Union before long and sign the reciprocal trade agreement including MFN status. Just at that time, the Soviet Union collected 5,000-30,000 USD from the persons who applied for emigration to a foreign country as compensation for the free education that they received in the Soviet Union. Many people thought this policy was directed against the Jewish people in the Soviet Union. This caused an organized retaliation by the American Jewish community. So Senator Jackson and Representative Vanik advocated that trade and immigration should be connected and they proposed an amendment, the famous Jackson-Vanik Amendment. This finally became law. In the Trade Act 1974, this amendment is stipulated in Para. 402, the so-called Clause 402. Since 1990, Congressmen have proposed taking action based on what they called human rights issues. These issues include unfavorable balance of trade, proliferation of sensitive weapons, etc. By this they attempt to revoke or conditionally prolong the MFN annual review of China. In fact, revoking MFN status from China will hurt not only China, but also the US export enterprises and customers. Having discovered that governments of various western countries supported the entrance of their enterprises into the Chinese market, and foreign capital occupied the Chinese market successfully, the US government recognized that to impose sanctions upon China through revocation of MFN status would put it in a disadvantageous situation in the Chinese market. On 26 May 1994, the US announced it would continue MFN status to China and disconnected relations between human rights and MFN, but maintained the annual review. See Yang Guohua, Legal Problems in Sino-American Economy and Trade Relations and American Trade Law 1-5 (1st edn, 1998).
44. See the Testimony of US Trade Representative Barshefsky in Senate Finance Committee on 16 February 2000.
45. This is, to amend Part IV of the 1974 Trade Act, to make it not applicable to China. See the proposed text on Normal Trade Relations for the People's Republic of China, submitted to the Congress by President Clinton on 8 March 2000.
46. See above, n 42.
47. See US Congressman Joseph Hoeffel's speech in the House on 30 March 2000.
48. The Act added some content specifically against China. It includes: (a) To found Congress-Administration Committee, to supervise the conditions of human rights of China, to assemble a list of the persons who suffer persecution in China, to supervise the progress of China's legal construction, to launch the bilateral cooperation, to develop the relations with the non-government organizations and to submit an annual report; (b) To supervise China to implement their WTO commitments, including requiring China to write clearly in the Protocol of China's accession to the WTO that the WTO should review the implementation of China's commitments annually; to increase the funds, organizations, and staff for the Department of Commerce (DOC), the State Department, the Office of Trade Representative, and the Department of Agriculture, to supervise and promote China to follow the Agreement; when Chinese products cause chaos and trade transferring in the American market, the US may take special safeguards, at the time to supervise and avoid trade transferring; the Office of Trade Representative should submit a report on China's implementation conditions to the Senate annually; (c) To found a special working group on forbidding the import of compulsory products by prisoners of reform-through-labor from China, to supervise and avoid the import of related products from China; (d) To assist the establishment of rule of law in commerce and labor, the DOC, as well as the Department of Labor (DOL), may implement the aid project, but they must not give the aid to All-China Federation of Trade Unions and the organizations of violating human rights; On the question of Taiwan's accession to the WTO, the WTO Director-General should make arrangements for discussing the question of Taiwan's accession to the WTO on the same conference in the following item, after approving China's accession to the WTO. The US should be ready to
49. See He Jiuzhong, 'The Significance of Signing the Bilateral Agreement of China's Accession to WTO between China and the United States', People's Daily (17 January 2000) at 4.
50. For WTO agreements, see World Trade Organization, The Legal Texts: The Results Of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999); John Croome, Guide to the Uruguay Round Agreements (Kluwer Law International 1999).
51. For WTO agreements, see World Trade Organization, The Legal Texts: The Results Of the Uruguay Round of Multilateral Trade Negotiations (Cambridge University Press, 1999); John Croome, Guide to the Uruguay Round Agreements (Kluwer Law International 1999).
52. TRIMS 2 and its illustrative list.
53. For instance, The Law of the People's Republic of China on Chinese-Foreign Cooperative Joint Ventures Article 20: A cooperative joint venture shall resolve on its own balancing of its foreign exchange revenues and expenditures; The Law of People's Republic of China on Chinese-Foreign Equity Joint Ventures Article 9: For the raw and processed materials, fuel, auxiliary equipment, etc. needed by an equity joint venture, priority shall be given to purchasing in China.
54. See China Draft Protocol (28 May 1997).
55. The Law of the People's Republic of China on Foreign Trade 9.
56. See Agreement on Sino-American Market Access.
57. See above, n 51.
58. Without such a form of safety valve, a country may not be willing to attend GATT/WTO. See Hockeman, The Political Economy Of The World Trade System 159 (1st edn, 1999).
59. WTO Agreement on Safeguards.
60. WTO Agreement on Anti-Dumping.
61. WTO Agreement on Subsidies and Countervailing Measures.
62. GATT 12 and 28(b) (1994).
63. See id, 18.
64. See id, 20.
65. See id, 21.
66. See above, n 17, at 9.
67. See above, n 59, at 28.
68. China promulgated The Regulation on the People's Republic of China on Anti-Dumping and Countervailing on 25 March 1997, but it needs to be reinforced and perfected. A point worth mentioning is that some economists did not advocate protecting domestic industry by using the clauses such as safeguards, immature industry, etc. They thought that according to the theory of comparative interest in international trade, when a department is impaired, the state will transfer the resources to other departments which have comparatively more benefits; protecting immature industry would keep these industries in an immature status forever. See Paul A. Samuelson, Economics 1446-50 (12th edn, 1992). But in practice, every country still applies these protective measures. See above, n 55, at 162.
69. See John H. Jackson, The World Trading System - Law and Policy of International Economic Relations 11 (The MIT Press, 2nd edn, 1997).
70. See above, n 58, at 3.
71. See above, n 59, at 17.
72. It does not fall into the scope of the administration of the WTO whether a country treats its various industries in the same way. But from the view of the government, it is unfair to treat domestic enterprises and foreign enterprises differently.
73. See above, n 59, at 10.
74. The main Agreements of the WTO all have clear stipulations on it, such as TRIPS 41.
75. See above, n 4, at 158-62.
76. See International Trade Center UNCTAD/WTO and Commonwealth Secretariat, Business Guide to The World Trading System (1st edn, 1999).
77. Adam Smith held that 'opening the market to foreign goods has no effect on enterprises which do not enjoy special protection.' In addition, some enterprises under impact may face the question of unemployment, but the question is not as serious as imagined. See Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol 40-1 (1st edn, 1776).
78. Adam Smith once pointed out that by restricting the import of foreign goods (through the use of high tariffs) which can be produced domestically, the relevant domestic industries may be able to monopolize the domestic market. But this kind of monopoly will neither help increasing the whole of social industries, nor lead the industries to develop in the most advantageous direction. See above, n 74, at 24-28.
79. The Long March is the 12,500 km distance the Red Army of the Communist Party walked from Jiangxi Province of South China to Shan'xi Province of North China from 1934-1935, breaking through the formidable suppression of the then KMD army, which finally led to the victory of the Communist Party.