China's accession to the WTO through the eyes of those who witnessed and negotiated it
By Ma Miaomiao  ·  2021-12-14  ·   Source: NO.50 DECEMBER 16, 2021
Participants have a discussion at an activity marking the 20th anniversary of China's accession to the World Trade Organization in Shanghai on November 5 (XINHUA)

'Pop!" The gavel in the hands of an Arab official wearing a white robe fell and applause rang out on November 10, 2001, marking China's official accession to the World Trade Organization (WTO) as its 143rd member. Looking back on this historic moment in Doha, capital of Qatar, Huo Jianguo, then a member of the Chinese delegation and now Vice Chairman of the China Society for World Trade Organization Studies, said his Chinese colleagues were excited but also breathed a sigh of relief.

After 15 years of painstaking efforts, China finally saw the light at the end of tunnel in its endeavor to join the WTO. According to Huo, the whole process had been far too complicated. On the one hand, there was a huge gap between China's economic system at that time and the principles of fair competition and non-discrimination per WTO mandate. To meet the challenges of WTO participation, China had to revise and improve laws and regulations involving foreign trade and economic cooperation.

On the other hand, the competition for market shares and trade benefits was fierce, with the EU and the U.S. concerned about the entry of their salable products into the vast Chinese market and putting forward many a demand on China's opening up, he recalled.

China's successful admission to the WTO generated an equally beneficial result for both developed and developing members, the latter in particular. And the U.S. was one of its biggest beneficiaries, Long Yongtu, then China's chief WTO negotiator, said at a seminar in May.

Stepping up and forward

Huo said ever since, China got a system to learn from for deepening its own reform and opening up, and the WTO provided a reference for China's market exploration.

China's decision to join the world trade body denoted two important breakthroughs, according to Long. It initiated the country's transformation from a planned economy to a market-oriented one and advanced the opening up of its domestic market to the world with a high level of transparency in certain areas. "That was a significant transformation as the concept of the market economy, then the equivalent of capitalism, was still very much 'taboo' before 1992," he explained.

It was absolutely clear that China would be building a socialist market economy. Long said there are two criteria for measuring the development of a country or region. One is the people's livelihood. Do people actually receive the benefits from economic growth? The other is social equality. Can the gap between rich and poor, as well as the regional disparity be narrowed? "The socialist market economy values people's livelihood and social fairness," he added.

Over the past decades, hundreds of millions of people have been lifted out of absolute poverty in China through targeted measures, demonstrating one of the largest undertakings in the forging of a socialist market economy, Long said.

"When China agreed to adopt a market economy, we also insisted on being recognized as a 'developing country'," he said, stressing that the market of a developing country must open itself in accordance with the progress and status quo.

"Before and after the WTO entry, there was some controversy in China, such as whether the opening up of the market would negatively impact some weaker industries such as food, fertilizers and automobiles. Facts have verified that the positive effect far exceeded the negative ones people were dreading," Huo said.

The external pressure brought on by opening the doors has stimulated the vitality of all walks of life and enhanced China's competitiveness, Yi Xiaozhun, former Chinese Vice Minister of Commerce and Deputy Director General of the WTO, echoed with Huo. For instance, China's service sectors, especially those that have been opened up, have made significant progress over the past decades, Yi said.

China's exports have increased sevenfold, while its imports increased nearly six times since the country's WTO accession. This means that China has made important contributions to the world as a pillar and engine of global economic growth, Yi added.

The country has been favored by many multinational companies. For instance, half of the profits General Motors gains annually stem from the Chinese market. U.S. computer manufacturer Dell has around 700 factories worldwide, around half of which are located in China.

China overtook the U.S. to become the largest recipient of foreign direct investment in 2020 after remaining the second largest one for years. The service sectors are becoming a new destination, with their share of foreign-invested enterprises surpassing that in the manufacturing industries since 2008 and reaching 73.7 percent of national total in 2018.

Give and take

China has fully delivered on its WTO membership commitments, revised its laws and regulations, and created an economic and trade system that meets WTO rules as planned, Sun Zhenyu, China's first ambassador to the WTO, said in an interview with Economic Information Daily.

The average tariff rate had been reduced from 15.3 percent in 2001 to the pledged 9.8 percent in 2010. By 2020, it had further dropped to 7.4 percent. Former WTO Director General Pascal Lamy gave China an A+ rating for meeting its commitments, he added.

During his mission to Geneva, Sun witnessed an increase in China's role in the WTO. He said China participated in all major WTO negotiations after the Fifth WTO Ministerial Conference in Cancun, Mexico, in 2003.

He recalled how China's WTO accession came at the time when the Doha Round of WTO talks began in November 2001, during which China cooperated with dozens of developing countries on agriculture, intellectual property rights and public health negotiations.

China has also made positive contributions to the WTO Trade Facilitation Agreement and the Information Technology Agreement expansion negotiations, he said.

In recent years, in addition to implementing the specific WTO commitments on trade in services, the Chinese Government has ventured beyond the initial goals, continuing to reduce restrictions on foreign investment in China.

China's decision has created an open and level playing field. According to the World Bank's Doing Business Report 2020, China ranked 31st in the world in terms of business environment, up 15 places from the previous year, and was one of the 10 economies with the most improved business environment for a second consecutive year.

Yi foresees a future of great potential for China. He believes that as China continues to wider open its door to the outside world, relax market access in the service sectors, and participate in the multilateral rule-making within the WTO framework, it will be able to seize new opportunities in the globalization of the service sectors and usher in a new period of high-quality development.

However, as unilateralism and anti-globalization trends have had a great impact on the multilateral trading system in recent years, Sun said the reform of the WTO under the new international circumstances has no time to wait in the face of the global economic slowdown triggered by the COVID-19 pandemic.

Regarding the restoration of WTO functions, Sun believes that the reinstatement of the Appellate Body, a standing body of seven persons that hears appeals from reports issued by panels in disputes brought on by WTO members, should feature high on the agenda. The Donald Trump administration of the U.S. paralyzed the WTO panel in December 2019, when it blocked all new appointments.

Sun also suggested that the resumption of WTO trade negotiations should not be neglected. In response to the pandemic, he said the WTO could learn from the successful experience of the negotiations on intellectual property protection and public health in 2003, and seek concrete results in waiving intellectual property rights on COVID-19 vaccines. 

(Print Edition Title: Twenty Years On)

Copyedited by Elsbeth van Paridon

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