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The Implications of China's Accession to the World Trade Organization

Abstract

China formally applied to rejoin the GATT in 1986. After more than ten years of negotiation, however, China’s entry into WTO seems as remote as ever. This unprecedented long application time in the GATT/WTO history, coupled with the uniqueness of the China case and the rapid growth of the Chinese economy, has made this subject one of the heated topics in the IPE field. Many works have addressed the rules and principles of WTO and status quo of China’s trade regime to imply a gap in between. By doing so, these works emphasize the insufficiency of China’s progresses on reductions of tariff and non-tariff barriers, lack of transparency in its laws and regulations, and the lack of national treatment of foreign companies. These are the major issues on the negotiation table; however, little work has been done the goal of the Chinese economy, which is the reason behind its economic and trade policies and its reform on the regime. To some degree it will have deeper impacts on its policies than the nature of its economy does. Because if China is simply during the transition from non-market economy to market economy, then we can make sure that economic liberation is under way. However, if today China’s situation is a combination of a transitional economy and a nationalist economy, then we have to reconsider the whole framework.

By emphasizing the uniqueness of the China case as both a transitional economy and a nationalistic economy, I shall draw two main propositions from the following analysis. First, neither China nor WTO are ready for China’s accession. Second, the WTO membership is crucial for China’s further openness, but in the meantime, further liberalization is required of China, especially in the area where the role of the state is to be minimized. In the following sections of the paper, I shall first examine the current incompatibility between WTO, an important international economic institution, and China, a complicated unit to be incorporated. I shall then explore the uniqueness of the China case in an attempt to answer the question why neither side is ready for China’s accession at this time. In the end, I shall provide certain policy recommendations for both China and WTO on this matter.

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