WTO performance called 'outstanding'
(China Daily)
Updated: 2004-11-17 10:50

China entered the World Trade Organization (WTO) on December 11, 2001.

With the third anniversary of its membership approaching, it is time to review what China has experienced over the past few years and what kind of challenges are waiting for the world's fastest-growing economy. This is the beginning of a series of China Daily WTO specials.

By Dai Yan

When visiting Beijing last week, Supachai Panitchpakdi, director-general of the WTO, said the nation's performance since its WTO accession is outstanding.

"I would give China's performance a top score," he said.

The high accolades from the WTO chief are a positive message as China closes in on its third WTO anniversary.

But unlike the past two anniversaries, the Chinese public has shown less interest in past achievements, because they can feel the effect of its commitments everywhere.

One indicator is China's soaring imports which reached US$457.75 billion in the first 10 months of this year, up 37.2 per cent compared with the same period in 2003.

The next two months will undoubtedly push the annual total to US$500 billion, doubling the figure for 2001.

China's substantial tariff cuts since joining are partly responsible for the explosive growth of imports.

China's tariffs average has been reduced to 10.6 per cent from 15.6 per cent in 2000.

Its average duties on industrial products have also been cut from 14.7 per cent before WTO entry to 9.3 per cent this year.

The average tariff on farm products has been lowered to 15.6 per cent, far below the 54 per cent that was evident before entry and the average world rate of 62 per cent.

In terms of non-tariff measures, China has eliminated the need for import licences and quotas on more than 400 tariffed goods.

The service sectors continued their steady opening as the China Banking Regulatory Commission approved three automotive companies to set up the nation's first three foreign-invested, non-bank auto finance companies.

Also, the China Insurance Regulatory Commission opened five cities to foreign non-life insurance companies.

The steady stream of new laws and regulations across various trade and investment sectors also fulfilled WTO commitments.

The Ministry of Commerce, for instance, promulgated the Regulations on Foreign-Invested Companies of an Investment Nature in February this year.

And the newly revised Foreign Trade Law that took effect on July 1 means companies and individuals now only have to register with authorities for import and export rights, rather than having to wait for approval.

"We firmly believe that engaging China in the rules-based trading system has resulted in important progress in key areas, particularly in tariff reduction, revising existing laws and drafting, and passing new ones to comply with its WTO requirements," said Jim Gradoville, chairman of the American Chamber of Commerce in China, which assesses China's WTO implementation process each year.

The most impressive change for US businesses is that they are now asked for their input, from time to time, when regulations are being drafted that will have an impact on their respective industries, said Gradoville.

In December last year, the National People's Congress called for comments on the revised Foreign Trade Law. China's Supreme People's Court asked for views on draft provisions regarding foreign-related arbitration.

The sweeping changes in China's economic and social arenas embody the biggest change that has been created by WTO membership, according to Zhang Hanlin, a WTO expert from the University of International Business and Economics.

Membership has prompted new habits from Chinese officials, businessmen and other citizens, who know to ask themselves: "Is what I'm doing in line with WTO rules," he said.

Motivated by the spirit of the WTO, China is aggressively integrating itself into the trading bloc, Zhang said.

For example, China has opened some sectors much earlier than required, he said.

In April, the Ministry of Commerce issued the Administrative Measure on Foreign Investment in Commercial Areas, which was almost six month ahead of the WTO timetable.

The rule abolishes joint-venture requirements and ends restrictions on the location and number of foreign-funded stores.

China also played a role in bridging the new round of WTO negotiations as developing and developed countries were split over agricultural issues during the Doha Round of talks, Zhang said.

Chinese officials and company leaders have started using WTO rules to their advantage, Zhang said.

Since its entry, the country, the largest victim of anti-dumping cases, has initiated about 70 anti-dumping investigations.

Chinese officials also met the first WTO complaint this year after the United States filed a grievance over China's value-added tax policy on semiconductors.

With the ever-increasing integration, Zhang says he believes Chinese officials will improve their skills to protect local products that are being treated unreasonably in other countries.

For example, the Bush administration decided to consider a safeguard measure on Chinese-made pants and shirts, which were still under quota limits.

It was a violation of WTO rules but started a tide of textile protectionism.

The violation occurred because China promised a safeguard measure that allowed WTO members to cap its imports if the free flow disrupted their markets. However, Chinese pants and shirts were still subject to quotas.

The European Union has developed, in recent years, a large number of technical regulations and standards.

Part of the regulations have created over-strict requirements, which have actually become trade barriers for developing countries, Zhang said.

Chinese industries have shown great concerns about restrictions being placed on the marketing and use of certain azocolourants, which are used to make clothes, and a number of old makes of electrical equipment.

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