Top Biz News
WTO ties rev up nation's growth
By Andrew Moody and Ding Qingfen (China Daily)
Updated: 2009-11-02 08:40
"The government seldom did this after China first joined the WTO. Now it is more active in responding to the unreasonable actions by leveraging WTO rules and regulations," Fu said.
Some feel that if China is to make greater use of the law and respond to trade actions, it should also address problems in its own backyard.
The European Chamber of Commerce said in September that despite China being in the WTO, European companies were still denied complete access to the China market.
It also said in its annual position paper there was an "increasing threat of protectionism" coming from the Chinese government.
Joerg Wuttke, president of the European Chamber of Commerce in China, is particularly concerned about access given to major European automobile manufacturers.
"To operate in China, they are still forced to establish 50/50 joint ventures, just as they were 30 years ago when China implemented the reform and opening-up policy," Wuttke said.
Some believe, however, that when the climate is right, the Chinese government will begin to make concessions in this area
Li Xiaogang, director of the Foreign Investment & Research Center at the Shanghai Academy of Social Sciences, said changes might take place soon.
"Actually, China made quite a concession when it allowed foreign auto companies to enter a few decades ago. However, the time is ripe now for the government to consider making changes," Li said.
Market status
Pivotal to whether it does or not could rest on China being finally allowed "market economy status", which has been central to a lot of recent dumping disputes and is at the heart of the country's relationship with the WTO.
At present, China is not going to be allowed automatic market economy (MES) status until 2016, 15 years after joining the WTO.
So currently, any trade dispute with China is not dealt with as it would be against any other major country.
If a country accuses the United States, which has MES status, of dumping, the test used is whether it is trying to sell a particular product at less than the price it sells it for in the United States.
China has to meet different criteria because of its non-MES status. The price of what it is trying to sell goods for in overseas markets is not compared to domestic prices, but with those of a proxy country that has full status. Comparisons can be made with Brazil or Mexico, but often the US is used despite prices in the US often being well above those in China.
Zhou Shijian, standing counselor at the China Society for World Trade Organization Studies, said this is a huge problem for China in the current trade war environment.
"China will continue to be the major target of trade protectionist measures when the problem of market economy status cannot be dealt with," he said.
Trading partners still demand greater clarity on the part of China in terms of its actions.
The Chinese government's decision in March to block Coca-Cola's attempt to acquire Huiyuan Juice Group, China's largest fruit juice maker, is seen by some as a case in point.
It was rejected under anti-monopoly legislation on the grounds it would have given the US soft drink giant a dominant market position.
The European Chamber of Commerce said in its recent paper, however, that there was "not enough explanation and analysis for important decisions and key cases" such as this one.
In Geneva, the headquarters of the WTO, China is increasingly influential. It has a whole army of meticulously prepared negotiators ready to attend any meeting fully briefed. As such, it is in a better position than many countries to shape policy.
Free trade areas
China has also set up a number of free trade areas with neighboring nations under the framework of the WTO such as the China-ASEAN (Association of Southeast Asian Nations). The effect of this is to create invaluable buffers with free trade zones around China.
Many are now looking to China to push forward the Doha round of talks, which were suspended in June last year after the United States and India could not reach consensus on agriculture.
"China is gaining more speaking power in the Doha round talks," said E. Defeng, deputy director general of the Department of WTO Affairs with the Ministry of Commerce.
He said that WTO pressure on China to reform its banking system is one of the reasons why China did not suffer the same sort of banking crisis that has afflicted banks in the West.
"Chinese banks went through a thorough restructuring process in the past few years. It means that China banks were in an advantageous position when the financial crisis finally hit," Wu said.
Potential trade wars might loom, but after eight years in the WTO, China is arguably in a stronger position than ever before. It has been instrumental in negotiating many of the WTO's current rules and has more to gain in seeing them adhered to.
Jian Sun at A.T. Kearney said the interests of China are now very much bound up in its membership of the WTO.
