Six years after joining the WTO, the nature of trade relations with China is changing very rapidly so be careful how you invest in this massive market – you could get burnt.
By John O’Hanlon
Looking back, September 2001 was an eventful month. The events of the 11th overshadowed an important step in China’s relationship with the rest of the world when on the 17th, just six days after the devastation of the World Trade Centre in New York, the world’s most populous nation finally agreed to join the World Trade Organisation (WTO) after 15 years of wrangling.
On that day it was agreed that:
China will provide non-discriminatory treatment to all WTO Members. All foreign individuals and enterprises, including those not invested or registered in China, will be accorded treatment no less favourable than that accorded to enterprises in China with respect to the right to trade.
China will eliminate dual pricing practices as well as differences in treatment accorded to goods produced for sale in China in comparison to those produced for export.
Price controls will not be used for purposes of affording protection to domestic industries or services providers.
The WTO Agreement will be implemented by China in an effective and uniform manner by revising its existing domestic laws and enacting new legislation fully in compliance with the WTO Agreement.
Within three years of accession all enterprises will have the right to import and export all goods and trade them throughout the customs territory with limited exceptions. China will not maintain or introduce any export subsidies on agricultural products.
As Long Yongtu, Head of the Chinese Delegation told the WTO working party that day: “The 15-year negotiation is indeed a long process. However, it is only a blink of eyes comparing with the 5000-year history of China….
Looking back over the history of the last 15 years, we are pleased to see that we have finally arrived at the end point today after overcoming numerous difficulties and frustrations. But this is only the end of a beginning of a long historical process. As we have successfully ended this important stage of beginning, we are more confident that we can achieve even greater success in the long process ahead us.”
The long-term view
Incidentally China’s entry to the WTO was concelebrated with the 30th anniversary of China establishing full diplomatic relations with the UK in 1972. The United States followed in 1978, but I can recall, while serving in the UK diplomatic service in Warsaw in the mid-1960s that the Polish capital was the only place in the world where the US and China were both represented, and consequently the only place where they could (and did) sit down together to discuss trade, strategy and the meaning of life.
That’s a curio, but it’s a reminder of how much things have changed. Now trading relations are positively thriving, but a scintilla of suspicion remains. We are only slowly recovering from the fear that China would replace the Soviet Union as a monolithic and hostile power and …
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