|
“International economic cooperation has brought about this defining
moment in the history of the multilateral trading system,” said Mike
Moore, WTO Director-General, at the conclusion of the meeting of the
Working Party on China's Accession. “With China's membership, the
WTO will take a major step towards becoming a truly world
organization. The near-universal acceptance of its rules-based system
will serve a pivotal rôle in underpinning global economic
cooperation.”
Under
the chairmanship of Ambassador Pierre-Louis Girard of Switzerland, the
Working Party concluded almost 15 years of negotiations with China and
agreed to forward some 900 pages of legal text for formal acceptance
by the 142 Member Governments of the WTO. Thirty days after China
notifies its acceptance of the agreement, China legally becomes a
member of the WTO.
As
a result of the negotiations, China has agreed to undertake a series
of important commitments to open and liberalize its regime in order to
better integrate in the world economy and offer a more predictable
environment for trade and foreign investment in accordance with WTO
rules.
Among
some of the commitments undertaken by China are the following:
-
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.
While
China will reserve the right of exclusive state trading for products
such as cereals, tobacco, fuels and minerals and maintain some
restrictions on transportation and distribution of goods inside the
country, many of the restrictions that foreign companies have at
present in China will be eliminated or considerably eased after a
3-year phase-out period. In other areas, like the protection of
intellectual property rights, China will implement the TRIPS
(Trade-related Aspects of Intellectual Property Rights) Agreement in
full from the date of accession.
During
a 12-year period starting from the date of accession there will be a
special Transitional Safeguard Mechanism in cases where imports of
products of Chinese origin cause or threaten to cause market
disruption to the domestic producers of other WTO members.
On
the other hand, prohibitions, quantitative restrictions or other
measures maintained against imports from China in a manner
inconsistent with the WTO Agreement would be phased out or otherwise
dealt with in accordance with mutually agreed terms and timetables
specified in an annex to the Protocol of Accession.
1. Goods
The
conclusion of the negotiations for market access on goods represents a
commitment undertaken by China to gradually eliminate trade barriers
and expand market access to goods from foreign countries. China has
bound all tariffs for imported goods. After implementing all the
commitments made, China's average bound tariff level will decrease to
15% for agricultural products. The range is from 0 to 65%, with the
higher rates applied to cereals. For industrial goods the average
bound tariff level will go down to 8.9% with a range from 0 to 47%,
with the highest rates applied to photographic film and automobiles
and related products. Some tariffs will be eliminated and others
reduced mostly by 2004 but in no case later than 2010.
Textiles
Upon
accession China will become a party to the Agreement on Textiles and
Clothing and will be subject to its rights and obligations. As for all
WTO members, quotas on textiles will end at 31 December 2004, but
there will be a safeguard mechanism in place until the end of 2008
permitting WTO Member Governments to take action to curb imports in
case of market disruptions caused by Chinese exports of textile
products.
Agriculture
China
agreed to limit its subsidies for agricultural production to 8.5% of
the value of farm output (per Article 6.4 of the Agriculture
Agreement). China also agreed to apply the same limit to subsidies
covered by Article 6.2 of the Agriculture Agreement.
2.
Services
Telecoms
Upon
China's accession, foreign service suppliers will be permitted to
establish joint venture enterprises, without quantitative
restrictions, and provide services in several cities. Foreign
investment in the joint venture shall be no more than 25%. Within one
year of accession, the areas will be expanded to include services in
other cities and foreign investment shall be no more than 35%. Within
three years of accession, foreign investment shall be no more than
49%. Within five years of accession, there will be no geographic
restrictions.
Banking
Upon
accession, foreign financial institutions will be permitted to provide
services in China without client restrictions for foreign currency
business. For local currency business, within two years of accession,
foreign financial institutions will be permitted to provide services
to Chinese enterprises. Within five years of accession, foreign
financial institutions will be permitted to provide services to all
Chinese clients.
Insurance
Foreign
non-life insurers will be permitted to establish as a branch or as a
joint venture with 51% foreign ownership. Within two years of China's
accession, foreign non-life insurers will be permitted to establish as
a wholly-owned subsidiary. Upon accession, foreign life insurers will
be permitted 50% foreign ownership in a joint venture with the partner
of their choice. For large scale commercial risks, reinsurance and
international marine, aviation and transport insurance and
reinsurance, upon accession, joint ventures with foreign equity of no
more than 50% will be permitted; within three years of China's
accession, foreign equity share shall be increased to 51%; within five
years of China's accession, wholly foreign-owned subsidiaries will be
permitted.
Notes
to Editors: back
to top
1.
History of China's accession to the WTO
China
was one of the 23 original signatories of the General Agreement on
Tariffs and Trade (GATT) in 1948. After China's revolution in 1949,
the government in Taiwan announced that China would leave the GATT
system. Although the government in Beijing never recognized this
withdrawal decision, nearly 40 years later, in 1986, China notified
the GATT of its wish to resume its status as a GATT contracting party.
China
is one of 30 governments currently seeking accession to the World
Trade Organization. Like many of the countries now applying for WTO
membership, China is in the process of implementing economic reforms
and transforming its economy into one which is more market-based.
China's accession process to the WTO has been guided by a Working
Party whose membership consists of all interested WTO member
governments. Initially, the Working Party on China's status was
established under GATT in 1987 and concerned only China's trade regime
for goods. In 1995, it was converted to a WTO Working Party and its
scope was broadened to include trade in services, new rules on
non-tariff measures and rules relating to intellectual property
rights.
A
substantial part of China's accession process involved bilateral
negotiations between China and WTO members. These were usually
conducted privately, either at the WTO in Geneva or in capitals. Other
meetings concern either informal or formal sessions of the Working
Party. While several areas of China's trade policies, i.e. schedules
of market-access commitments in goods and specific commitments on
services, have been the focus of bilateral and plurilateral
negotiations, it was the responsibility of the Working Party to
maintain an overview of how the negotiations were progressing and to
ensure that all aspects of China's trade policies were addressed.
Ambassador
Pierre-Louis Girard, a senior Swiss trade official, served as the
Chairman of the Working Party. The Chairman, member governments and
China were aided in their work by the WTO Secretariat which provided
administrative and legal assistance as necessary.
The
Working Party had two tasks: to compile a report based on its
deliberations; and to complete a Protocol of Accession. It is not
unusual that WTO accession working parties attach a number of annexes
to the protocol. The annexes are an integral part of the protocol, are
legally binding and address specific issues related to the applicant's
trade regime. As with all other accessions, the annexes, which have
been a focus of the negotiations, are meant to provide WTO members
with guarantees that the reforms or other transitional measures
promised by the applicant will actually be implemented. In other
words, they serve as a kind of a negotiated timetable for bringing the
applicant's trade regime into full conformity with the WTO's rules and
obligations.
Accession
processes vary in length and can take several years to complete, much
depends on the readiness of the applicant country to meet not only the
rules and obligations of the WTO's market-economy principles, and its
policies of pro-competition and non-discrimination, but also the
market-access conditions for goods and services which the applicant
country grants to other WTO Members. Because the Working Party makes
decisions by consensus, all WTO members and the country seeking
membership must be in agreement that their individual concerns have
been met and that all outstanding issues have been resolved in the
course of their deliberations.
2. The Chinese Taipei GATT/WTO relationship
In
early 1965 Taiwan requested and was granted observer status at
sessions of the General Agreement on Tariffs and Trade (GATT 1947). In
1971, this status was removed, following a decision by the UN General
Assembly that recognized the People's Republic as the only legitimate
government of China.
At
its September 1992 meeting, the GATT's Council of Representatives
decided to establish a separate working party to examine the request
for accession of the Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu (“Chinese Taipei”). The Chairman said he had
carried out extensive consultations on the subject of establishing a
working party. He noted that all contracting parties had acknowledged
the view of the People's Republic of China (PRC) that Chinese Taipei,
as a separate customs territory, should not accede to the GATT before
the PRC itself.
3. Hong Kong and China and the WTO
Hong
Kong, then a British Crown Colony became contracting party of GATT on
23 April 1986. On 1 July 1997 the People's Republic of China,
resumed the exercise of sovereignty over Hong Kong. From that date,
Hong Kong became a Special Administrative Region of China. As such it
would, inter alia, retain the status of a separate customs territory,
and would continue to decide its economic and trade policies on its
own and could, also on its own, using the name “Hong Kong, China”,
maintain and develop relations, and conclude and implement agreements,
with States, regions and relevant international organizations in the
economic, trade and other fields. Subsequently, Hong Kong, as a
contracting party of GATT, was a full participant in the Uruguay Round
and assumed all of the corresponding rights and obligations through
formally accepting the Final Act Embodying the Results of the Uruguay
Round of Multilateral Trade Negotiations, which was drawn up at
Marrakesh on 15 April 1994. By virtue of Article XI of the Marrakesh
Agreement Establishing the World Trade Organization, Hong Kong became
an original Member of the WTO. In accordance with the arrangements
described above, Hong Kong will continue to be a WTO Member using the
name of “Hong Kong, China”.
4. Macau and China and the WTO
The
People's Republic of China resumed the exercise of sovereignty over
Macau, a former Portuguese colony, on 20 December 1999. On that day,
Macau became a Special Administrative Region of China and as such,
inter alia, continues to maintain its social and economic system and
retained its economic and trade policies, on its own, using the name
of “Macau, China”, maintain and develop relations, and conclude
and implement agreements with all States, regions and relevant
international organizations in the economic, trade and other fields.
The People's Republic of China said at the time that the Macau Special
Administrative Region would continue to participate in relevant
international organizations and international trade agreements such as
the General Agreement on Tariffs and Trade.
Macau
became a contracting party of the General Agreement on 11 January 1991
and was a founding member of WTO, which was established on 1 January
1995. On 20 December 1999 Macau continued to be a member of the WTO
using the name of “Macau, China”.
5. China in World Trade
In
2000 China was the 7th leading exporter and 8th largest importer of
merchandise trade - exports: 249.2 billion dollars (3.9% share),
imports: 225.1 billion dollars (3.4% share). For commercial services
China was the 12th leading exporter and the 10th largest importer -
exports: 29.7 billion dollars (2.1% share), imports: 34.8 billion
dollars (2.5% share).
|
