Are the WTO procedures for admitting new members reasonable: a case study on China's entry into WTO.
INTRODUCTION
It was an exhilarating and memorable moment yesterday when the exhausted but joyful Chinese and American negotiators shook their hands during the signatory ceremony of the Sino-US agreement on China?s entry into the World Trade Organization (WTO). This agreement paved the way for China to enter WTO in the very near future after it applied to rejoin for thirteen years. Currently, there are a total of 134 members and there are over thirty countries and separate customs territories which are negotiating to join the WTO apart from China. Each of them has to go through a long and complicated accession procedure in order to become an official member. In the following, I will firstly try to explain the accession procedure to WTO, then I will analyze the various stages of the procedure and discuss whether it is reasonable and if not, why.
HOW TO JOIN THE WTO : THE ACCESSION PROCEDURE
One of the most important tasks the WTO faces in pursuit of a truly fair and transparent world trading system is the integration of non-members. According to Article XII of the Marrakesh Agreement Establishing the World Trade Organization, which provides for accession, states:
?Any state or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to the WTO on terms to be agreed between such state or separate customs territory and the members of the WTO.?
The above stipulation indicates that the terms are to be determined and agreed by a series of negotiations between the applicants and members of the WTO. Broadly speaking, the entire procedure consists of five stages.
Firstly, the applicant government has to make a communication to the director-general, which will then be circulated among all the members. Any members that are particularly interested in the accession of that government may join the Working Party established to review the application after the request has been approved at the next General Council meeting.
Then the government submits a memorandum which is examined by the Working Party, describing all aspects of its trade and economic policy that relate to the WTO agreements. The areas it covers include policies affecting trade in goods or trade in services, agricultural and industrial policies, policies regarding intellectual property, et cetera. The Working Party members may submit questions or comments for response by the applicant government and they will meet time to time to further negotiate details of law, regulations, taxation systems, tariff and non-tariff barriers, information on regional trading agreements and other issues that might affect international trade.
When the multilateral talks are still being carried out and sufficient progress has been made, bilateral negotiations begin, with the applicant and each Working Party member negotiating specific market access commitments regarding goods and services, tariffs rates and other policies. The talks, which usually last very long will continue until all the members of the Working Party agree that necessary changes have been made to bring the applicant?s foreign trade regime into compliance with the WTO. Though the negotiations are carried out bilaterally, the commitments made are to be applied to all the WTO members under its Most Favourite Nation (MFN) obligation.
After all the multilateral and bilateral negotiations have been completed, the legally binding terms and conditions for accession will be drawn up in three separate documents : the Working Party Report, the Protocol and the ?Schedules?. The first two set out the terms of the multilateral negotiations and include specific commitments from the applicant on some particular issues that are not adequately addressed in the WTO Agreement. The market access schedules cover agricultural, industrial goods, and services commitments resulting from the bilateral negotiations with each Working Party member focusing on goods and services of particular interest. These commitments, along with other tariff and non-tariff commitments will be incorporated into the Protocol upon the approval of the Working Party.
Eventually, the final package of documents will be sent to the General Council or the Ministerial Conference for approval. If a two-thirds majority of WTO members vote in favour, the applicant will be able to sign the Protocol and it will enter into force thirty days after ratification of the applicant government.
ANALYSIS AND DISCUSSION : USING CHINA AS AN EXAMPLE
Article XII of the Marrakesh Agreement Establishing the World Trade Organization does not set a deadline for the completion of the accession procedure. In practice, applicant governments normally take a couple of years to successfully join the Organization, and in some peculiar cases, for example China, which is still outside the WTO after negotiating for over thirteen years. I will switch my focus to the accession of China because it has attracted the most attention among all applicants for accession to the WTO and its close relationship with the HKSAR. A question is always raised, ?How can the WTO claim to govern the world trade while more than one-fifth of the world?s population, the second largest national economy, and one of the top ten trading nations, is excluded from its ranks??
China applied to resume the membership of GATT in 1986 and it was when the ?talkathon? began. In fact, the bilateral negotiations with the Working Party members take up considerable amount of time because China has to negotiate and reach agreement with each of the 36 Working Party members and each of them has their own interest. These negotiations are time-consuming and technically complex. It would be preferable if the number of WTO members participating in the Working Party can be limited or a deadline can be set for the bilateral negotiations. Sometimes, a certain country would just want to stop or delay an applicant from joining the WTO by raising some extortionate or unjust conditions and requirements. In fact, the bilateral negotiations are always dominated by several superpowers in the WTO, especially the United States. They are harsh to the developing countries, demanding some impractical concessions that are impossible to be accomplished or will severely harm the local economy once were made - greedy and never say enough. Some of the claims are discriminative. The best example would be in the negotiation of textile products between the United States and China. Until the recent agreement that was reached between the two countries, the US insisted that the quota restriction of import of Chinese textile products to the US would only be withdrawn completely by 2010. But according to the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations and the Agreement on Textiles and Clothing, all the restrictions must be withdrawn before 2005. Therefore, what the US asked for violated the agreement and it was clearly discriminatory towards China. That is one of the main obstacles to the Sino-US negotiation in the past ten years.
Furthermore, the US always mixed up political factors with trade issues. From June 1989 to February 1992, the bilateral as well as multilateral negotiations all came to a halt due to the economic sanctions imposed by the US unilaterally. Also it is American usual practice to relate human rights, arms trading and other non-trade issues to the negotiations. It is definitely contrary to the objective of the WTO, which is to promote a global fair and harmonious trading system. It is not difficult to see that the United States is biased against China in the negotiations. They are afraid that the development of the latter will accelerate after integrated to the WTO and so their position as the world?s superpower will be harmed.
An additional complication to the accession of China to the WTO is whether China will be entitled to ?developing country? status as a WTO member. As a matter of fact, this status is self-designated by WTO members based on factors such as relative GDP per capita. Developing country status entitles that particular member to receive ?special and differential treatment? so that it can take advantage of transition periods for implementing WTO Agreement obligations and they can expect lower level of concessions that is expected to make in negotiations. There should be no dispute that China is a developing country but the United States unreasonably insisted that China could only join the WTO as a developed country until they signed the bilateral agreement with China. Any attempt to diminish a member?s rights under the WTO by claiming a higher ?entrance fee? is unjust and cannot be accepted.
In fact, all the aforesaid unreasonableness or unfairness can be explained by the unbalanced power manipulated by the well-developed countries in the WTO and the accession procedure. Currently, most applicants to the WTO are poor or developing countries. The Working Party members, which are mostly developed countries have their own interests and would try their best to ask for high standards and conditions favourable to themselves but at the same time painful to the applicant governments. Some unfair measures are often used to pursue for their individual political purposes. For instance, so far the Congress of the United States has not revoked the 1974 Jackson-Vanik Amendment to the U.S. Trade Act requiring the annual renewal of China?s MFN status, which clearly violates the MFN principle. They are using it as a key leverage against China to improve human rights.
CONCLUSION
It is a great news that a win-win agreement had finally been reached between US and China. It is generally expected that China will be able to complete the bilateral negotiations with the 36 Working Party members and become the official member of the ?Club? in spring next year. For the remaining negotiating applicants or non-members that would like to join the WTO, they have to follow the rules of the game no matter if the accession procedure is reasonable or not. Will there be any change to the procedure or the current US-dominated situation in the WTO? Let us wait and see!
Total : 1653 words (excluding footnotes and bibliography)
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