Sign up for the monthly ChinaPower Newsletter, which highlights our new and updated content, featured events, and publications. the Chinese government of providing subsidies that have led to overcapacity and The WTO is a rules-based, membership-driven organization with 153 member countries. "How Influential is China in the World Trade Organization?" In reaction to the 1989 Tiananmen Square protests' suppression, the Bush I administration and Congress imposed administrative and legal constraints on investment, exports, and other trade relations with China. Prior to joining the WTO, China had long been a member of other major international organizations, including the United Nations since 1971 and the World Bank and International Monetary Fund since 1980.2 Nonetheless, joining the WTO proved a prolonged and challenging process for Beijing. [4], By 1984, the United States had become China's third-largest trading partner, and China became America's 14th largest. Updated August 25, 2020. anti-dumping and safeguard measures, which aim to protect their domestic These “Article XII members” have typically been required to make more extensive commitments than original members that joined through GATT. China's admission was "an enormous multilateral achievement" that marked a clear commitment towards multilateralism. All final rulings of the DSS are binding and mandatory.1. complaint in March 2017 claiming that China had retaliated against South India, for instance, was involved in 21 disputes in its first five years of WTO membership, while Russia was involved in 11 cases. Unlike many other economies, China’s membership was not grandfathered in, as was the case with “original members” that joined in 1995 through their membership in the WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT). • Hong Kong had been admitted as a WTO member on 1 January 1995, before Hong Kong was handed over to China in 1997. Winning a trade dispute is costly and requires significant technical and legal expertise, which often compels less-developed members to forego filing complaints. Its accession is particularly note-worthy because although China was a part of the General Agreement on Tariffs (GATT) its readmission to the multi-lateral trading system took 15 years from its submission in 1986 to its accession in 2001. Since WTO rules require a quorum of at least three judges on the Appellate Body, it now stands unable to issue rulings, effectively bringing WTO dispute settlement to a standstill. In November 2019, the WTO authorized China to levy tariffs on $3.6 billion of US goods. By 2002, this rate dropped to 7.7 percent. & Industry for National Defense, CPC Central Commission for Discipline Inspection, Central Leading Group for Inspection Work, Commission for Discipline Inspection of the Central Military Commission, Independent Commission Against Corruption (Hong Kong), Judicial Administrative Organs People's Police, Office for Safeguarding National Security of the CPG in the HKSAR, Central Leading Group for Propaganda and Ideology, Central Guidance Commission on Building Spiritual Civilization, Central Publicity (Propaganda) Department, National Press and Publication Administration, National Radio and Television Administration, Central Leading Group on Hong Kong and Macau Affairs, Association for Relations Across the Taiwan Straits, International Development Cooperation Agency, International Military Cooperation Office, State Administration of Foreign Experts Affairs, United States bombing of the Chinese embassy in Belgrade, "Accession of the People's Republic of China - Decision of 10 November 2001", "The Political and Social Implications of China's Accession to the WTO", "States Monitoring States: The United States, Australia, and China's Human Rights, 1990-2001", "China's Trade Relations with the United States in Perspective", "Money talks: An enormous multilateral achievement", https://en.wikipedia.org/w/index.php?title=China_and_the_World_Trade_Organization&oldid=993191388, Wikipedia articles needing clarification from October 2020, Creative Commons Attribution-ShareAlike License, This page was last edited on 9 December 2020, at 07:41. It was a long process that culminated in an agreement on accession terms with the United States in 1999, and entry into the WTO in 2001. China Power. They can bring a dispute against another member as a complainant, or be the subject of a complaint as a respondent. The US alone has filed 52.2 percent of all complaints against China, which itself has filed 76 percent of its 21 disputes against the US. In May 2019, China submitted its own WTO reform proposal that (among other points) criticized a “certain member” (the US) for blocking appointments to the WTO’s Appellate Body. Yet, Beijing has not instituted deep, systematic reforms and its mixed compliance with WTO dispute rulings has at times challenged the WTO’s underlying norms. The organisation demanded that the US bring its tariffs into conformity with the country's obligations as a member of the WTO. typically target their The dispute settlement system (DSS) is the WTO’s legal mechanism for resolving trade conflicts between members. When China finally joined the WTO in 2001 after years of knocking on the door, it made huge concessions and changed thousands of domestic laws to conform to global trade standards. | Privacy Policy. China responded by teaming up with India and seven other developing members to refute the US proposal and voice support for the WTO’s practice of allowing members to self-designate their status. Today, thanks largely to its WTO membership, China is the leading trading nation in the world, and possesses a technologically sophisticated $14 trillion economy. Issues with the Appellate Body are part of broader disagreements among WTO members over how to address underlying problems within the organization. heightened tensions within the WTO. As part of China’s accession, the United States had the right to apply a special China safeguard if imports from China were found to be disrupting U.S. markets. © 2020 by the Center for Strategic and International Studies. Following government crackdowns on the Tiananmen Square protests in 1989, the United States and other WTO members working on China’s accession suspended negotiations with China until 1992. However, Chinese-American trade was still hindered by the Jackson–Vanik amendment of 1974, which made trade with the United States contingent on certain human rights metrics. During its arduous, 15-year accession process, China made extensive commitments to reform domestically and reduce trade barriers. De Facto Technology Transfer Requirements. industries from lower-priced foreign goods. ChinaPower provides an in-depth understanding of the evolving nature of Chinese power relative to other countries. China is using the WTO processes and there is every expectation that China will abide by the decisions. (This is known as Sec. To mark the tenth anniversary of China’s WTO entry, WTO Director-General Pascal Lamy recently discussed China’s role in the WTO with CBR Editor Paula M. Miller. In contrast, the United States constantly ignores the global rules-based order and actively sabotages the institutions of that order. China’s accession to the World Trade Organization (WTO) in December 2001 was heralded by the international community as a victory for free trade and economic liberalization. [3], Formal diplomatic relations between the United States and the People's Republic of China were not established until 1979, and even afterwards, trade relations were hampered by the high tariff rates of the Smoot–Hawley Tariff Act of 1930. As of December 2017, the WTO has 164 members. The bulk of China’s 65 disputes – 81.5 percent – have been with the US (39) and EU (14). Bill Clinton, U.S. President In the spring of 2000, China was trying to become a member of the World Trade Organization (WTO). China has nevertheless scored some significant victories in cases against the US. refrained from filing any disputes against China. Accessed December 13, 2020. https://chinapower.csis.org/china-world-trade-organization-wto/. The US Trade Representative established its own annual review of China’s WTO compliance, which it still reports to Congress. China experienced explosive trade growth after joining the WTO. After the two governments settled asset claims dating from the Korean War in 1950, Congress temporarily granted China most favored nation status in 1980. To adhere to China’s demands in exchange for restored market access (shut down in violation of WTO rules), Australia would have to change the … differ from those filed against China. In 1992, China’s average weighted tariff rate of 32.2 percent far surpassed the global average of 7.2 percent. The US won the case and by October 2005 China demonstrated full compliance with the ruling. In many cases, China has shown a willingness to comply with [5] The American textile industry lobbied Congress for, and received, tariffs on Chinese textiles according to the WTO Agreement on Textiles and Clothing. ", Joining the Club: Accession to the GATT/WTO, China’s Promotion of the Renewable Electric Power Equipment Industry: Hydro, Wind, Solar, Biomass, The WTO in Wonderland: China’s Awkward 15th Anniversary, 2018 Report to Congress on China’s WTO Compliance. China gained observer status with GATT and from 1986, began working towards joining that organisation. Several advanced economies have pushed back against China’s self-designation as a developing country. In some aspects, China has space to improve, like services commitments and also some domestic policies. “China is a member of the … subsequently the dumping of goods – including solar panels, aluminum, and steel Members may be involved in the DSS in one of three ways. Given the centrality of forced technology transfers in broader tensions between China and other major economies, Beijing’s response to the pending ruling could have significant ramifications for the global economy. Most notably, China was labeled as a non-market economy for 15 years after its accession, which made it easier for other countries to bring anti-dumping cases against Beijing. After the 1997 Asian financial crisis, China sold off or merged many unprofitable state-owned enterprises. Through objective analysis and data visualization, ChinaPower unpacks the complexity of China’s rise. extended windows for implementing WTO commitments and assistance with handling However, the annual renewal of China's MFN status was constantly challenged by anti-Chinese pressure groups during US congressional hearings. I think the problem is these commitments are not so clear-cut – not like tariff reductions. These commitments, found in China’s lengthy accession protocol, included lowering tariffs on goods, opening trade in services, allowing markets to set prices, removing export subsidies and taxes, ending state influence over the commercial operations of state-owned enterprises, and implementing reforms to boost accountability. The verdict ended a dispute that began in 2013 when China complained that the US had unfairly placed anti-dumping duties on over 40 Chinese products. Kazakhstan and Vietnam faced similarly stringent, but less extensive, concessions due to heavy government intervention in their respective economies. Beijing likely factors into this hesitancy. Unlike thirty years ago, China is not seeking accession and the other WTO members have no leverage available. China’s very first dispute came in 2002 when it was one of several countries that launched a series of complaints against US steel tariffs. In comparison, eight of China’s 15 complaints against the US progressed to a panel investigation, where it won four, tied three, and lost one.7. China formally became a member of the WTO on December 11, 2001. 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