Decontamination Plan China and WTO Term Paper

Pages: 13 (3995 words)  ·  Style: APA  ·  Bibliography Sources: 5  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

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[. . .] This is particularly important at the provincial and municipal levels, where progress may be hampered by administrative and judicial capacity constraints, in addition to the potential role of vested interests (particularly on issues related to the elimination of restrictive practices, which nontariff obstacles such as inter-provincial taxes, and fees).

Market Access Prospects and Opportunities

The most immediate benefit to China of WTO accession is increased access to oversea markets. Generally speaking, as a step towards normalizing its trade relations, other WTO members have permanently granted China the most-favored nation (MFN) treatment. In addition, several trading partners have eliminated many of the restrictions they formerly imposed on imports from China after the country became a member of WTO. The bottom line here is that China's labor-intensive exports in a number of sectors (particularly electronics) has been boosted by the country's easier access to foreign markets. In particular, the quotas placed against its clothing and textiles will be removed as a result of its WTO accession. While the timing still remains uncertain due to the specific safeguards provisions incorporated in China's accession protocol, it is generally expected that this removal will go a long way in generating a significant boost to China's exports (Adhikari & Yongzheng, 2002; Hertel & Walmsley, 2000; Ianchovichina & William, 2002; Rambaugh & Blanche, 2004).

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Other sources of benefit to China after WTO accession abound. For instance, within the multilateral dispute settlement procedure under WTO, China stands to benefit from the treatment of future trade conflicts. This will equally go a long way to help the country to benefit from a greater reciprocity in the resolution of trade conflict as well as help the country better promote its trade interests. In addition, the scope for WTO members to unilaterally impose anti-dumping protection against Chinese products will be limited.

Term Paper on Decontamination Plan China and WTO Assignment

Nevertheless, provisions that could constrain China's export market gains in the coming years, especially with respect to its gains from trade on clothing and textiles, are incorporated in its accession protocol. Note that such provisions are, to a very large extent, widely seen in China's case as going beyond the usual practice in recent WTO accession cases, even though they do reflect the organization's principles (Lardy, 2002). Broadly speaking, under the product-specific safeguard mechanism which provides relatively low requirements for safeguard actions against Chinese exports, the provisions unfortunately include a concept of "market disruption" as well as non-market treatment of China, particularly on issues related to the determination of anti-dumping in addition to countervailing cases for as much as fifteen years.

Having examined the above issues in this section, I will now turn my attention to the potential implications of the country's increased participation in world trade. This will be the topic of the following section.

China's Increased Role in World Trade -- Potential Implications

Numerous studies have shown that, overall, China's WTO accession will produce a positive international welfare effects. In the 1990s, such welfare effects have been the subject of increasing research by many scholars and government agencies both in China and in Europe. However the major outcome of such studies and models indicates that, given that China's tariffs have already been lowered substantially prior to its accession, the overall welfare effects of the WTO-induced tariff changes in China are not significant or sizeable when compared with a baseline scenario. As such the studies and models generally concur with the following key points (Adhikari & Yongzheng, 2002; Rambaugh & Blanche, 2004):

1. China will benefit from its WTO accession in the long run. Note that benefitting from increased competitive pressure, which is an external impetus for domestic reforms, is the key objective of China joining the WTO. It is thus not surprising that most analysis point to the fact that in the long run a positive net benefit will accrue to China -- benefits that will occur in the form of efficiency gains and other forms of direct benefits for the Chinese consumers;

2. China's WTO accession will contribute to the country's sustained growth and this will, in turn, provide benefits to most of its trading partners, including the United States and other European and Asian countries. It is sufficient to note that China has agreed, as one of the conditions to its WTO accession, to open sectors which are considered crucial by its trading partners. Some of these sectors include the agricultural, tourism, and service sectors of China's economy. In addition, the key obstacles that have long weakened foreign investor confidence in the country will be removed as a result of its continued improvements of its business environment, particularly as it relates to such areas as its predictability and transparency.

3. Both the advanced economies as well as the most advanced developing countries would equally benefit in the short to medium term. Increased exports to China of capital and technology-intensive manufactures are the main underlying causes of these benefits. This is in addition to increased investment and trade opportunities in the services sector of China's economy, as well as access to the vast agricultural markets in China.

4. 4. Some of the less advanced developing countries may, at the same time, sustain some adjustment costs as a result of China's WTO accession. Those of them who are the direct competitors to China in, for example, the clothing or textile sector, will be the most affected in this regard.

In contrast, significant benefits may accrue to the low-income Asian nations who not only have close ties with China but have exports that are complementary to China.

It is, however, worth pointing out that narrow trade analysis may be incapable of estimating all the facets that are related to the overall impact of China's accession to WTO. In particular, with regard to the role of China in the global economy (especially the country's growing role as a global export base and its attractiveness to international investors), several key aspects of China's WTO membership could potentially have an even greater impact on some of the trends described above. For these reasons, it can be possible to underestimate the benefits to the rest of the world through quantifications of the global impact of China's WTO accession.

The above explanations do provide some justification to the fact that China's emergence in the world trade would be facilitated by its WTO accession. There are, however, some inherent risks. First, through extensive safeguards procedures that may be initiated by the trading partners, China's exports may be restricted. In this case, there is a possibility that the country may retaliate through its own anti-dumping claims. Second, since growth sustainability could be threatened by the impact of WTO accession on China's state-owned enterprises (SOE), fiscal sustainability and on the agricultural sector and rural income, the country's home front may be equally threatened. Nevertheless, the beneficial impact of the WTO accession can be reinforced by the fact that much of China's trade liberalization has already taken place. Furthermore, two major factors make China's trade emergence a noteworthy phenomena (Adhikari & Yongzheng, 2002; Ianchovichina & William, 2002; Rambaugh & Blanche, 2004):

1. China did not associate its export-oriented development phase with the maintenance of pervasive import barriers. For instance, the decisive concessions which China made to open its agricultural sector can be considered to be a WTO commitment that is, to a very significant extent, broader that those made by other past WTO member nations;

2. Compliance with a framework of global rules defined in a multilateral context is a key feature of China's trade liberalization. This is different from what have been observed in other former episodes of trade emergence by other countries which are usually characterized by reliance on regional and bilateral trade agreements.

Having summarized the potential implications of China's increased role in the world trade in this section, I will now turn my attention to the elaboration of the international impact of China's WTO accession.

China's WTO Accession -- Its International Impact

On the issue of international impact of China's WTO accession, most researchers and policy makers concur with the following postulates (Rambaugh & Blanche, 2004):

1. Most of China's trading partners will benefit immensely if the country's growth momentum is sufficiently sustained. Already, imports for domestic used have increased significantly in China. This is in addition to the prominent role been played by the country's processing trade. In addition, in order to meet both local final demand, multinational companies are increasingly investing in China. It is sufficient to note here that despite low growth being experienced in the rest of the world, these developments have contributed to maintaining strong growth in the Asian region;

2. Because most of the newly industrializing economies (NIE) of Asia have a complementary trade pattern with China, they stand to gain immensely from China's expanding trade. Already their export of intermediate products and components to China has increased significantly some few years after its accession. Nevertheless, China's domestic production is equally rising and its exports are also moving up the value-added chain. The… [END OF PREVIEW] . . . READ MORE

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