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Debate: Chinese membership in the WTO

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Should China be a member of the World Trade Organization?

Background and context

Incorporating China into the WTO is the single most important trade policy challenge now facing the United States. After 13 years of on-again, off-again deliberations, negotiations for China's accession to the World Trade Organization (WTO) are tantalizingly close to completion. A deal was nearly struck during the early April visit to Washington by Chinese prime minister Zhu Rongji. However, the Clinton Administration was not willing to accept the package without further Chinese concessions, which Beijing was unwilling to make. As of the beginning of May, negotiations resumed, with U.S. officials confident that a deal could be finalized by the end of May, so that the Congress could consider granting China permanent normal trading relations (NTR) as part of the annual U.S. review of trade with the People's Republic.The key issues that remain to be resolved range from whether trade will actually be benefited, whether human rights should be linked with trade and whether China’s entry will harm the WTO in the long run.

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Argument #1

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Yes

China is a huge market and they are keen on opening it up to the rest of the world. Despite adamant opposition from strategic industrial sectors and their allies in Beijing, President Jiang Zemin pushed through a market-opening package that will certainly gladden the hearts (and, they hope, the pocketbooks) of Western businessmen. Thus, industrial tariffs will be cut to 17% from an average of 21%, and agricultural duties to 14.5% -- 15%. China will also end export subsidies of agricultural commodities.

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No

The agreed reductions are not nearly as far reaching as they should be. In the booming telecommunications industry, foreign companies will be restricted to no more than 50% of the Chinese market. In the automobile industry, while tariffs will be reduced, they will still be no less than a whopping 25%, making foreign goods extremely uncompetitive. All this suggests that China will be gaining a lot more in terms of access to the world markets, and the world community will still be facing severe restrictions in trying to enter the Chinese market.

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Argument #2

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Yes

Private businesses usually take into account the instability of the rule of law when assessing business risk. There is nothing wrong for them to take a greater risk if there is a greater prospect for profits. More importantly, most of the problems with Chinese law can be circumvented if foreign companies choose their contracts to be governed by laws from other jurisdictions, as these are international contracts.

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No

There is nothing in the current agreement that will protect investors. The current accord's apparent silence with regard to transparency will create problems. Given the primitive state of Chinese law and administrative procedures, foreign businesses face years of daunting obstacles when commercial disputes arise.

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Argument #3

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Yes

In all fairness to Beijing, in other international bodies, such as the United Nations and the World Bank, China has proven to be a follower not a leader. More importantly, is it a bad thing if the third world has more of a say in the WTO?

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No

China's admission to the WTO could inexorably lead to the WTO losing its clearly defined commercial focus and becoming politicised. If China anoints itself as the spokesperson for Third World interests, the WTO could be rapidly transformed from a functional body dealing with the practical commercial concerns of the world's largest trading economies into a talking shop focused on the political interests of nations who are only marginal players in the world economy.

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Yes

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No

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Argument #4

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Yes

While fundamental human rights is important, its enforcement is not strictly within the purview of a ‘trade organisation.’ The strength of the WTO comes from keeping to its mission to promote free trade, and to leave the enforcement of human rights to other organisations like the United Nations or the Commonwealth. Moreover, the evidence of other WTO members like Singapore and Malaysia is an improvement of human rights that came with increasing wealth and living standards as a result of free trade.

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No

If we see human rights as being fundamental, then China should not be allowed to join the WTO until it improves its human rights record. It still detains prisoners without trial, quashes all opposition parties, forces a one child policy and has some of the worst reports of torture in its prisons. Allowing China to become wealthy with World Trade will merely entrench its government’s position and give them no incentive to change.

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Argument #5

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Yes

While inefficiency is obviously a bad thing, it is not necessarily a bad thing if a potentially huge trading power has its national language added to those the WTO recognises or if it has greater representation on the WTO.

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No

It is likely China will demand leadership positions in the WTO, bloating the organization's lean bureaucracy, reducing its effectiveness. There is concern that Beijing will eventually press for Chinese to join English, French and Spanish as one of the WTO working languages, driving up costs and the time needed to reach any decision. The consequences of the WTO acceding to such demands could come back to haunt the organization once Russia and Saudi Arabia become members and demand their own staff and language accommodation. It will make the WTO inherit all the inefficiencies of the UN.

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Argument #6

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Yes

In other international bodies, such as the United Nations and the World Bank, China has proven to be a follower not a leader. There is no evidence that it will take on a mission to undermine world trade.

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No

China might also unnecessarily politicize the WTO and make it lose its main focus which is trade. If China anoints itself as the spokesperson for Third World interests in Geneva, the WTO could be rapidly transformed from a functional body dealing with the practical commercial concerns of world trade into a talking shop focused on the political interests of nations who are only marginal players in the world economy.

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