July 21, 2000 RS20582RS20582 India has been member of GATT since 1948; hence it was party to Uruguay Round and a founding member of WTO. Since its WTO accession, China has been the target of 29 WTO disputes initiated by its trading partners, with the United States accounting for the lions share of these cases. With WTO accession drawing ever nearer, China faces the most far-reaching reforms in decades, says Reuters. From Chinas request to resume its status as a contracting party to the GATT to its final accession to the WTO, it took China 15 years to go through the arduous and prolonged negotiations. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C 107. Post was not sent - check your email addresses! China is the largest developing country in the world, Gao said. Another decade elapsed before the first national popular election for president. Chinas economy must become a market economy in order to become part of the global economic system, as well as to effectively participate in the economic globalization process.. By 2000 its share of total world trade had sextupled as compared with 1977 and as early as 1995 China had become one of the top ten trading countries in the world. Winning a trade dispute is costly and requires significant technical and legal expe (Agence France Presse), Chinese officials, intellectuals and laymen have mixed feelings about the benefits and disadvantages of joining the WTO. But, as foreign investment continued to grow, the share of exports produced by foreign-invested firms expanded, exceeding 10 percent by 1990. These costs will be reflected in rising rates of unemployment in sectors that will shrink as they face increased international competition, both from imports and from goods and services provided by foreign-invested firms in China. China, for instance, holds veto power in the UN as a permanent member of the Security Council. Because of meager domestic savings, a large fraction of U.S. domestic investment must be financed by borrowing from abroad. China's entry into the WTO would impart new momentum to the relationship and give it an underpinning that it had been noticeably lacking in recent years. Guidance for the Brookings community and the public on our response to the coronavirus (COVID-19) , Learn more from Brookings scholars about the global response to coronavirus (COVID-19) . The transition from a command economy to a marketbased economy has been remarkably successful in China. In July 2016, the United States filed a dispute with China. China's entry to the WTO is a complicated issue concerning the rights to development and the means to do it. Cumulative foreign investment in China far exceeded the total stock of foreign direct investment in countries such as Mexico and Brazil, which opened their doors to foreign direct investment decades before China. Initially most of the funds were raised by the sale of sovereign bonds, but by the latter part of the 1990s major Chinese companies sought listings and raised billions of dollars on overseas equity markets.. China Mobile (Hong Kong), PetroChina, Unicom, and Sinopec together raised more than $15 billion through equity sales in New York and Hong Kong in 2000. In the 1990s U.S. exports to China continued to grow rapidly, almost quadrupling between 1990 and 2000. As Chinas GDP growth has declined, the official numbers have come under closer scrutiny as many observers, both within China and abroad, have begun to suspect that Chinas GDP growth has been overstated during this period and that real growth in the economy has been markedly slower than the official figures reflect. Until the U.S. savings rate rises or the rate of investment falls, no amount of trade liberalization abroad will reduce significantly the global U.S. trade deficit. By 2000 foreign invested firms, which accounted for only about one-eighth of all manufacturing output, were responsible for almost one-half of all of Chinas exports. (International Herald Tribune), After accession to the WTO, China and Taiwan's GDP will increase, as will the prospects of peace between the two countries. It claimed China was taxing exports of high-demand raw materials. Implications of Chinas WTO Entry By 2000 the U.S. bilateral deficit reached $84 billion and for the first time exceeded the bilateral deficit with Japan. After 17 years in the WTO, China still falls far short of fulfilling its WTO obligations to protect copyrights, trademarks, patents, and other intellectual property rights. An article from the Washington Post discussing some of the difficulties China is experiencing adjusting to a global economy. This was natural given the large economic stake of the United States in the creation of more open markets globally. Article from LA Labor News analyzes motivations of AFL-CIO leaders to attack China, and points out that how we interact with China and other emerging nations is crucial in determining if the world can avoid a fatal "melt down". China agrees to make some changes and buy more American products. Bilateral trade between China and the United States has grown extremely rapidly since trade relations resumed in 1978. But the United States generally wins trade disputes, particularly against China, when the case is brought to the World Trade Organization (WTO). WTO membership now entails liberalization of a much broader range of domestic economic activity, including areas that traditionally have been regarded by most countries as among the most sensitive, than was required of countries entering the WTOs predecessor organization the GATT. The future changes in each major sector are highlighted, including a short assessment of the reforms. As one of the largest international economic organizations (alongside the International Monetary Fund (IMF) and the World Bank), it has strong influence over trading rules and agreements, and thus has the ability to affect a country's economy profoundly. Since 1994, the international community has added agreements covering information technology, basic telecommunications services, and financial services. Also see the related articles in China Daily. Mobilizing support for discussing new issues in the WTO. Why Chinas WTO Accession Matters "The contradictory impulses that are driving China, a country that at one moment seems to be hurtling ahead toward a more open future and the next seem stuck behind in narrow Communist orthodoxy and the intolerance of the past." Though a country-specific event, it raised important controversies about the relationship between development and trade, the terms of integrating developing countries into the global economy, and the critical role international economic policy making bodies like the WTO have in regulating the interaction between developed and developing countries' economies. The third flaw in the argument that the ever growing bilateral trade imbalance reflects a fundamentally closed Chinese economy is that exports of U.S. firms to China have grown extremely rapidly since Chinas reforms and opening up began in the late 1970s. (Toronto Star), China is preparing for membership in the WTO, which will result in a radical transformation of the Chinese economy. Obviously the United States has and will continue benefit enormously from the shift of production within Asia discussed earlier in this chapter, since imports of these goods help to hold down prices in the United States. Equally important, the availability of lower cost imports allowed this growth to occur with an unusually low rate of price inflation. Since its WTO accession, China has been the target of 29 WTO disputes initiated by its trading partners, with the United States accounting for the lions share of these cases. On Friday the United States published a written defence in the first of the three legal cases, asserting that China and the United States agreed the issue should not be judged at the WTO. Second, Taiwan will have to eliminate important nontariff barriers on Chinese goods, notably the import ban imposed on a large number of goods of Chinese origin. The benefit of the WTO process is it prevents the damaging consequences of trade protectionism . The document, signed by both nations in November, provides details of China's pledge to open its market to the US. The WTO had limited power in some of these issues anyway, and now it has even less because maybe the dispute settlement system won't even function. But the government hopes for a resulting boom in the private service sector that could compensate for the jobs lost, or even create net employment. Foreign firms began to establish operations in China following the passage of a joint venture law in 1979 and the creation of four special economic zones on the southeast coast in 1980. More profoundly, it appears that Chinas top leadership in the wake of the Asian crisis came to believe that there was no viable alternative to the globalization of production and that, indeed, China would benefit from greater participation in the trend.