WTO Accession in China

WTOAccessioninChinaLIShantongDevelopmentResearchCentertheStateCouncil,PRCNovember20052Introduction•TheentryintoWTOisacontinuationofChina'sreformandopenpolicy.•TheentryintoWTOisthestrategicchoicemadebyChineseGovernmentinaccordancewiththetrendofeconomicglobalizationandthepoliticaldevelopment,andconsiderationofChina’slongterminterests.3Introduction•Globalizationisthemajortrendoftoday'sworld.Chinaaimstoactivelyimplementherinternationalobligations,andtofurthersharethebenefitsbroughtbyglobalization•ToinjectgreatmomentumintoChina'sreform¾themarketsystemistobeimprovedandperfected¾thereformofSOEandfinancesystemisintheprocess¾monopolyinsomeareashasnotbeenbrokenyet¾socialcreditsystemistobeconfirmed¾themarketorderisnotsatisfactory¾FulfillingourcommitmentsandadjustingtheregulationswillpromoteChina'sreformeffectively4Introduction•TotransformChina’scomparativeadvantagetocompetitiveadvantagesothat...¾Chinacanallocateitsresourcesmoreeffectivelyinabroaderglobalenvironment¾Chinacanimproveitslevelofspecializationthroughinternationaldivisionoflabor¾AnefficientmarketsystemcanbecreatedforindustrializationinChina•TobringarelativelysteadyexternalenvironmenttoChina5Introduction•Chinahastorespecthersolemnlegalcommitments,buttheseisnorecipe•Chinawouldliketoretainflexibilitytopursueherdevelopmentgoals−egbyminimizingantidumping,usingTRIPSflexibilities,liberalizingservices,loweringtariffs,openingsectorscurrentlysubjecttostatetrading−Thekeyistofocusongoodeconomicpolicy•AndWTOmembershipmeansopportunitiestopushforbetterpoliciesinChina’stradingpartners6AccessionInvolves•Non-discriminationbetweensuppliers−andbetweendomesticandimportedgoods•Uniformadministrationandtransparency•LiberalizationofTradingrights•Protectionsubstantiallyreduced•AbolitionofallNTBsexceptstatetrading•AbolitionofTRIMs•AbolitionofMFAquotasontextiles7OtherKeyFeatures•Trade-RelatedIntellectualPropertyRights•Retentionofstatetradingforoilandkeyagriculturalproducts•Tariff-rate-quotaregimeforsomeimports•Non-marketeconomytreatmentinantidumpingfor15years•Product-specificsafeguardsfor12years•Specialtextilesafeguardsfor3years8Pre-accessionpolicyreforms•Transformationofthetradingsystemfromplantomarket•Eliminationofnontariffbarriers•Reductionsintariffs9Movingfromplantomarket•Changingenterprisestorespondtopricesignals•MovingfrommonopolySTCstomanytradingfirms•Introducingindirecttradepolicyinstruments−Egtariffs,quotas,licenses•Introducingexportprocessingregimes10Dualisticforeigntradingregimes•Chinahadestablishedtwoseparatetradingregimesby1986-87.•Oneistheexportprocessingregime,whichisextremelyopen,notsubjectedtotarifforNTBsrestrictions.•Theotheristraditional,butincreasinglyreformed,ordinarytraderegime.•Since1990sexportprocessinghasgrownrapidly,whichaccountsformorethanhalfofallexports.11China’seconomicstructureandmarketopenness•Agriculturalsectoraccountfor50%ofChina’slaboremployment.•Chinaisanetexporteroflabor-intensivemanufacturesandanetimporterofcapital-intensivemanufactures•Chinaisnetimporterofgrain,buthastradesurplusofotheragriculturalproducts.12StructureofFactorEndowmentsinChinaLandCapitalLaborUSA13%USA23.3%USA5.1%China6.7%China28.8%China1.4%S.Asia17.4%13China’seconomicstructureandmarketopenness•Thereisasignificantdifferencebetweennominaltariffrateandtheactualcollectedrate,becauseofprocessingtradeandimportdutyexemption.•China’stariffandNTBsprovidehighprotectionformanufacturingsector,especiallythecapital-intensivesectorsandfinalconsumptiongoods.•Duetothehighshareofimportforprocessingtrade,theeffectsofhightariffandNTBsareverylimitedinsomesectors.EconomicStructureandMarketOpennessinChina,1997(%)OutputImport/DomesticUseExport/OutputsOrdinaryExports/TotalExportsOrdinaryImports/TotalImportsNominalTariffRateCollectionTariffRateforTotalImportsRice1.20.90.9100921.00.4Wheat0.77.90.0-781.00.2Corn0.41.17.9100211.00.0Cotton0.310.70.0100173.00.6Wool0.056.08.9100615.00.7Vegetableoil0.612.34.3194617.05.3Food2.62.59.7721823.23.7Textiles4.610.118.460141.80.7Apparel1.93.637.045235.50.3Leather1.113.232.629114.42.5Petroleumrefineries1.611.85.769628.74.8Chemicals4.016.78.3803110.83.0Machinery2.513.35.9613513.74.2Roadvehicles1.64.21.9637350.732.6Electricmachinery2.89.615.9212017.93.1Electronics2.534.736.392011.82.1Total/Average100.06.47.7513211.22.5ActualImpactofWTOAccession16ReductioninTariffs199241199530200115.320059.917MachinerySector•Marketopennessdidnotcauseshockstothemachinerysector.Onthecontrary,thissectorexperiencesthebestperiodofdevelopmentinthehistory¾China’smachinerysectorisledbydomesticdemand,andtherapideconomicgrowthisfavorabletothemachinerysector¾ThissectorwasprotectedbyNTBs.Buttheeffectiveprotectionratewasnothighduetolicensedimportpolicies.ThustheshorttermeffectofWTOaccessionwasnotbig¾Thelongtermeffectofmarketopennesstothemachinerysectorwilltaketimetobereflectedcompletely.18MachinerySectorOutputTotalSalesProfitTaxation108YuanGrowth108YuanGrowth108YuanGrowth108YuanGrowth20021820523.4%1718624.1%97447.5%78920.6%20032522531.9%2432433.3%153148.7%103024.2%20043271127.4%3190227.7%185816.5%116111.0%