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China and the WTO: Why Multilateralism Still Matters
An examination of China’s participation in the World Trade Organization, the conflicts it has caused, and how WTO reforms could ease them
China’s accession to the World Trade Organization (WTO) in 2001 was rightly hailed as a huge step forward in international cooperation. However, China’s participation in the WTO has been anything but smooth, with China alienating some of its trading partners, particularly the United States. The mismatch between the WTO framework and China’s economic model has undermined the WTO’s ability to mitigate tensions arising from China’s size and rapid growth. What has to change? China and the WTO demonstrates that unilateral pressure, by the United States and others, is not the answer. Instead, Petros Mavroidis and André Sapir show that if the WTO enacts judicious reforms, it could induce China’s cooperation, leading to a renewed confidence in the WTO system.
The WTO and its predecessor, the General Agreement on Tariffs and Trade, are predicated on liberal domestic policies. They managed the previous accessions of socialist countries and big trading nations, but none were as large or powerful as China. Mavroidis and Sapir contend that for the WTO to function smoothly and accommodate China’s unique geopolitical position, it needs to translate some of its implicit principles into explicit treaty language. To make their point, they focus on two core complaints―that Chinese state-owned enterprises (SOEs) benefit from unfair trade advantages, and that domestic companies, private as well as SOEs, impose forced technology transfer on foreign companies as a condition for accessing the Chinese market―and they lay out specific proposals for WTO reforms.
In an age of global trade disputes, China and the WTO offers a timely exploration of unprecedented challenges to the current multilateral system and fresh ideas for lasting solutions.
China’s accession to the World Trade Organization (WTO) in 2001 was rightly hailed as a huge step forward in international cooperation. However, China’s participation in the WTO has been anything but smooth, with China alienating some of its trading partners, particularly the United States. The mismatch between the WTO framework and China’s economic model has undermined the WTO’s ability to mitigate tensions arising from China’s size and rapid growth. What has to change? China and the WTO demonstrates that unilateral pressure, by the United States and others, is not the answer. Instead, Petros Mavroidis and André Sapir show that if the WTO enacts judicious reforms, it could induce China’s cooperation, leading to a renewed confidence in the WTO system.
The WTO and its predecessor, the General Agreement on Tariffs and Trade, are predicated on liberal domestic policies. They managed the previous accessions of socialist countries and big trading nations, but none were as large or powerful as China. Mavroidis and Sapir contend that for the WTO to function smoothly and accommodate China’s unique geopolitical position, it needs to translate some of its implicit principles into explicit treaty language. To make their point, they focus on two core complaints―that Chinese state-owned enterprises (SOEs) benefit from unfair trade advantages, and that domestic companies, private as well as SOEs, impose forced technology transfer on foreign companies as a condition for accessing the Chinese market―and they lay out specific proposals for WTO reforms.
In an age of global trade disputes, China and the WTO offers a timely exploration of unprecedented challenges to the current multilateral system and fresh ideas for lasting solutions.
264 pages, Hardcover
Published January 5, 2021
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Displaying 1 of 1 review
May 23, 2021
The book gives reader the history of China becoming a member of WTO in 2001 after the WTO accession process, including negotiations with WTO members resulting in the China Protocol of Accession which it signed and ratified all WTO trade agreements with various terms & conditions. After which, over the 21 years, it became obvious that China have been conducting trades with other members by exploiting grey areas in some of the agreements ... with most of the complaints relating to Chinese state-owned enterprises (SOEs) and technology transfer violations. The author spent great efforts referring to the WTO framework for trade policies with legal and contractual terms in order to reveal how China has been avoiding wrong doings in trade disputes and WTO adjudications by operating in overlooked terms & conditions of the 2001 accession protocol, which can be a bit heavy loaded if one does not appreciate the nitty-gritty wordings in legal documents.
In the last two chapters, the author proposed plugging the holes to China's questioned activities by making modifications to related WTO agreements ... which I see as just new wine into old bottles and China will find other holes in due course. If we try to view all these from the perspective of China, it is just a state trying to maximize the benefits using the liberal principles and agreements of WTO and other states.
One can observe in many aspects how China can play its cards well to silence complaints by leveraging its market size for foreign access; foreign currencies reserve to be use as direct investments to targeted countries and industries; low cost of production (via exploiting its labour supply from rural counties); and more recently its One Road One Belt strategies. Hence, maybe WTO has to live with the way China trades internationally based on its manipulation of WTO agreements.
In the last two chapters, the author proposed plugging the holes to China's questioned activities by making modifications to related WTO agreements ... which I see as just new wine into old bottles and China will find other holes in due course. If we try to view all these from the perspective of China, it is just a state trying to maximize the benefits using the liberal principles and agreements of WTO and other states.
One can observe in many aspects how China can play its cards well to silence complaints by leveraging its market size for foreign access; foreign currencies reserve to be use as direct investments to targeted countries and industries; low cost of production (via exploiting its labour supply from rural counties); and more recently its One Road One Belt strategies. Hence, maybe WTO has to live with the way China trades internationally based on its manipulation of WTO agreements.
Displaying 1 of 1 review