Despite hopes for a breakthrough at the U.S.-China summit, the two countries remain unable to agree on China’s accession to the World Trade Organization (WTO), a rule-governed body that seeks to liberalize global trade. As the largest economy not participating in the WTO, China’s inclusion is favored around the world. The terms of its entry, however, remain a sticking point.
In April 1998, China’s proposals on tariff reductions and market access delivered in Geneva failed to win the approval of members. A main point of contention is China’s insistence that it enter the organization as a developing country—a status that automatically would provide it with the longest possible time periods for complying with some WTO standards and would exempt it entirely from a few.
In a CNN interview shortly after the summit, U.S. Trade Representative Charlene Barshefsky stated, “All countries in the WTO, all 132 members, have opened their economies with respect to goods, services, and agriculture. Most of these countries have substantially reduced their tariffs, have ended discriminatory treatment to foreign goods, provided national treatment and equal treatment to the imports that come in and have largely opened up their regimes. China needs to make concessions in the range of those other 132 members.”
While the Chinese government oversees reform of the banking sector and state-owned enterprises (SOEs), it is reluctant to accept the terms laid-out by members of the WTO. These terms would require the opening of sectors that are not sufficiently developed to successfully compete in the global market. The government, however, does recognize that bringing the economy more into line with WTO requirements is in the nation’s best interest, and to that end banking and SOE reform were initiated this year. However, the regional financial crisis has slowed reform, and therefore China’s progress in meeting WTO requirements.
China will continue to negotiate its market access and tariff schedules with WTO members, including the United States. While it is not possible to set a date for China’s entry into the WTO, consensus holds that accession will be granted in the next several years.
China’s inclusion in the global trade organization is commonly believed to be pivotal to the future of international trade and the health of the world’s economies.