Thu, Dec 07, 2006 - Page 9 News List

China's five year WTO honeymoon nears end


As China's five-year adjustment period since accession to the WTO draws to a close, the US and Europe are intensifying pressure for the emerging giant to play fair by the rules of global trade.

But the rhetoric is also a vindication of China's entry into the WTO, which has given trading partners a forum to vent their grievances and a chance to prise open the world's most populous market.

Grant Aldonas had a ringside seat to observe China's accession to the Geneva-based club, as US undersecretary of commerce for international trade from 2001 to last year and before that as a top trade lawyer in Congress.

"Although there are difficulties in the US-China relationship, the bet that members of Congress were making was that the power of markets would expand the range of freedom in China," he said.

"As far as I'm concerned, when I go to China these days, that bet has been vindicated," said Aldonas, who is now a senior fellow at Washington's Center for Strategic and International Studies.

Cheap Chinese goods have kept US interest rates low and so fostered a five-year expansion in the world's biggest economy, the former US official said.

China's entry into the WTO on Dec. 11, 2001, was welcomed by its trading partners as finally bringing one of the world's fastest-growing economies into the bosom of the trading system.

China became subject to the binding regulations governing world commerce -- but enjoyed a five-year transition period before some of the rules were applied fully.

With that period coming to an end, both the US and EU have warned that China can expect harsher scrutiny of the access it gives to foreign companies and the protection it affords to intellectual property.

US Trade Representative Susan Schwab, who now faces a potentially hostile Congress controlled by Democrats, said last week that she was "looking seriously at additional cases unless China fulfills its WTO commitments."

Last month, EU Trade Commissioner Peter Mandelson issued a similar warning.

"China has reached a stage in its development when the rest of the world is entitled to ask for more from China," he said.

John Jackson, a professor of international economic law at Georgetown University, said nobody expected China's WTO membership to be smooth sailing.

"But I think if I were to give a broad-brush evaluation of how it's gone so far, I'd put it well above a `B,'" said Jackson, who sits on WTO arbitration panels tasked with mediating over trade disputes.

"On the whole it's been quite good. Some of the catastrophes that some people predicted have not happened. There hasn't been a whole rash of cases," he said.

The EU has led WTO members in imposing anti-dumping duties on Chinese products, including shoes and textiles. One high-profile dispute over clothing imports sparked the so-called "bra wars" with China.

Along with Canada, the US and EU have sued China in a dispute over car parts. That has become the first row involving China to reach the WTO arbitration stage.

But Jackson said that such disputes were par for the course.

"It's clearly good for the system. The WTO could not have lasted much longer without China on board," he said.

However, nothing irks the US and EU more than rampant violations in China of their intellectual property, which pundits say is shaping up to be the next big clash at the WTO.

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