[Feb. 08, 2007]

China entered the World Trade Organization (WTO) in December 2001. After fifteen years of negotiations, People's Republic of China (PRC) was able to convince WTO members that, without its membership, the WTO was only partially a worldwide trade organisation.

With a 10% GDP and a 1.3 billion population (20% of world population), Chinese economy is now booming. Therefore, in more than 5 years, Chinese WTO membership is turning to be - especially for the US and EU - a tough nut to crack.

Last week, US filed a complaint with the WTO against China's subsidies for manufacturing exports. According to the filing, China "uses its basic tax laws and other tools to encourage exports and to discriminate against imports of a variety of American manufactured goods". (Financial Times - Feb. 2, 2007)

Even if China is the most flourishing Asian economy, with exports booming and a swelling trade surplus, it still offers exports tax rebates - introduced in the late nineties to overcome the region's financial crisis - to its local firms.

European Union's strategy seems to move in a slightly different direction. By the end of 2006, the UE warned China for failing to open its economy to foreign imports and competition, menacing to take China before the WTO in future trade disputes. (International Herald Tribune - Nov. 7, 2006)

But less than one month ago, Benita Ferrero-Waldner - the EU commissioner for external relations - and Li Zhaoxing - the Chinese foreign minister - opened in Beijing negotiations on expanding cooperation in trade and climate change.

"China is changing before our eyes," said Ferrero-Waldner, "and the European Union continues to grow, both in size but also in capacity. Therefore we need to change our basis too." (International Herald Tribune - Jan. 17, 2007)

Paolo Farah, in his work La Cina e la WTO: i problemi di trasparenza e i rapporti commerciali tra Cina, Unione europea e USA (despite of its Italian title and abstract, the work is in English - editorial note), offers a exhaustive survey on negotiations among China and other WTO members - in particular the United States and European Union.

According to the author, Chinese presence in WTO has not achieved a real implementation of WTO provisions, which require a general and deep application of transparency, for instance in formal publication of laws and regulations.

In a political prospective, the Paolo Farah agrees with researchers and analysts that give emphasis on WTO members' pressure on transparency issues, which will radically influence and change Chinese legal system.

Both the US and EU set up bilateral and multilateral negotiations to help China to integrate the WTO. The EU created the so called "113 Committee" (composed of UE and Chinese officials) for implementing the common commercial policy and the EU-China WTO programme to support China's integration into the WTO.

The US set up 30 federal agencies - 17 directly involved in monitoring issues and 13 that grant technical expertise and data - and the WTO Compliance Subcommittee to promote and facilitate exchange of information.

In a multilateral prospective, the WTO, as an international governmental system, has implemented the Transitional Review Mechanism (TRM), a special multilateral mechanism for reviewing Chinese legal system, providing a "good opportunity for WTO members to submit questions to China and receive further clarifications in multilateral forum."

But The Middle Kingdom (that's the meaning of "China" - Zhongguo in Mandarin) is a complex country. Even if collective farming were dismantled in early 80', allowing private firms, little changes were introduced into political and social structures (the country is still led by the single Communist Party).

Beside, Chinese foreign policy - supporting some African leaders and meddling in diplomacy on important political issues - reveals the nation's eagerness to become the world's next great power.

To face its shooting up standards of living - the nation is one of the world's bigger consumers of oil - Chinese foreign investments are heading for emerging countries rich in energy and oil resources (from Africa to Brazil).

Moreover, China established itself as the key dealmaker in nuclear negotiations with North Korea and contributed troops to the U.N. peacekeeping mission in Lebanon.

China is gaining confidence, challenging some Washington's foreign policy goals, especially after January 11 ASAT (anti-satellite) test, which could represent a turn for the worse in US-China relations. (Asian Times - Feb 6, 2007)

Otherwise, in the globalized economic system we live in, nations are more deeply intertwined. While Chinese leaders realize national development depends on the international marketplace, US and EU consider China's economic growth an opportunity they can't miss.

Robert Zoellick - who served as US trade representative and deputy secretary of state - wrote in The Financial Times: "China wants its economic rise to complement, not replace, the current order. If the US and China recognise the strategic stakes in guiding this transition, they can develop an agenda that builds confidence and support in both countries and beyond." (Financial Times - Jan. 23, 2007)

For any further investigation, check its related articles:

US-China tensions rise over subsidies on The Financial Times website

EU warns China on trade on International Herlad Tribune website

China and EU begin renegotiating commercial relations treaty on International Herlad Tribune website

US-China: A turn for the worse on Asian Times website

A global mission for China and America on Financial Times website