Beijing to Geneva

Benefits of being a WTO member

China’s accession proceedings to the World Trade Organisation have been completed, although, because the status of the fourth Ministerial meeting in Doha is now uncertain, the formal accession may spill over into early 2002 rather than late 2001. As is understandable, a new entrant has to offer stiffer terms of concession than the liberalisation accepted by existing members:
nowhere is this as evident as in the low tariffs China has accepted for agriculture. Faced with an application for accession, and China’s has been pending since 1986, any existing member has the right to demand bilateral negotiations for entry and the best bilateral market access offers on the part of the applicant are formalised in accordance with the Most Favoured Nation clause. That apart, China had to negotiate its status as a developing country. The WTO agreement stipulates that for a new entrant, this status is not automatic but has to be negotiated. The final obstacle was insurance sector liberalisation. Since this has been sorted out, formal approval by WTO’s General Council, in Doha or later, alone remains.

Within China, there is speculation about the transition pains to farmers and inefficient state-owned enterprises. For a country like India, there are several strands, since China and India often compete in similar low-value products. First, China obtains benefits from being a WTO member. However, most of these, such as MFN treatment, were already available in major markets through bilateral agreements. Second, non-transparent cross-subsidisation of Chinese exports will be somewhat more disciplined. Third, China has been a major target of Indian anti-dumping investigations and India will henceforth have to follow WTO norms in such procedures. However, despite China not being a member of WTO, India has followed these WTO norms.
Fourth, the Chinese market will be opened up, but given present trade trends, it is difficult to contemplate India gaining significantly from China’s market access liberalisation. Fifth, India and China might adopt common negotiating positions at WTO discussions. But any speculation on this possibility is also premature. Sixth, since Chinese rules and regulations are still not transparent enough, a large number of disputes vis-a-vis China might clog up dispute settlement procedures. This last is significant but might not manifest itself immediately. The overall message for those who wish India to opt out of WTO, is that there are benefits from being a member.