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China Marks 1st Anniversary of WTO Membership

China has just ended its first year in the World Trade Organization. Business leaders say Beijing has made progress in opening its markets to trade, but work remains to be done.

For 13 years, China fought to join the World Trade Organization. It sought the political status WTO membership brings, as well as the protection WTO members enjoy in trade disputes.

To join WTO, China agreed to substantially reduce tariffs, make industry regulations more transparent, and gradually open markets to foreign businesses.

Wednesday marks the first anniversary of its WTO membership. Business people and analysts say the year has seen considerable change to China's trade environment. Professor Zhang Hanlin is director of the China Institute for WTO Studies at Beijing's University of International Business and Economics.

He says China has done a good job implementing WTO rules so far. In particular, he says, headway has been made in reforming China's system of taxation, and in eliminating tariffs and quotas on imported goods. He says also China has cracked down on copyright violations, which are rampant.

Many in China's foreign business community agree. Chris Murck is chairman of the American Chamber of Commerce in Beijing. The organization lobbied hard to make China's WTO membership a reality. "They have made noticeable progress in the area of revising laws and regulations, reducing tariffs on schedule or ahead of schedule in some cases, and improving transparency of government processes," he said.

Analysts say Beijing appears committed to making good on its commitments. However, day-to-day implementation faces resistance in many provinces, where foreign competition is seen as a threat to local businesses. "The execution of those commitments is now in the hands of a large number of ministries who did not negotiate them and were not necessarily in favor of them,"said Mr. Murck. "And so many of them are now thinking as hard as they can about how they can comply, and, still within the framework of that compliance, protect their domestic constituencies."

Professor Zhang, however, says there is no split between the central and provincial governments.

He says that over the past year, the central and local governments have begun to see eye to eye on this issue. One reason, he says, is that the central government has worked to educate local officials and business people on WTO rules.

Despite the efforts thus far, some foreign business representatives complain that WTO implementation has patchy.

Take, for example, the auto industry. China agreed to allow in more imported cars, but has not yet done so.

Another problem area: agriculture. U.S. exports of soybeans plunged last year after Beijing imposed new regulations on genetically modified crops. The regulations threaten America's billion-dollar soybean exports. Some industry sources think the regulations are not scientifically justified and are simply a way of avoiding competition for China's farmers. "Eventually the question will have to be finally resolved, and the Chinese government will have to decide whether it is going to follow a European approach to GM crops, or whether it will follow an approach that the United States considers to be based on sound science," he said.

It is unclear whether these rough spots are deliberate attempts to get around WTO rules, or simply administrative glitches that are to be expected during the first year of WTO membership.

Mr. Murck says it will become clear within the next 12 months. "In year two, I think the patience will be somewhat diminished, and people will be expecting the government to perform in a more transparent and efficient way than in year one. So in that sense, it's going to be more difficult," said Chris Murck.

Professor Zhang and others say that next year, implementation will become stronger, and China's market more open. When that happens, they say, not only the United States, but all of China's trading partners, will benefit.