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US Urges China Not to Subvert WTO Trade Rules - 2002-02-01

The Bush administration says it is looking forward to working with China as the world's most populous country begins its first year in the World Trade Organization. China was admitted to the global rule-making trade body late last year after 15 years of negotiations, leading to new opportunities in global trade. The U.S. government says it will also make sure China abides by all the rules of global trade.

U.S. Trade Representative Robert Zoellick says every one of China's World Trade Organization obligations will be tracked by an agency or office of the U.S. government. These include opening up markets to foreign companies, reducing state subsidies for Chinese companies and lowering trade tariffs.

At a luncheon in Washington Thursday organized by the U.S.-China Business Council, Ambassador Zoellick warned China not to miss the opportunity to move toward openness and away from state-controlled markets. "Because if China tries to subvert the trade principles of the WTO by twisting them into elements of a bureaucratic industrial policy, it will both fail to derive the advantages of those principles and it will undercut the global WTO objectives," he said.

A recent World Bank report on China says the most important reform for Chinese leaders is to reduce the role of government in the economy.

It says this would make China more attractive to foreign companies, which have been frustrated by bureaucratic hurdles.

Jim Montgomery, a consultant for multinational companies in Asia, sees China's entrance into the WTO as a very exciting time, which will benefit businesses and also change China for the better. "It's a step forward for both China and the rest of the world. It's a means for China to reinforce its reform process and a means to enable the rest of the world to find access to that very large market," he said.

China has a domestic market of one-point-three billion people. Economists say it also benefits from impressive intellectual talent.

One area in which Ambassador Zoellick believes China can take off is in information technology, known as the I.T. sector.

He says China has agreed to reduce its tariffs on all information technology products to zero by 2005 and that this should quickly reap benefits. "Within this decade, I forecast that China will become the largest supplier of I.T. hardware. It will become the location of choice for I.T. assembly. It is already becoming a design and development partner. It will soon be the second largest market in the world for personal computers. This is a spectacular example of how a strategy of openness can lead to growth.

Taiwan was also accepted in the WTO late last year and Ambassador Zoellick hopes the world trading body can be a channel for enhanced communication and negotiation between the island and China. However, he warns Taiwan may be afraid of opening up too much to China for fear of becoming too dependent on the mainland. China has regarded Taiwan as a renegade province since the two split in 1949.

Other challenges for China and Taiwan abound in this new trading framework, as for the first time since 1975, the powerful economies of the United States, Japan and the European Union are all on a decline at the same time. This has sharpened arguments of anti-globalization movements who fear open trade can destabilize societies if it is conducted with disregard to the welfare of workers and communities.