1 / 33

China and the WTO

China and the WTO. International Trade Relations Spring 2003 Prof. Malawer. Dan Funk Gary Malloy Ed Ostensoe Devi Prasad. Agenda . China’s WTO accession and current global trade data China’s WTO membership Implications of China’s adoption of international trade

Anita
Download Presentation

China and the WTO

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. China and the WTO International Trade Relations Spring 2003 Prof. Malawer Dan Funk Gary Malloy Ed Ostensoe Devi Prasad

  2. Agenda • China’s WTO accession and current global trade data • China’s WTO membership • Implications of China’s adoption of international trade • China’s WTO accomplishments thus far and some complaints • TRIPS overview – IPR in China and the impact on trade • Trade dispute settlement mechanisms • China’s WTO concerns, problem areas and adoption issues • China and TRIPS – legal modifications and practical obstacles • United States trade policy proposal on China and IPR

  3. China and the WTO • China’s WTO accession was a 15-year process • Applied for admission to GATT in July 1986 • Entered WTO December 11, 2001 following Doha Ministerial • 143rd member nation • Organizational support and oversight • TPSC: Trade Policy Staff Committee Subcommittee on China’s WTO Compliance • MOFTEC: Ministry of Foreign Trade and Economic Cooperation • China’s main domestic WTO activities since accession (2002) • Restructuring of trade-related ministries and agencies • Education and training on the requirements and benefits of WTO membership: SIPO and CIPTC

  4. China’s Accession Agreement • Confers obligations of 20+ multilateral WTO agreements • Especially MFN, national treatment, TRIMS, and TRIPS • Opens China’s markets to WTO members • Includes safeguard mechanisms for WTO members • Legal restraint of Chinese imports • Textiles safeguard • Special methodology for measuring dumping • Transitional Review Mechanism • Annual WTO compliance review through 2009

  5. China’s IPR Infrastructure • SIPO • State Intellectual Property Office • CIPTC • China Intellectual Property Training Center • HK SAR IPD • Hong Kong’s Special Administrative Regions Intellectual Property Department • APEC IPEG • Asia-Pacific Economic Cooperation Intellectual Property Rights Expert Group

  6. China Trade

  7. China Trade Source: US Department of Commerce – ITA Market Access Compliance (2003)

  8. US / China Trade Balance

  9. Transformation - 1970s to 2000 Internal and Institutional • Isolation to integration i.e, Ordinary trade regime to Dual System regime i.e., liberal trade regime • Duty free import of investment, inputs by Foreign Invested Enterprises • Import tariffs, TBs & NTBs, trade by SOE • Entry into IMF and IBRD in 1980s • Revival of contractual party status with GATT in 1986 i.e, 36 years gap • WTO membership – A felt need in 1990s for external impetus to overcome obstacle to further reforms to sustain growth • Membership Welfare Impact – China to grow by 2.2% & World by 0.2% p.a • ($28 bn and $ 56 bn respectively) • $10bn trade in 1970s rose to $280bn in 2000 • Moved up from 30th to 6th position as trading nation • Trade/GDP increased four fold to 40 percent – next only to that of US

  10. Meaning of WTO Accession A Multilateral Trading System • For Some Developing Countries • A Destructive Force - smashes old edifice of their closed economy • For Others • A Constructive Force – builds their institutional capabilities and overhauls economic management system • For For China – • The Most Efficient system that taps potential of each trading partners through open market (i.e., Not a bazaar but bidirectional relationship) • A need & opportunity to officials, businessmen, general public to reconfigure their mindset to new circumstances (a dent on their power base) • For the US – • For ALL– • A responsible behavior from major players who account for 75 % of global trade through multilateral trading agreements

  11. Impact Transmission through • Factor productivity growth • Expansion of Labor intensive industries • Contraction of Protected & Land intensive industries • Competition to inefficient SOEs • Reduced in budgetary revenue ? • Increased unemployment and regional disparities • Increased Market access to Chinese exports in US, OECD and other developed countries • Increased market access to US & European Exports • for agro, capital and technology intensive industries • Enhanced policy transparency, better governance, greater business predictability leading to consistency in applicabilition of rules

  12. Some of China's Accomplishments & The US gains • Reduced tariff from 55 % in 1982 to 12% in 2003 • Permitted more than one shipment per licence (a major US concern) • Promised to bring down to <10% by Jan 2005 • Repealed more than 90 Laws • Progressed in its commitments • Reviewd >2500 trade laws • Trained 1000 Judges abroad • Amended legislative framework for • Trademark, Copy right, Patents • Initiated anti-piracy and anti-counterfeiting campaign in 2002 • But weak on enforcement and remedies that have deterrent effect. • Police are not interested in pursuit of violations • An illustrative list of impact on US – A pointer for more?! • US high-tech IT export sector alone gained $500 mn due to tariff reduction by China in 2002 • US exports of wood products surged by 65% in value due to tariff reduction • Beef & poulty exports increased by 28% in value; almonds exports up to $50 mn

  13. Complaints • Weak IPR regime - violation of which has implication of $1.9 bn/yr • Incomplete & inconsistent information on Subsidies & CVD • Continuing Quotas and licence fee on some raw materials • Weak VAT administration on domestic products • Indirect restrictions under TRIMS • Mixed compliance in Agriculture sector due to TBs

  14. Some Good news • 2002 anti piracy campaign involving 400,000 government agents yielded seizure of 16 mn illegal publications and 39 mn pirated discs • Japan and other WTO members are co-operating at TRIPS Council to ensure Chinese compliance • China to host 2003 WIPOConference

  15. TRIPS – Origins & Functions • TRIPS came into effect January 1, 1995 (Uruguay Round) • Developed countries: 1-year phase-in period • Developing & Transition countries: 5-year phase-in period • Least developed countries: 11-year phase-in period • TRIPS requires compliance with WIPO conventions • Paris Convention (industrial property) • Berne Convention (copyright) • Rome Convention (performances) • IPIC (protection of integrated circuits) • TRIPS Council • Monitoring • Consultation • Technical Cooperation • Reviews and Negotiations on Specific Subjects • Review of TRIPS agreement

  16. Resistance to TRIPS • Costs to establish and enforce IPRs • Technology transfer • Patent eligibility and compulsory licensing • Biotechnology • Confidential test data • Geographical indications

  17. How Are “TRIPS” Disputes Handled? • Bilateral Discussions, for example U.S. / China, EU / China, Japan / China • Arbitration – CIETAC, China International Economic and Trade Arbitration Commission, (Based on the number of cases CIETAC is the busiest arbitration institution in the world) www.kpmg.com.cn

  18. Advantages Of Arbitration • More time and cost effective than court proceedings • Right to chose the arbitrators from an international pool of arbitrators • CIETAC grants a binding decision & awards can be enforced in China and abroad www.kpmg.com.cn

  19. Who Are The Disputes With? • Chinese Individuals • Chinese Companies • Chinese Government “The number of cases involving the first two categories far exceeds those of the third.”(Export America, June 2001, Dispute Avoidance And Dispute Resolution In China)

  20. Disputes With Chinese Companies Or Individuals Primary Ways To Resolve A Commercial Dispute In China • Negotiation (least expensive) • Arbitration (CIETAC) (CMAC) • Litigation (complex and time consuming) • DSB (Export America, June 2001, Dispute Avoidance And Dispute Resolution In China)

  21. Dispute Resolution (WTO) Current Cases Involving China • AS RESPONDENT – NONE (www.wto.org) • AS COMPLAINANT – TWO CASES VS. U.S., REGARDING “DEFINITIVE SAFEGUARD MEASURES ON IMPORTS OF CERTAIN STEEL PRODUCTS” MARCH 2002 (www.wto.org) “Many cases will not be based on a violation of fair trade practices and therefore are not subject to the WTO dispute settlement mechanism.” (www.kpmg.com.cn)

  22. International Arbitration Cases 1995 1996 1997 1998 1999 2000 2001 2002 AAA 180 226 320 387 453 510 649 672 CIETAC 902 778 723 645 609 543 731* 684* HKIAC 184 197 218 240 257 298 307 320 ICC 427 433 452 466 529 541 566* 593* AAA American Arbitration Association CIETAC China International Commercial Dispute Resolution HKIAC Hong Kong International Arbitration Center ICC International Chamber of Commerce *Statistics include domestic as well as international arbitrations www.hkiac.org/en_statistics.html

  23. MOFTEC: China’s WTO Intermediary • MOFTEC: Ministry of Foreign Trade and Economic Cooperation • Review of 2500 Domestic Trade Laws in 2002 • 830 reportedly “repealed” • 325 reportedly “amended” • Mission:Continued Education & Implementation WTO requirements (Central/Provincial Officials)

  24. WTO-Mandated Tariff Reductions • Information Technology/Computers • Chemicals • Autos/Parts • Wood/Paper Products • Agriculture Goods (Beef/Dairy/Citrus, etc.)

  25. Other Central WTO Concerns • MFN and National Treatment of Goods/Services • Transparency and Rules of Origin • Independent Review of Administrative Decisions • Technical Barriers to Trade, Import Licensing, • Antidumping, Subsidies/Countervailing Duties • NTB removal initiated in many Chinese sectors: Chemicals to Scientific Equipment • Legal foundation to access China’s: Financial Services/Banking/Insurance, Telecom, Product Distribution, Construction, Engineering, etc.

  26. WTO Imposition Problem Areas • Limited Transparency in adoption and operation of new laws & regulations. • Inconsistent Implementation at local and provincial levels of government. • Local Government Resistance and arbitrary imposition of existing laws/WTO requirements. • Little opportunity for public commentary & input in drafting of laws & regulations. • Endemic uncertainty and lack of uniformity in law imposition and enforcement mechanisms.

  27. Selected US-China WTO Trade Issues (Agriculture and TRIPS/IPR) • Agriculture • Bio-Technology:Uncertain Rules and Regulation Imposition • Tariff Rate Quota (TRQ) on selected Bulk products: Cotton/Wheat/Corn • Sanitary/Phyto-sanitary “zero tolerance” requirements on Meat & Poultry imports, not applied to domestically produced food stuffs. • Trade delaying inspection and monthly import limitation requirements. • Continued Subsidization of domestic production for export (corn).

  28. WTO Mandated Changes in China’s Intellectual Property Laws (TRIPS) • Patents – China’s new patent law came into effect on July 1, 2001 • Trademarks – China’s new trademark law went into effect December 1, 2001 • Copyrights – China’s new copyright law went into effect October 27, 2001

  29. China’s TRIPS Agreement Failings • Ineffective Enforcement Mechanisms, Remedies, Penalties • Lack of Coordination in Chinese Ministries and Agencies • Local Protectionism and Corruption • Low Police Enforcement Interest • High Legal Threshold for Criminal Prosecution and Conviction • Lack of Technically Skilled Judges and Expert Witnesses • Limited Judicial/Legal Experience • Weak Punishment Mechanisms for Civil and Criminal Penalties

  30. USTR Testimony to Congress (2002) IPR related trade association testimony to Congress: “Effective enforcement against (IPR) infringement in China is universally recognized as the chief concern of (IPR) rights holders, as piracy rates in China are high.” For example: US Copyright holders report that inadequate enforcement “has resulted in piracy levels in China for most sectors at around or in excess of 90 %” with losses due to piracy estimated to be a staggering $1.9 Billion annually….

  31. Recommended US Policy and Actions • Demand stronger enforcement of China’s IPR laws • Enhanced Judicial Educational Exchange • Continued Bi-lateral Discussions with Chinese Ministries both US based and in concert with other WTO members. • Increase trade barriers to China • Form coalition with other IPR-affected WTO members to exert trade pressure on China • Timeframe: 3 years (tie this to TRM milestones)

  32. Questions?

  33. Sources • China Online: http://www.chinaonline.com/refer/biographies/secure/BB-REV-GaoLulin3.asp • China Intellectual Property Center http://www.ciptc.org.cn/en/zxjsen.htm • WTO Website: http://www.wto.org • WIPO Website: http://www.wipo.org • TRIPS: Controversies and Potential Reform: Keith E. Maskus, Lead Economist, The World Bank • Development of China Trade 1995 – 2002: http://mac.doc.gov/China/docs/chinatrade.pdf • USTR: 2002 Report to Congress on China’s WTO Compliance • USTR World Regions: China, HK, Mongolia, Taiwan: http://www.ustr.gov/regions/china

More Related