Assess the Economic and Political Implications of Wto Accession

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However, it is notable that the invitation of foreign competition has had a negative impact in some industries. Although China eliminated export subsidies in agriculture and reduced tariffs, it is argued that WTO membership has been detrimental to agriculture. Notably relatively high tariffs are used to protect poor farmers, however without this there is becoming an even greater disparity between Rural and urban sectors. This is emphasised by the evidence given by Fewsmith, that some of 200 million workers still need to be transferred from agriculture to non-agriculture sectors.

In regards to Political implications there are various different implications. In an interview with Long Youngtu, he explains that the biggest political implications of the WTO accession are China’s ability to be transparent. [11]11Notably China are bounded by the following principles due to WTO membership: 1) nondiscrimination (the Most-Favored-Nation [MFN] principle, under which the best market access given to any one member is extended to all other members); (2) market opening; (3) transparency and predictability; (4) undistorted trade; and (5) preferential treatment for developing countries. Previously China had been criticised for corruption, however, under the WTO principles China have shown promising signs in regards to compliance. China due to MFN, now have to take into consideration the intellectual property rights of other countries, thus making foreign firms more protected when they trade with China. In addition to this, China has to take into consideration trade-Related Investment Measures (TRIMs) and Trade-Related Aspects of Intellectual Property Rights (TRIPs). Author Laurence J. Brahim argues that the Transitional Review Mechanism has pressured China into being increasingly transparent. China nonetheless in years 2002 and 2003 did not show any clear and outright examples of non-compliance according to… thus supporting the claim that China is becoming more legitimate. Fewsmith argues that due to a reduction in high tariffs, China is now less inclined to smuggle and the reasons for smuggle cases such as Xiamen and Zhanjiang were exactly for this reason. Fewsmith goes on to argue that China’s increase in transparency will, in turn; improve its attractiveness amongst foreign investors. Moreover, it is now in China’s interest to comply with the rules of the multilateral system to reap the full rewards of WTO membership. [12]12

However, it is true that China still has to go a long way to improve transparency. In 2009, China was accountable for 40% of antidumping investigations and 75% of countervailing duties[13]13. By 2011 China had already been involved in 69 cases of dispute settlements. These instances undoubtedly outline China’s Achilles heel. According to STEPHEN J. EZELL, China has not by any means lived up to WTO commitments and have in fact, given “false promises” throughout there first 10 years of accession. According to him China have undermined every commitment of the WTO. China’s lack of transparency is exemplified where he states: “in October 2011, the USTR (MFN) identified that there were 200 unreported subsidy measures that China has had since 2004. “ and he also outlines that China, in 2009 lost $48.2 billion IPR actions alone. All in all he argues that China have no interest for the proper functioning of the multilateral system, but only mercantilist agendas.

According to Fewsmith, China’s increasing transparency has come as a result of a reduction of SOE’s since WTO accession. He argues that due to competition that has come as a result of China further opening its markets, there has been a vast reduction in the amount of SOE’s as inefficient SOE’s are being eradicated. Notably SOE’s in China were renown for questionable loans in the banking sector and thus, drastic restructuring and reform was needed in order to combat a crisis. According to George C. CHOW “Many state-owned enterprises must lay-off large portions of their work force and some will close as the banking system has far too many branches and employees” [14]14

However, contrary to the view that China is becoming increasingly privatized, Shanshan Li, Ningxiang Xu outlines that SOE’s still play a prominent role even after WTO accessions. He argues that regardless of the number of SOE’s shrinking, firms still gain government subsidy and many of these perform. This seems true to some extent. For instants, Sinopec and CNPC are SOE’s and they have grown to become the fifth and sixth largest MNC in the world and by 2016, both companies have had annual revenue of over $280 million each. In addition to this, Shanshan Li Ningxiang Xu outlines that although China were required to get rid of state-subsidy after accessions in 2001, vast amounts are still available to governments. Notably, this in many ways contradicts the view that China is growing in transparency and reiterates Stephen. J. Ezels view that China is in fact still a mercantilist “nation champion”.

In addition to this, another Political implication is that there is becoming a greater disparity between urban and rural sectors.

All in all, China’s exports and increase in FDI have been the most significant implication of WTO accession for WTO. Whilst China still has notable flaws, it is however evident that they are becoming increasingly transparent as SOE’s decrease and privatization increase.

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