On Monday 12 November 2001, China formally signed an accord to join the World Trade Organisation (WTO) thereby bringing the world's sixth biggest economy into the global trading body.
The text of the signed agreement is being kept confidential pending ratification, but outlined below are highlights of what WTO membership means and how this affects what happens in China.
What do members of WTO agree to?
- Legal ground rules for international commerce
- Provision for trade to flow as freely as possible
- Reduction of trade tariffs
- Equal treatment between trading partners
- Equal treatment between local and foreign produced goods and services
- Redress through WTO's dispute resolution mechanism.
How does membership immediately affect what happens in China?
- Empowers those in China's leadership to make faster moves towards a more open economic environment
- Requires certain long discussed changes to the Chinese regulatory system
- Transparency of bureaucratic functions will increase, and accountability of government offices will improve.
What is the message to investors now?
China's Minister of Foreign Trade and Economic Co-operation Shi Guangsheng said that by joining WTO China would provide "more and better opportunities" for exporters and investors worldwide. The potential opportunities for investors in China are huge, however, realisation of these opportunities will come gradually over a number of years.
Where will the new opportunities lie?
The textile, agriculture and telecoms industries are due to open up, and banking and insurance opportunities are to increase significantly. China has begun to look at further foreign investment in infrastructure such as transportation and communication although there are still many areas to be addressed. Implementation program of WTO agreements are to be phased and the specific time tables have not been publicized. In some sectors it will take many years for investors to gain equal trading rights e.g. foreign banks are expected to have to wait 5 years for full national treatment and to compete for individual customers without geographic restrictions.
For further information please contact Luke Filei on luke.filei@cms-cmck.com or +86 10 6590 0389 in Beijing or +86 21 6289 6363 in Shanghai.
