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WTO and China from a Comparative Perspective

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Introduction

There are many comparative perspectives on Chinese government to the accession of the WTO trade policies. Some of the views, focusing on the legal policies and the key responsibilities set, observed that China’s greatest challenges were the legal requirement commitments, suitable for implementing particular rules and to ensure that they are maintained well through the WTO trade mechanisms, for example those relating to the dispute resolution matters. Secondly, from the point of view of economics, the trade accession is observed to be some of the key comparative measures that will open the trade doors for the Chinese people global trade. However there is a compelling comparative perspective that sees the WTO trade accession policies as a part of the broader set of trade reforms, which the Chinese government has taken since 1978 as key measure for alleviations of poverty and promotion of economic development within the country and globally.

One of the greatest milestones for economic changes in China and the World Trade Organization was the initiation of the trade accession agreements of China to WTO in 2001.It was found that the Chinese accession with the world trading system might have a great economic impact on other countries. These countries will face the impacts through four channels; expanded market for the exports in other global markets, stiff completion in third world markets, expansion of level of investment in Chinese economy and growth of the foreign investments of China in developing countries such as in Africa. Therefore, China will create a great market for exports from other countries. To understand the comparative aspect of the country and the WTO, we must adequately understand the link between the WTO accession and the many reforms said to meet the Chinese demands after the implementation.

WTO trade rules and policies are important elements in the formulation of good policies for economic development, though they do not produce a complete work. Just like other trade policies, they aim to reduce the effects of groups or individuals on trade, rather than achieving all goals. Note that most of the WTO trade agreements are permissible through the legally policy, which any country is free to choose.

Discussion

An understanding of how WTO works is essential for this study. We shall discuss how the various WTO accessions have influenced the social, political and economic perspectives. China’s accession has many perspectives, which are clearly elaborated in this section and the various policies associated with them or their implication. These policies are found to affect the Chinese economy and even that of the households. The policies have been found to create good opportunities for the Chinese people, both globally and locally. They also facilitate the reduction of costs with the trading system. Usually, there are five key principles of the general trade agreements on trade tariff and the WTO, which provide an essential framework for analyzing and interpreting China’s accession implications. These principles include:

Non-discrimination Principle

This principle is based on the idea to equally treat the members of the WTO and, thus, the best market services are extended to all of them none discriminatively. In most cases, countries are discriminated by the suppliers, based on domestic goods or even the imported goods found in the internal market. The application of this principle to China case involved some additional trade commitments, among them the imposition of dual pricing modes, trading restrictions are phased out and new judicial reviews, and administrative policies, and arrangement are fixed. These agreements are to play a vital role not only to the central government operations but also in the internal trade rules and regulations.

Transparency and predictability principle

Trade policies are based on transparency and predictability principles set by the WTO guideline policies and rules that require specific trade commitments, which China has entered into with the organization. Some of the commitments include uniform provision of applications of the trading regime and provision of adequate judicial changes. Another essential contributing element is to provide mechanisms, aimed at bringing and solving local protectionism measure, vital for the expansion of the central government. Lastly, China has decided to bind on the entire tariff system on goods. In order to achieve all these; the government has advocated tariffs below the current rates applied (Edward S. Seinfeld, 2010).

Moreover, under this principle, there are transitional reviews that took place annually for eight years after China’s accession mainly for providing additional information necessary for reforms to the central government. Another important factor to promote trade was the policy on China’s government to abolish the trading restrictions on some specified commodities.

Other commodities, and especially those on the short list of products, were to remain subject to the trading restriction and, thus, the foreign market, domestics and international suppliers to distribute the commodities. The purpose of all these are to emphasize on the transparency and the specific requirements on accession. Secondly, it was observed that an emphasis on transparency will help to avoid unnecessary cost and other acrimonious conflicts of the continuous destroyed trade relationships between Japan and United States of America during Japan’s trading period of high exportation and growth (Richard Baum, 2010).

Market opening principle

The market opening principle under the trade accession is committed at ensuring that China abolishes the non-tariff trade barriers on its trade sectors and lastly to reduce the trade tariffs. Other commitments involved that China eliminates quotas fixed on textile items and clothing i.e. also signed in the Multifiber Arrangement and United States commitment to introduce MFN trade tariffs instead. The trade tariffs set by China were very essential, as they were to result in the weight average trade tariff reduction from around 13.4 percent in 2001 to almost 6.8 percent by the termination of the implementation era. However, these reductions were less than 27 percent that the Chinese government achieved from 1992 to around 2001.

The commitments taken by the China to liberalize its trade affairs extremely and relatively large when compared to those used by other states, though the WTO has subjected them to greater reservations and qualification, than those of other countries globally for credential purposes (Roselyn Hsueh,2010).

On the other hand, the Chinese trading partners have also played a key role in abolishing some of the trade quotas that initially had been imposed under the MFA agreements. The abolishment of these trade restrictions is to provide a vital opportunity for the Chinese government to improve its export amount of clothing and textile. This has been found to provide a great force of comparative advantages on these exports. These advantages can be ignored, if the goods importers decide to exercise own rights of imposing some special textile and clothing measures for safeguarding trade during the transition period, expected from 2007.

Another essential concession set by most of the already existing members of the WTO was to stop producing making non-application provisions of those types found against Japan by the United States and western countries on admission to the GATT organization. These concessions will in future affect China’s status of receiving the MFN in almost all global markets. The status might save China from the onerous single sided procedure, such as the earlier annual reviews of China’s MFN level in the United States. This has assured the Chinese investors better export opportunities that a foreign market has continually provided.

Undistorted trade principle

This WTO principle relates to the undistorted trading systems and it involves all general principles in some areas, such as those associated with the countervailing trading measures, the subsidies safeguards and antidumping agreement policies. China has greatly followed these policies beyond measures, by taking stringent measures, such as not allowing agricultural exports subsidies. The existing policies of safeguarding and antidumping have been found to create trouble effects for China’s access to foreign products markets.

WTO dumping policies are biased toward finding it even where no economical dumping activities sites available. The WTO research experts found that dumping situation in China was worse than in other developed countries, because over 70 percent of the Chinese government exports are highly dumped. China was also mentioned to remain vulnerable to the situation for the next 15 years unless the government took adequate measures, necessary for reducing dumping. A great worry of the china’s trade accession is the continuous rise of the product specific transitional based safeguarding provisions.

These provisions have been found too quick by any member of the WTO, thus, triggering stiff actions against the Chinese export diversion to other products market. The country is in thr worst condition, especially in the non-market based economy that introduces new forms of measures, targeted to hit China directly. However, trade diversion and protection measures permitted under these trade provisions are highly troubling and provide little procedural safeguarding measure.

There is an attempt by some WTO members and, especially, United States and other western countries to propose the use of product specific transitional safeguarding against China’s product export to other countries, such as the clothing and the textile items as they have already had surface in the United States. Despite the export quotas system imposed through the Multifibre Arrangement, if the countries decide to use the product specific safeguard and at the same time other countries fail to reject the temptation of using trade diversion, then domino effect may arise.

Domino effect means that most of the China’s exports will be diverted to fewer countries in small amounts, leading to China retaliate, as it will think that other countries are against it through unfair trading activites.China might retaliate by deciding to promote unethical dumping actions and contesting for the safeguarding measures through the WTO trade disputes. This will eventually destroy the trading system both in China and for all those countries under the WTO umbrella. However, the retaliation measure taken by China might be costly to its good performing economy, thus, it is advisable to adopt the policies of settling the dispute through WTO. Retaliation as its politically driven measure can ruin the trade liberalization policies or create a lot of uncertainties around the trade agreements (Xiaoming Huang, 2006).

The best measure that the Chinese government can decide to undertake is to adopt and push for the trade reforms on antidumping and safeguarding policies that will assist to minimize the numerous abuses of the protectionist policies. This can greatly improve the economic performance of the country in the short run, while at the same time improve the global trading system in the future. Moreover, as it is proposed by the economist, the Chinese government can press the WTO to adopt new policies and rules capable of granting automatic share of the market of a given commodity. Secondly, the Chinese government can strictly advocate the dumping policies, so that the severity of dumping is reduced and dumping allowed to be practiced on special circumstance. Lastly, the Chinese people need to consider trade coalition agreement as a tool to ensure that they win the market in the developing countries (Michael A. Santoro, 2006).

Intellectual property rights principle

An intellectual property regime suitable for a developed country may be difficult to apply in developing countries. However, all the states under the WTO’s agreements need proper regulation to protect innovation and patent rights for the purposes of ensuring that the markets remain more competitive. The Agreement on Trade Intellectual Property Right (TRIPS) plays a key role under trade agreements for China and has been instrumental on WTO accession. Recently, China greatly improved intellectual property rights by promoting innovations both locally and assessment of the foreign-based technology, thus, reducing pressure from the trading partners. Through, the intellectual property rights China has made it possible in updating some of its trademarks, patent right and copy right as a move to match the standards of other developed countries in WTO.

Conclusion

The Michael A. Santoro, China 2020 World Trade Organization trade regulations have changed the way China trade with different countries all across the globe. The World Trade Organization has principles, which member states are supposed to abide with. These principles are there to ensure there is fairness in the way world trade is carried out by various players. The principles have a direct impact on social, economic, as well as the political settings of the member states. China has not been left out, the WTO principles have transformed the way the country carries out her trading activities. With various restrictions and regulations in place, the Chinese trading capacity is impacted in many ways.

World Trade Organization has non-discrimination trading policy. The application of this principle to Chinese trading activities has resulted in additional of some trade commitment among them the imposition of dual pricing modes, trading restrictions phased out and new judicial reviews, administrative policies, and arrangement are fixed. These agreements have been found to play a vital role not only in the central government operations but also in the internal trade rules and regulations.

The intellectual property principle that is widely in use in various World Trade Organization member states has also gained support in China. The government of China has implemented this principle in its trading and production policies. The government has put in place regulations aimed at protecting individual property rights and intellectual rights. This has in turn resulted in greater innovation within the country in various sectors of the economy. Currently China is among the leading nations in the field of research. This principle has made China one of the leading countries in production of various technologically related goods such as phones, laptops among other products.

The principle of marketing opening has received support from the Chinese government. The government has opened its marker to various international trade players. However, the Chinese government has misused this trading principle on marketing, whereby it tends to dump goods of low quality in foreign markets. These has lead to an outcry from various international trade, especially members of the World Trade Organizations, which are arguing about the unethical behavior of dumping goods of low quality in their markets. They are convinced that the Chinese dumping activities are affecting their economies in a negative way. They are pushing for a tougher trade restriction on China. Despite the negative aspect of the principle, the Chinese people have greatly benefited from the opening of their market.

Many jobs have been created because various multinational firms tend to invest heavily in China due to its large population that provides cheap labor as well as a ready market for their goods. This has contributed greatly to making Chinese economy one of the fastest growing economies in the world.

In conclusion, WTO principles have received overwhelming support from the Chinese government. The people of China have benefited from the implementation of these policies in their social, economic as well as political lives. The policies have led to the growth as well as resulted in reforms in the most crucial institutions of the country.

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