The main areas covered by China’s Protocol of Accession

In the wake of World War II, 23 countries came together in 1948 to form the General Agreement on Trade and Tariffs (GATT) to facilitate international trade by eliminating subsidies and trade tariffs, and to boost economic recovery after the war. The GATT was also envisioned as a way to avoid the pre-war tendencies towards protectionism.

China was one of the original 47 signatories, but withdrew in 1950. The remaining members continued to refine and develop the GATT rules, until it merged with the World Trade Organization (WTO) in 1995. China began negotiations to rejoin the GATT in 1986, which became negotiations to join the WTO following this merger. Agreements made with one member of the WTO will automatically also apply to all others, though individual members can apply for exemptions if a term is particularly harmful to their economy. When a country applies to join the WTO, it must negotiate terms on tariff levels and market access that are acceptable to all members. The terms accepted become its Protocol of Accession – the formal document by which it agrees to join the WTO and be bound by WTO multilateral agreements. The negotiations on China’s accession lasted for 15 years.

The European Chamber was created in order to monitor China’s implementation of its official Protocol of Accession, to both protect European business and assist European leaders in their interactions with their Chinese counterparts.

In this article, we have outlined the main areas covered by China’s Protocol of Accession, some of which still form part of the Chamber’s advocacy work today.

Transparency

• Translate all laws, regulations or other measures, at all levels of government, relating to trade in goods or services into one or more of the WTO languages (English, French and Spanish).
• Apply such laws, regulations or other measures in a uniform and neutral manner.
• Establish independent and impartial tribunals for the review of all administrative actions and decisions relating to such implementation.
• Carry out annual, ‘transitional’ reviews of compliance with WTO-related obligations for eight years following accession.

Market access in goods

• Cut tariffs on industrial goods to an average rate of 8.9 per cent.
• Sustain this average against future increases.

Market access in services

• Liberalise a number of service sectors that were previously closed or severely restricted to foreign investment. [China made commitments in all sectors covered by the GATTS, including financial, telecommunications, distribution, and legal services.]

Subsidies

• Make subsidies to state-owned enterprises subject to countervailing duty actions.
• Eliminate export subsidies on industrial goods.

Agriculture

• Eliminate quotas on all but a few agricultural goods.
• Eliminate export subsidies on agricultural goods.

Nonmarket Economy treatment in anti-dumping cases

• Agree to be treated as a ‘nonmarket economy’ for 15 years after accession for purposes of conducting anti-dumping investigations against Chinese companies.

Discriminatory safeguard rule

• Allow WTO members to apply a special safeguard rule, the ‘transitional product-specific safeguard’ (TPSS) that applies only to Chi na and will remain in effect for 12 years after accession
• Allow under the TPSS other WTO members to impose quotas and tariffs on Chinese goods upon a minimal showing of injury, with China’s ability to retaliate restricted.