China

CHINA’S ACCESSION TO WORLD TRADE ORGANISATION

By Siobhan Wood and Jane Gordon

China & WTO – A brief History
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China was one of the 23 original signatories of the General Agreement on Tariffs and Trade (GATT) now known as WTO in 1948. After China’s revolution in 1949 they left the GATT system. In 1986 China applied for reinstatement and finally joined the WTO on the 11th December 2001.

Industry Timelines
China’s entry into the WTO opened the doors for foreign firms to enter the market, by:

2005 – Telecom

Firms allowed 25% share in mobile telecom companies immediately, 49% after 3 years 2006 – Automobiles Tariffs reduced to 25% (Were as High as 80 – 100%)

2006 – Banking Foreign banks allowed to conduct business with Chinese Firms 2 years after entry, individuals by 2006

2004 – Agriculture Tariffs on US products will fall from 31% to 14%

Industry Timelines cont.
2005 – Textiles Quotas on imports ends 2005 – Energy/Oil Allow 16.58 million tons of oil initially, increasing by 15% per year until 2005  2004 – Distribution/Retail Restrictions phased out for most products. Foreign firms allowed controlling interest of up to 65% In retail stores

FACTS & FIGURES
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From 2001 to 2005 china imported goods worth nearly 2.2 trillion USD with an annual growth rate of 28%.

Facts and Figures
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In 1978 China’s total foreign trade amounted to 20.6 billion USD and they ranked 32nd in the worlds trading nations. Today China is the worlds 3rd largest trading economy behind the EU and the United States.

Facts and Figures
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Furthermore China’s ratio of imports to GDP has moved from 5% in 1978 to 30% in 2005 which is more than twice that in the US and more than 3 times the ratio in Japan.

Advantages – One Year On
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5000 tariffs had been slashed 2300 improvements to bureaucratic rules and regulations Import duties had been cut by an average of 25%

Disadvantages – One Year On
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Millions of people working in heavy industry had lost their jobs Imports of cheap foreign food had prompted farmers to migrate from the countryside into China’s already crowded cities.

Example: Dell
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Before China entered the WTO, Dell withdrew plans to open a manufacturing facilities in China when government leaders demanded that they maintain control of Dell’s operations, as a result Dell opted against opening the facility Once Dell Recognized that China was joining the WTO it set up its operations in the late 1990`s.

References
www.wto.org www.chineseculture.net www.globalpolicy.org www.english.peopledaily.com.cn

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