All stand to benefit from China's entry to WTO

All stand to benefit from China's entry to WTO

The Asahi Shimbun, Tokyo

China has been accepted as a member of the World Trade Organization (WTO) in its meeting of trade ministers. The world's most populous nation with its economic might is expected to formally join the international watchdog organization by year- end.

It took 15 years of grueling negotiations to bring Beijing into the WTO since it applied to join the predecessor General Agreement on Tariffs and Trade (GATT). The duration and difficulty of the process is proof of the difficulty of getting agreement on terms of integrating China with its 1.3 billion people and an economy that thrives on a policy of reform and liberalization.

China hoped to protect its agriculture and service industries, which are vulnerable to tough international competition. At the same time, many members worried that China would use WTO membership as a launching pad for an all-out export offensive based upon cheap labor as its principal competitive advantage. The sharp conflict of interests proved difficult to resolve.

In its bid for WTO acceptance, China has accepted a special safeguard that lets trading partners to impose controls upon certain imports specifically from China to protect domestic industries. With arbitrary rule by mandarins still dominant, the nation has also made substantial effort to harmonize its own systems with international standards, such as establishing legislation to protect intellectual property rights.

WTO acceptance has given China a new development opportunity as the world's factory, churning out competitive products from textiles and apparel to home appliances and information equipment, capitalizing upon its growing foreign investments.

WTO members have mixed feelings about the implications of China's admission. On one hand, bringing Beijing into compliance with international trade rules mandated by the WTO membership will make investors feel secure in pouring their money into the country. Most of all, foreign investors are drawn by China's vast domestic market.

At the same time, many nations fear that lower trade barriers will help China accelerate an already spirited export drive. They also worry that their own manufacturers might shift production to China for its cheap labor, hollowing out industry at home.

But neither entrenchment nor alarmist warnings of a Chinese ``threat'' would help much. Nations need to take advantages of the new opportunities created by China's admission into the WTO in ``plus sum'' thinking that emphasizes mutual benefits from increased trade and investment involving China.

China, as well as its trading partners-including Japan-must redouble their efforts to change themselves to encourage this attitude among WTO members.

Exposure to international competition will force China to reform its inefficient state-owned enterprises quickly. China must also reinforce its social safety net to prevent a further widening of the regional gaps in economic development. Accelerated effort toward a market economy is bound to have a great impact on the nation's political system, now based on the Communist Party's monopoly on power.

Japan should try to consider and prepare for future economic ties with China based on a long-term perspective, addressing such issues as an appropriate division of labor and complimentary relations it should establish with China. Japan must pursue ways to expand the economic vitality of both countries as good trading partners after careful study of China's present capabilities and future potential.

Import controls as a safeguard are just temporary relief. Trade disputes need to be addressed under WTO rules.

Members of the Association of Southeast Asian Nations (ASEAN), whose exports often compete directly with Chinese products in international markets, are bracing for tougher times. But Chinese WTO membership also presents a chance to expand and deepen the economic relations among the region's economies. Taiwan, which was accepted into the WTO along with China, will also benefit from a deeper integration with the mainland.