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.