China firmly maintains multilateral trading system
FILE PHOTO: A cartoon that illustrates the Doha Round of World Trade Talks
2021 marks the 20th anniversary of China’s accession to the World Trade Organization (WTO). Since it joined the WTO, China has ascended to be the world’s first major trading country and the largest recipient of foreign capital inflows.
It is admitted that an open, inclusive, sustainable, multi-lateral trade system is essential for fostering a global economic governance system that is fair and rational.
Difficulties in negotiations
But the fact is that since the 2008 financial crisis, the multi-lateral trade system has faced a conundrum, with its development in a predicament. To restore economic growth, some developed countries adopted beggar-thy-neighbor policies and implemented protectionism. At the same time, anti-globalization prevails. In the context of the COVID-19 pandemic aggravating the global economy, some Western developed countries frequently challenge the multi-lateral trade system, trying to reconstruct the global governance system so as to divert the contradictions within their native lands.
Looking back, the Doha Round of World Trade Talks during the period of 2001-2006 was regarded as a watershed in the history of attempting a multi-lateral trade system. Consensus has been hard to reach in the WTO negotiations regarding agriculture and other traditional issues. Developed countries, represented by the US and Europe, advocate higher-standard trade rules while developing countries pay more attention to development issues and stress the justification of their lawful rights and interests based on the “special and differential treatment principle.” However, the two sides have not reached a balance. The disputes added difficulties to the current multi-lateral trade negotiations.
The emergence of regional trade agreements is an important supplement to the global multilateral trading system given the deadlock of the system. Particularly in recent years, the number of regional trade agreements represented by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the United States-Mexico-Canada Agreement (USMCA) has increased sharply. The member states involved in regional trade agreements have common expectations for the negotiation issues due to similar political and economic systems, and common needs for trade security. It is thus easier for them to reach consensus and the negotiation is highly efficient. Furthermore, the negotiation terms of regional trade agreements are usually what states as participants are most concerned with, and once such agreements are reached, the states will gain immediate economic benefit from them. However, some terms of other agreements within the multilateral trade framework are difficult to agree upon because of the economic disparity of the participants. As a result, as regional trade agreements grow in their totality with increasingly greater influence, the multilateral trade system is overshadowed with less attention.
Chinese solutions proposed
The WTO plays an irreplaceable role in maintaining the world trade order and creating an open, stable, and non-discriminatory trade environment. It guarantees the members’ due rights through multilateral trade negotiations, dispute settlement, and policy deliberations.
Since its accession to the WTO, China has kept frequent interactions with the world economy, with its external trade environment constantly improved, domestic market increasingly diversified, and international trade volume rapidly expanding.
As China has embarked on the new journey of building itself into a socialist modernized country in all aspects, it tries to put forward uniquely Chinese proposals and solutions that are conducive to negotiations and reforms of the WTO.
In promoting the reform of the WTO, the principle of consultation and consensus, which stipulates rules to guide the resolution of issues, should be insisted on as the basis. The advantage of this principle is that WTO members that are in different levels of development are granted equal opportunities to conduct substantial negotiations with their rights and obligations distributed in an even way.
In addition, as the top priority of the WTO, the dispute settlement mechanism helps maintain the basic normal functioning of global trade. Since the Appellate Body which hears appeals from reports issued by panels in disputes brought by WTO members is currently unable to review appeals given its ongoing vacancies, China needs to actively support the restoration of its normal operation. The disputes that arise in the settlement process shall also be encouraged to be addressed according to international common practice to ensure fairness and efficiency.
Liu Bin and Pan Tong are respectively from the Academy of China Open Economy Studies at the University of International Business and Economics and the China Institute for WTO Studies.
Edited by BAI LE