Twenty years ago on December 11, China formally joined the World Trade Organization (WTO). The industry generally believes that China and the world win – win 20 years after joining the WTO.
As Wto Deputy Director-General Zhang Xiangchen said, China’s accession to the WTO has established stable policy expectations for its trading partners. China’s integration into economic globalization has provided a huge market space for the world.
However, in recent years, the WTO has faced many challenges. In particular, by the end of 2019, the WTO had suffered its most serious crisis since its establishment. The appellate body, known as the “pearl in the CROWN of the WTO”, was officially suspended, and the dispute settlement mechanism was paralyzed. Then, the world was hit by the COVID-19 pandemic, and the volume of global trade plunged.
How can China play a positive role when the global multilateral trading system faces the impact of protectionism?
Weaker WTO role?
With the formal suspension of the appellate body, some argue, the WTO’s role in global trade has diminished.
Zhang Jianping, director of the Regional Economic Research Center under the Ministry of Commerce’s Research Institute, told China News Service Guoshiqi that the US obstructing and sabotaging the appellate body cannot substantially damage the role and influence of the WTO on global trade. Because trade friction cases and the amount of money involved in the overall global trade is still very low.
Ni Yueju, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, told China News Service that the WTO dispute settlement mechanism is a pillar of the WTO, and its suspension will inevitably affect the WTO’s role in global trade.
“But we know that the erosion of the WTO’s role began with the doha round dragging on, and that is the main reason why regional and bilateral free trade agreements have gained momentum since the beginning of the 21st century.” Ni pointed out that besides dispute settlement, WTO’s functions also include making trade rules and expanding trade and investment liberalization and facilitation. Any loss or weakening of its functions will reduce member states’ confidence in the multilateral trading system.
Therefore, Ni Yueju suggested that in order to restore the confidence of WTO member states, apart from striving to restore the dispute settlement mechanism as soon as possible, it is also very important to promote the effective conclusion of the negotiation results of trade rules and let member states benefit from further opening up.
We will advance the WTO reform process
China is taking an active part in regional economic cooperation. We are not only pushing for the RCEP to enter into force early next year, but also applying to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership (DEPA), opening the door even wider.
In this process, the relationship between regional trade agreements and WTO has always been the focus of academic research.
In this regard, Zhang jianping pointed out that free trade agreements or regional trade agreements are encouraged and supported by the WTO and need to be filed in the WTO. The WTO website also regularly publishes the number and text of regional trade agreements that have been filed and are being implemented.
Ni Yueju said that objectively speaking, if the development direction of the two is the same, and both are for the development of freer and more convenient trade and investment, more countries participating in more open and free regional trade agreements can play a role in promoting the development of multilateral trading system to some extent.
However, Ni believes that if regional trade agreements are more exclusive, such as the US-Canada Mexico agreement, or add too many geopolitical factors, the multilateral trading system may be more corrosive.
Therefore, she believes that whether regional agreements can replace multilateral agreements to become the mainstream of national economic and trade relations in the future depends on the WTO reform process. If there is no progress in WTO reform and the three functions of WTO cannot play an effective role, this possibility cannot be ruled out.
We will firmly support safeguarding the multilateral trading system
Compared with the early days of China’s entry into wto, the world economic situation and international economic and trade pattern have changed greatly. Ni Yueju believes that first, globalization has entered a slow lane, and trade protectionism and unilateralism are on the rise.
Second, the rapid rise of emerging economies, led by China, is playing an increasingly important role in the world economy, squeezing the role of developed countries. In this new context, the developed economies led by the US have banded together to put pressure on China, trying to change the previous rules of the game and make China submit to the new rules of the game or be excluded from the new rules under the principle of “equal opening up” and “fair competition”. The salient feature of the new rules is the transition from the border to the border, pointing to China’s domestic trade and industrial policies, as well as relevant laws and regulations.
How should China respond to these challenges? What role can WTO reform play in solving the above problems for China?
“The CPTPP rules are representative of the high standards of economic and trade rules of the future. It is therefore important to stress test against high standards of economic and trade rules.” Ni Yueju pointed out.
The WTO has 164 member countries. Developing countries, with their growing economic strength, have an increasing say in the WTO. Ni believed that China, as the largest developing member country, can play a leading role in the WTO, jointly safeguard the legitimate rights and interests of developing countries and jointly promote the development of the multilateral trading system in a more free, open, fair and inclusive direction.
Zhang suggested that China should take the path of innovation-driven development in the future, pursue high-quality development, further promote institutional opening-up, especially involving cross-border flows of capital, technology, talent and other factors, and promote economic structure optimization, all of which should be carried out under the conditions of opening-up.
“The WTO rules are beneficial to China, the largest developing country, and we will firmly support and defend the multilateral trading system. At the same time, we will work hard to build a network of free trade zones covering countries and regions along the Belt and Road and promote further development of globalization.” Zhang jianping said.
