Correct Understanding of Advantages and Disadvantages in Joining WTO

This article focuses on the following three points: I. The Advantages and Disadvantages of Joining the WTO; II. Approaching Advantages and Disadvantages in a Dialectical Way; and III. Meeting Challenges, Promoting Advantages and Eliminating Disadvantages.

I. The Advantages and Disadvantages of Joining the WTO

Joining the World Trade Organization (WTO) is the internal requirement for China to deepen reforms, expand opening and establish a socialist market economic structure, it is the need for China's economic development. Joining the WTO in the capacity as a developing country is both advantageous and disadvantageous to China's economic development, but on the whole, advantages outweigh disadvantages.

It is conducive to expanding export and attracting foreign capital. After entering the WTO, China will enjoy the most favored nation status as a member country. This will not only enable China to enjoy the advantages offered by other countries and regions opening their markets, and cause the main trading countries to gradually abolish their discriminatory practices, but will also enable China's products to possess more favorable competitive conditions than before, thereby promoting China's export trade, particularly the development of the export of China's industries with comparative superiority. After joining the WTO, China has to fulfill the WTO's specified obligations and gradually open its domestic markets, this will help further improve the foreign investment environment and enhance the appeal of Chinese markets to foreign businessmen, facilitating the introduction of more foreign capital, technology and management expertise.

It is conducive to accelerating the readjustment and optimization of the domestic industrial structure. The readjustment and optimization of the industrial structure is an important and pressing task for China's economic development. Joining the WTO will create a favorable international environment for the implementation of this strategic task.. We can transfer some oversupplied products and industries through other WTO members opening their markets to China; by opening its markets to other member countries, China can make use of foreign capital and technology to transform its traditional industries and accelerate the development of high-tech industries and service trades, and raise the overall levels of China's industrial development.

It helps continue deepening China's economic restructuring. China's economic structural reform is aimed at establishing a socialist market economic structure, its basic requirement is to give full play to the role of the market competitive mechanism. Joining the WTO will expedite the process of China's reform. At the same time, it will boost the reform of State-owned enterprises (SOEs) and the establishment of a modern enterprise system; it will also push forward the in-depth structural reform of foreign trade, banking, insurance, securities and commercial aspects, so as to meet the need of the gradual opening of these areas.

It is conducive to China's participation in the formulation of new rules of international trade, safeguarding China's legitimate rights and interests and elevating China's international status. Joining the WTO to participate in the formulation of bilateral trading rules can give full expression to and reflection of the opinions and demands of China and the numerous other developing countries, give further play to China's role in international economic affairs, and enhance China's international status. In the meantime, China can make use of multilateral dispute solution mechanism, reduce frontal frictions and conflicts with other states, thereby effectively safeguarding China's legitimate rights and interests.

It is conducive to China's participation in the world economic globalization process. In this process it can better pursue benefits and avoid harms and protect and expand itself. After its projected entry into the WTO, China and other member states are all required to act strictly in accordance with international rules and open markets to each other. This will help China to comprehensively participate in international competition and international cooperation and give full play to its comparative superiority. At the same time, entry into the WTO also helps China to enter into extensive cooperation with transnational corporations, introduce from them capital, technology and management expertise, make use of their sales channels and networks to expand exports. Entry into the WTO also helps China establish its own transnational companies, set up enterprises in other counties and enhance the international competitiveness of the Chinese economy..

Of course, in joining the WTO, China will both enjoy its due rights and undertake corresponding duties, this will unavoidably bring certain pressure and challenge to us. Firstly, further opening the market will cause some domestic products, enterprises and industries to face more intense competition. After its projected entry into the WTO, China must observe WTO stipulations on opening the market, this will form certain pressure on the speed and steps of our opening the market. Along with the expansion in market access, the reduction of tariffs and the abolition of non-tariff measures, more foreign products, services and investments will possibly enter Chinese markets, domestic enterprises will face fiercer competition. Secondly, China's foreign economic and trade management will, to a certain extent, be subject to the restriction of WTO rules. China's current foreign-related economic laws, regulations and policies still do not completely conform with the stipulations of WTO regulations, although this is also an important task in China's effort to deepen its economic and trade management, there still exist many areas of conceptual and institutional inadaptability. There is still a big disparity in the working methods of government offices and managerial personnel. Thirdly, the adjudication on the solution of multilateral disputes may possibly produce results unfavorable to us.

II. Approaching Advantages and Disadvantages in a Dialectical Way

How to look upon the gains and losses of China's projected entry into the WTO? We should approach this question with an all-round, developing and dialectic viewpoint. We should analyze the advantages and disadvantages or gains and losses resulting from China's projected WTO entry from the high plane of the general situation and strategy concerning the cause of reform, opening up, economic development and the modernization drive. We should see both individual industrial units and the whole industry, we should see both present and future things.

In analyzing the advantages and disadvantages of China's joining the WTO, we cannot base ourselves on one or several industries, but instead we should keep an eye on the development of the entire economy. Approaching the matter from a single industry, entering the WTO will bring development opportunities for some industries with comparative superiority. Looking upon the matter from the entire industry, accession to the WTO will bring to China's industries greater opportunities than the impact it exerts, most Chinese industries will gain more opportunities for development.

Joining the WTO is of positive significance to the near-term economic growth, it is also of far-reaching influence on long-term economic development. From a short-term point of view, entering the WTO can help expand the production and export of China's textiles, electromechanical products with comparative superiority, and attract more foreign capital, particularly transnational corporations, thereby facilitating economic growth and expanding employment. From the long-term point of view, accession to the WTO will produce positive effect on China's economic restructuring, readjustment of the industrial structure, enhancement of international competitiveness and raise of international status

We should dialectically approach the gains and losses involved in China's projected entry into the WTO.

III. Meeting Challenges, Promoting Advantages and Removing Disadvantages

Joining the WTO is both an opportunity and challenge to China, we should grasp the opportunity and accept the challenge. We should actively push forward the two fundamental shifts of the economic system and the mode of economic growth, promote the reform in line with a socialist market economic structure, accelerate the readjustment of the industrial structure, give play to comparative superiority, and strive to improve the overall quality of the national economy. This is an important guarantee for enhancing China's overall national strength and international competitive capacity, as well as the fundamental way for China's participation in the effort of the multilateral trading system to promote advantages and remove disadvantages, pursue benefit and avoid harm. We should unify our thinking, take precaution beforehand, work hard and make adequate preparations in various aspects.

Enhancing understanding and unifying thinking. Joining the WTO is a major event in the process of China's reform, opening up and modernization drive, it is of far-reaching influence on China's economic development in the new era.

Adopting active measures and taking the initiative to meet challenges. In line with the WTO requirement and China's commitments, various professions and trades should study and set forth purposeful and necessary operational measures to meet the pressure and challenge brought by the WTO to China. Firstly, we should provide reasonable protection and support for agriculture. Secondly, we should strive to improve industrial enterprises' international competitive capacity. We should deepen enterprise reform, establish a modern enterprise system and operational mechanism adapting to the requirements of a socialist market economy, so that the enterprise will become a legal entity engaged in independent management and assume responsibility for its profits and losses and the main body of market competition. Thirdly, we should systematically open the service trade market. In light of our promise on joining the WTO, we should selectively and gradually expand opening to the outside world in the fields of telecommunication, banking, securities, insurance and commercial service, actively push forward the reform of the service trade management system, strengthen management, improve service and enhance the competitive capacity of the service trade. Fourthly, we should improve management of cultural products, strengthen legal construction related to cultural products, improve and perfect trade management, expand cultural exchange and cooperation with various countries, actively engage in foreign publicity on China's excellent culture and introduce outstanding foreign cultural products into China.

Changing concepts and transforming mechanisms. Many contents of the WTO's rules of conduct and operational mechanisms are new to us, we must change our concepts and transform mechanisms, only by doing so can we meet WTO's requirements.

Intensifying legislation and strictly executing laws. Governing the county according to law is the basic strategy of our Party in leading the people in administering the country. Taking entry into the WTO as an opportunity, we should further strengthen the work of legislation and law enforcement and boost socialist legal construction.

Training WTO professionals and mastering international rules.

By Guo Yan

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