Washington Post staff writer John Burgess covers foreign trade issues for the paper's Business section. Here, he answers some questions about the deal that may clear the way for China to enter the World Trade Organization and what that would mean for China and the United States.
Q: What would the deal for China's entry into the World Trade Organization mean?
A. In the near term, better access for U.S. companies to the huge and now much-protected Chinese market (1.3 billion consumers and counting). As part of the deal, China has agreed to let U.S. firms own up to 49 percent -- and later 50 percent -- of Chinese telecom companies and sell more farm goods. Financial institutions and insurance companies also would get rights to new kinds of business. Tariffs on a wide range of goods will fall.
In the longer term, the United States hopes that membership will mean that a country that is rapidly emerging as a world trading power ($184 billion exports in 1998) will begin following internationally accepted rules of commerce. That means things like phasing down state subsidies for exports and abiding by decisions of disputes panels that the WTO operates at its headquarters in Geneva.
Over time, the reasoning goes, by encouraging openness, this could make China a more responsible member of the world community in issues like military exports and human rights.
That's the hope in Washington, anyway. Whether China will live up to the package remains the key question. Not a few people in Congress think China will take the benefits of WTO membership, but cheat on things that cause it pain.
Q: So what are the benefits to China?
A. Chinese leaders see membership in WTO as membership in the world community at large, so there's a question of prestige. But there are also very practical considerations. Being in WTO will mean that China's trading partners generally can't bring trade sanctions against it on their own authority; sanctions would have to be approved by the WTO. Also, reformist wings of the ruling elite in China apparently feel that WTO membership will help the drive to make difficult changes in the Chinese economy. Being able to say that WTO requires closing down a state-subsidized factory, for instance, could silence some of the domestic opposition.
The talks that have just ended with a deal in Beijing went on for six days and several times they seemed close to collapse. But eventually, the two sides reached a deal. Both of them wanted it too much to do anything else.
Q. Are there direct impacts for U.S. consumers?
A. The direct impact is more for companies in the China trade and the people they employ -- consumers here already have pretty much free access to Chinese goods, as we all know from the `Made in China` labels on goods in our homes.
Q: Obviously reaching agreement with the U.S. was a key hurdle, but are there other obstacles to China's entry?
The WTO operates on a "most favored nation" basis. That means that whatever breaks China gives to companies of one country it has to give to companies from every one of the 134 members states. So the rest of the world was waiting to see what deal China would give the United States, which by virtue of the size of its market could hold out for the best deal anyone could get. The expectation is that China will now quickly reach similar market-opening agreements with other countries and formal membership will happen pretty quickly.