Academic journal article China Perspectives

Transparency and National Treatment under the Chinese Flag: A Lawyer's View of a Decade of WTO Membership and Legal Reforms

Academic journal article China Perspectives

Transparency and National Treatment under the Chinese Flag: A Lawyer's View of a Decade of WTO Membership and Legal Reforms

Article excerpt

Ten years after it joined the World Trade Organisation (WTO), China has still not become the country dreamed of by the Western governments with whom long negotiations on the conditions of its membership were conducted and who communicated to the public their enthusiasm for the prospects offered by the Chinese market.(1) Indeed, 2001 was a time of optimism, and in the spirit of the creation of the WTO at the 1994 Marrakech Conference, China seemed to be the missing link in what was envisaged as a cutting-edge organisation in terms of development towards increased international regulation.Today, China's economic development is as worrying as it is fascinating. Its political system has not followed the developments that certain observers anticipated in terms of greater integration into the international system, the opening-up of its market remains partial, and above all, the virtues of free trade shine less brightly in people's minds, as the failure of the Doha cycle testifies. Change and the permanence of the system intersect, rendering an analysis and assessment of China's membership all the more difficult.

This article sets out to retrace some of the developments that have taken place in China since it joined the WTO from the point of view of the modernisation of its legal framework and business practices. Necessarily subjective, the analysis aims to identify both the progress made and the resistance encountered.(2) At the end of this ten-year period, legal insecurity remains, in fact, one of the main problems raised in various surveys carried out on the mood of foreign companies present in China.(3) The transparency requirements at the heart of WTO regulations are often demolished by the discretionary practices of the Chinese government, whilst the opacity shrouding certain markets, when added to persistent corruption, often gives foreign companies the feeling that they cannot operate within a framework of fair competition.The principle of national treatment has led to the revision of numerous legal provisions and to an almost total harmonisation of the system applicable to companies operating in China, but here again, its application has met with many failures since the discriminatory implementation of regulations for foreign and foreign-invested companies, to the extent of excluding the latter from the public markets of the future. The principle of judicial review exists in theory, but few and far between are the foreign companies that would risk going to court over an illegal government decision prejudicial to them.

Nonetheless, the Chinese market remains at the heart of the priorities of most multinational companies, who see it as a means of growth compared to markets that are mature, stagnant, or depressed. The balance sheet of some of them is beginning to show a significant weight of business carried out in China. An ambivalence continues to exist between the promises of a vast market that have been vaunted since the beginning of the reform and opening policy, and the problems of finding a place or developing in it.The legal framework has undeniably been modernised thanks to China's membership of the WTO, a guarantee of the disappearance of certain practices in an economy that was previously entirely planned. Yet it is difficult to discern a "WTO spirit" that might lead China to open up its market over and above the commitments it made and to abstain from playing on the letter of these commitments in order to favour Chinese companies at the expense of foreign businesses. Apart from the rules and principles of the WTO, the question remains of whether the obstacles with which foreign companies are confronted are simply the result of the immaturity of a rapidly growing market, or of far more deeply-rooted structural obstacles and the impossibility of the current regime implementing the rule of law that it nevertheless continues to preach.

A new modernisation phase thanks to WTO membership

Hopes linked to China's membership of the WTO were running high ten years ago, proportionate with the years of negotiation - almost 15 - that had preceded it. …

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