Lardy: Only 50% chance China will enter WTO this year
By Lester J. Gesteland
ChinaOnline News
(23 April 2001) Despite recent declarations of confidence by the head of the World Trade Organization that China would gain entry into the WTO by the end of 2001, China experts and diplomats close to the negotiations are much less certain.
"I’d say there’s a 50-50 chance China will get in this year," Nick Lardy, senior fellow and head of Foreign Policy Studies at the Washington, D.C.-based Brookings Institution, told ChinaOnline.
"I simply don't think it could be done technically," one envoy involved in the negotiations told Reuters two weeks ago. "We simply don't have time to focus on Chinese accession in the coming months."
This contrasts sharply with a statement that Mike Moore, director-general of the WTO, made at a press conference today.
"I'm hopeful and believe it can be done in this year," he said, according to Reuters. "China will join. It will be a very proud moment if we get China to join and a most significant act," he said.
Sooner, not later
One of the reasons for the divergent points of view is that people like Moore are part of the group that want China to gain entry sooner rather than later, one China trade expert told ChinaOnline. "They’re expressing what they want to happen rather than making an accurate prediction," the expert said.
The main issue still on the table with regard to China’s entry into the WTO is domestic agricultural subsidies, Lardy said.
China currently helps its farmers through price supports equivalent to a 2 percent subsidy for the sector. Beijing wants the right to increase these subsidies to as high as 10 percent once it has gained entry into the WTO—the same terms granted to developing nations.
Led by the United States, members of developed nations want China to be restricted to a 5 percent cap—what developed nations are granted upon entry into the WTO. However, China has been adamant in its demand to be treated as a developing country.
Earlier this month, the United States floated a proposed compromise granting China the right to raise domestic agricultural subsidies to 6 percent to 8 percent for a certain limited time period, after which it would have to revert to the 5 percent cap.
This proposal was viewed as a breakthrough and fueled speculation that the agricultural subsidy issue had been resolved. More recently, U.S. negotiators have revealed that China has yet to respond to the proposals, and thus agriculture remains a sticking point in the talks.
Why the difficulties
Negotiations for China’s entry into the WTO have been protracted because of China’s unique status in world trade. Although a relatively poor country in terms of per capita income, last year the PRC was the seventh-largest trading nation in the world.
This makes its trading partners, particularly developed countries, wary of its impact on the WTO once it gains entry. China has become so big, developed countries believe it should be held to a high standard, Lardy said.
As a result, "China will be coming in under terms that are more stringent than any other member," he said.
Lardy said there’s a 50 percent chance China will gain entry into the WTO this year. But if a WTO working party doesn’t meet in May—the gathering of lower-level officials who hammer out the details of such agreements—then all bets are off, he said.
"If the working party doesn’t meet in May, then it’s very difficult to predict" when China will gain entry into the WTO, Lardy said.
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