Brian L. Goldstein and Stephen J. Anderson

January-February 2002 Issue:

Cover by Greg Berger Design, Inc

Foreign governments, nongovernmental organizations, and the business community have launched a range of educational programs to help China implement its World Trade Organization obligations

In August, FCS conducted an information technology technical assistance program in Beijing, which covered equipment standards and testing.

Speakers have stressed the importance of adhering to both day-one commitments (including IPR protection and an end to local-content, technology- transfer, and export requirements) and the opening of services sectors on schedule. Foreign counterparts will likely encourage good-faith implementation efforts and be patient with difficulties--but only initially.

FCS seeks American businesses to join its Partners in WTO Implementation initiative as a way to integrate business priorities into its ongoing local events.

China's capacity to comply with World Trade Organization (WTO) principles and to adhere to scheduled commitments will be critical for the future of global trade. Now that China has formally entered the global trade body, the future of the WTO itself depends upon the success of China's entry.

Chinese officials and the populace at large agree that China's WTO entry is another milestone in the country's integration into the community of nations. This popular support for WTO entry, however, has not until recently translated into widespread discussion of the intricacies of WTO requirements and principles. China's task is to popularize the patchwork of transparency, national treatment, antisubsidy measures, ending of quotas, and terms of many agreements in such areas as intellectual property rights (IPR) and information technology that make up its WTO commitments.

To be sure, Chinese central-government trade officials and academics are already expert in WTO jargon, and China's top leadership has backed WTO entry as a potential salve for the staggering array of challenges facing the country's economic development. Yet the US-China bilateral agreement on China's WTO accession, concluded in November 1999 and made public in English, was never made public in Chinese. Nor were any of the official summaries of the commitments. The typical functional or local official who now sits on the front line of implementation is well aware that WTO accession will lead to significant changes in regulatory processes, but the majority are only just now gaining access to the specific terms of the agreement. Implementation success will depend on the effectiveness of crucial education and training of these Chinese officials at the local level.

Foreign-funded efforts have attempted to address this lack of knowledge by both explaining the broader issues of WTO fundamentals and giving specific advice on how China can make particular regulatory processes WTO compliant. US and other governments, nongovernmental organizations such as the US-China Business Council, and multilateral institutions have in fact been funding and operating such programs for several years; these efforts continue and are expanding.

Of course, many of the overseas-funded efforts supplement rather than substitute for domestic, internally supported PRC government and think-tank efforts (see Table). PRC officials realize that they must now be articulate in the language of the WTO and understand the new body of commercial rules that China has agreed to follow. Hungry for foreign investment and technology, many Chinese officials are eager to learn of the new opportunities WTO entry presents for the next stage of China's opening and reforms. Such enthusiasm mirrors past reform efforts, as Chinese officials continue to seek international assistance and expertise to help emulate WTO norms and tackle issues about which they lack professional experience.

Toward this end, many central, provincial, and municipal government personnel have attended courses lasting a week or more on the WTO, sponsored by the PRC government or foreign organizations. Senior-level officials have attended month-long courses that cover WTO-related issues and areas, including general background on the WTO, information on WTO agreements, and the impact of China's WTO entry on key industries. Courses for the most senior-level officials have covered the actual terms contained in China's bilateral market-access agreements and in its Protocol of Accession.

WTO training efforts to date

Programs focusing on basic WTO principles, such as national treatment, subsidies, and dispute resolution mechanisms, began in earnest in 2000. These programs were supported by overseas agencies either independently or in cooperation with functional or local PRC offices. The most common events have been seminars featuring volunteers--WTO experts from government, business leaders, private consultants, and trade lawyers--speaking to large groups of Chinese officials, businesspeople, and academics throughout China. High-level officials from both government and state-owned enterprises often attend such seminars. Local media have covered these events heavily, providing another outlet for speakers to spread the word about WTO.

Chinese business leaders are also targets of educational efforts and have attended many of the seminars along with government officials. In fact, business leaders have been ravenous for information as they seek to adjust to reduced subsidies and the stiffer competition that will result from market openings. Hundreds of such middle- and senior-level managers attended recent US and Foreign Commercial Service (FCS) and US-China Business Council events in Tianjin; Shenyang, Liaoning; and Lanzhou, Gansu. The US-China Business Council has independently addressed similar groups in Hebei, Jiangsu, Shaanxi, Shandong, and Sichuan provinces, and the cities of Beijing and Shanghai. The US-China Business Council's Beijing office has met with hundreds of municipal and provincial delegations to discuss WTO in a less formal setting.

A range of US government offices have sponsored these programs. Staff from the US Embassy and Consulate commercial sections, economic sections, agricultural sections, and public affairs sections (PAS) have all helped organize these programs. PAS in particular funds dozens of trips to bring WTO-related experts to China. Other activities the US government supports include PAS international visitor programs that send Chinese officials, journalists, and academics to the United States; grants for activities aimed at strengthening the rule of law; and donations of legal texts and translations to Chinese governmental and nongovernmental organizations.

Specific US government programs held in 2001 have included an April e-commerce policy and regulatory educational session for senior-level Chinese officials from the State Council. Also in April, the Department of Commerce (DOC) participated in US National Institute of Standards and Technology seminars in Beijing and Xi'an, Shaanxi, which provided training on standards and certification. In July, DOC organized and led an IPR Enforcement Training delegation to Shenyang; Hangzhou, Zhejiang; and Xiamen, Fujian. In August, FCS conducted an information technology technical assistance program in Beijing, which covered equipment standards and testing.

Educational efforts: Sectors, IPR, rule of law

In addition to the US-China Business Council, private and international organizations have also initiated various WTO educational programs. These include the Ford Foundation and the Asia Foundation, as well as a number of university and business groups with specific regional or sectoral interests. US organizations are not alone in their efforts. Groups organizing events and training include the Asian Development Bank, the United Nations Industrial Development Organization, the World Bank, the European Union, and the German, British, Australian, and Japanese governments. Local chambers of commerce, including the American Chambers of Commerce in Beijing and Shanghai, have also lent support and expertise to WTO implementation efforts through policy recommendations and conversations with central government and local officials. The subjects of these seminars illustrate the full range of key WTO issues.

Discussion of the WTO's widespread impact on China, however, has not been limited to WTO-related events. WTO experts and business leaders raised WTO issues at exhibitions such as the annual Xiamen trade event and recent forums on China's western development in Chengdu, Sichuan; and Xi'an.

Despite years of effort and a raft of new laws, problems in such areas as IPR enforcement remain acute. Specific programs have focused on the training of PRC judicial officers and others in agencies responsible for IPR enforcement. The US-China Legal Cooperation Fund has supported similar goals since 1998 with grants to programs that aid the development of open and accountable legal processes (see The CBR, September-October 2001, p.71). The US Congress has mandated rule-of-law programs and funded several events through the US DOC and its Market Access and Compliance offices of the International Trade Administration. The US-China Business Council also helped to fund, along with the Ford Foundation and the US Embassy, a donation of 100 WTO-related books to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) in November 2001.

The EU-China Intellectual Property Rights Cooperation Program, established in 1998, has worked to aid the alignment of China's IPR regime with international norms. The EU-China Program for China's WTO Accession was launched in November 2000 with a budget of 3 million euros ($2.67 million) to aid the training of Chinese government officials. The framework calls for four components: institutional strengthening, policy and regulatory advice on WTO issues, awareness raising and training, and documentation and translation work. The European Union also funds the EU-China Intellectual Property Rights Cooperation Program and the EU-China Judicial Cooperation Program.

The German Technology Cooperation Co. (GTZ), under the German government, is conducting training courses and workshops on the WTO legal framework, providing assistance to the National People's Congress Finance and Economic Committee, and cooperating with MOFTEC in the Sino-German Cooperation in Economic Law program. GTZ also helped establish a WTO Inquiry Center under the China (Hainan) Institute of Reform and Development (CIRD). Australia, through its AusAid program, has been training Chinese officials in international economics, both in Australia and Beijing, since 1997. Japan has also been active on a number of fronts and is gearing up for a more comprehensive program.

The message: Be prepared

The overall message of these efforts has been that officials need to be prepared for WTO-induced changes and must understand the expectations of foreign business. Speakers have stressed the importance of adhering to both day-one commitments (including IPR protection and an end to local-content, technology- transfer, and export requirements) and the opening of services sectors on schedule. Foreign counterparts will likely encourage good-faith implementation efforts and be patient with difficulties--but only initially.

Speakers have encouraged local governments to take the lead in implementing transparency and other WTO commitments to obtain a competitive advantage in attracting foreign investment and technology. Responses to these efforts in the lead up to China's entry have been almost unequivocally favorable and have provided FCS with an opportunity to stage events and offer sponsorship through its Partners for WTO Implementation initiative for American businesses seeking to build relationships with local officials.

Support for Chinese WTO research centers

Cooperation with leading academic institutions in China has also been an important part of WTO education efforts. One of China's leading WTO research centers is the Shanghai WTO Affairs Consulting Center. The US-China Business Council cooperated with this center in 2001 to produce a series of six digital videoconferences with simultaneous translations on WTO-related topics, featuring US experts and a Chinese audience drawn from government, academia, and the media. The two organizations plan 20 more for 2002.

Other WTO research centers include the WTO Inquiry Center under CIRD and Beijing's University of International Business and Economics WTO Research Center, which established a WTO training center primarily focused on training more teachers and professionals to meet the demands of post-WTO China. Still other centers are popping up around the country.

Programs regularized, expanded

Chinese officials are now mobilized to adjust to the regulatory and operational changes brought by the country's WTO entry, while foreign investors eye new opportunities accompanying the next stage of China's market opening. To assist the transition, programs to spread the WTO gospel continue and expand, with ever-more resources and personnel devoted to the task.

The pace of US government-supported efforts will increase in 2002. Upcoming seminars organized by topic and region will draw on a cast of dozens of experts in China who now have off-the-shelf presentations on various aspects of China's WTO entry. FCS plans seminars with MOFTEC, the Ministry of Information Industry, and other PRC agencies and plans to organize events throughout China including Liaoning, Shandong, and Hebei provinces. Each commercial officer will stage at least one event within his or her geographic area.

To assist these and related WTO implementation efforts, the US Embassy will assign five more commercial officers solely to trade facilitation issues beginning in 2002. These officers will supplement the work of the US Department of Agriculture Foreign Agricultural Service officer who has been in Beijing since mid-2001 and the General Electric Co. employee who has, since September 2001, worked in FCS offices managing and advising on the implementation of WTO-related training programs.

The EU-China IPR Cooperation Program has been extended through 2003 with expanded exchanges, programs, and workshops. MOFTEC plans to expand cooperation to the governments of Japan and Canada.

All of these efforts are buoyed by the now widespread discussion of China's WTO commitments. The final WTO accession agreements have been translated and should have been made available in Chinese by the time this article is published. Discussions of specific commitments have started to supplement broad discussions of the WTO in China's mainstream media.

China Central Television (CCTV) has aired programs updating China's implementation progress. These broadcasts have included interviews and analysis on Chinese-language programs and the new "WTO Watch" on CCTV's English-language channel. Even PRC ministries are getting into the act: The website of the State Economic Trade Commission in December posted the following survey question: "China is entering the WTO, is your work unit ready?" Visitors could select one of three options: ready; still preparing; or have not prepared--though the survey results are not publicly available. Hainan's WTO training center operates a website with much Chinese-language material, but the details of tariff reductions and implementation measures are still hard to find in the vernacular. Though all these efforts together represent a promising start, the goals of transparency and due process will require steady progress and, perhaps more important, new ways of thinking about China's economy.

Furthering the effort: The role of foreign business

The programs outlined above are cementing a foundation for the broadening of WTO knowledge among PRC government regulators. Though they represent only a slice of the WTO-related activities taking place in China, they will continue to grow and evolve to support China's government apparatus as it works through the implementation of specific commitments. Foreign-invested enterprises themselves, through expansion of their operational activities, will also help Chinese officials get up to speed.

The most sophisticated foreign business leaders are discussing plans with relevant local or functional regulators. Whether these plans are to act on the discontinuation of local-content requirements or to establish a new banking venture under year-three commitments, a foreign business will benefit by discussing these issues early on with officials on the front line of implementation. Separately, FCS seeks American business Partners in WTO Implementation initiatives as a way to integrate business priorities into its ongoing local events. Foreign businesses participating in the many training and educational tasks may well feel as if they are herding cats--but their word is already spreading.

A learning process for everyone

Most China watchers are familiar with Deng Xiaoping's well-worn aphorism, that the color of the cat can be either "black or white, as long as it catches mice." It turns out that the color of the cat in question will be the calico that is the WTO.

It is not only Chinese officials who need to acclimate to this new calico. Most foreign businesspeople are not WTO experts, and the massive regulatory changes prompted by WTO accession have changed the operational landscape. Foreign investors should keep in mind that that not every commercial dispute will raise WTO issues. Websites including those of the WTO, the US Embassy in Beijing, and the US-China Business Council will serve as authoritative references. Cases are certain to arise where China is indeed WTO compliant or where an issue is not addressed by China's WTO accession agreement. In cases where authorities ignore Chinese WTO commitments, working through proper channels on the Chinese side is a prerequisite and will more often than not achieve results.

Certain elements within China's complex political structure still oppose market opening and the loss of monopoly control. Despite such pockets of opposition, it is clear that the PRC government leadership is committed to adapting to the norms and requirements of the international trading system.

Chinese leaders stress that the WTO will change the way China's government works. They emphasize that Chinese officials need to develop procedures and institutions to move away from approval by administrative fiat and abrupt implementation of regulations, and toward transparency in decisionmaking that affects trade and foreign investment under a broader system of rule of law. Whether Chinese pragmatism and willpower will prevail, and do so in a timely manner, remains an open question. But the considerable foreign resources already marshaled to support their goals could well prove invaluable.

Selected Foreign-Supported WTO Training Events for China*

Links to WTO Initiatives Asia Foundation The Ford Foundation EU-China Legal and Judicial Cooperation Program European Commission Delegation in China Georgetown University German Technology Cooperation Co. China Harvard Kennedy School of Government's China Public Policy Program The US Embassy in Beijing The US-China Business Council The US-China Legal Cooperation Fund United Nations World Bank -- Brian L. Goldstein