Econ0602-Lecture-6

Econ0602-Lecture-6 - 1 ECON 0602: Lecture 6 China’s...

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Unformatted text preview: 1 ECON 0602: Lecture 6 China’s Foreign Trade: Special Issues © HKU ECON 0602 Larry QIU 2/169 Topics ¡ China and the WTO ¡ WTO and its rules ¡ China’s entry to the WTO ¡ China’s FTA: CEPA ¡ Sino-US trade imbalance ¡ China’s exporters and importers ¡ China’s exchange rate ¡ China’s processing trade © HKU ECON 0602 Larry QIU 3/169 China and the WTO: Questions/issues What is WTO? What are WTO’s rules and principles? Why did China want to enter? What had China promised? © HKU ECON 0602 Larry QIU 4/169 What is WTO? ¡ General Agreement on Tariffs and Trade (GATT, 1947-1994) ¡ 1947, Geneva, 23 (including China), now 148+ ¡ Most Favored Nation Principle (MFN) ¡ National Treatment Principle (NT) ¡ The World Trade Organization (WTO, 1995-) ¡ It deals with the rules of trade between nations at a global or near-global level. ¡ = GATT + Dispute settlement mechanism + others © HKU ECON 0602 Larry QIU 5/169 3% 3% F D = = MFN NT ? Annual renewal © HKU ECON 0602 Larry QIU 6/169 Rules are set through negotiations © HKU ECON 0602 Larry QIU 7/169 ¡ The Sixth WTO Ministerial Conference, Doha Round was held in Hong Kong, China from 13 to 18 December 2005. ¡ Successful? Agreed to extend the talk ¡ http://www.wto.org/english/thewto_e/minist_e/m in05_e/min05_e.htm © HKU ECON 0602 Larry QIU 8/169 WTO/GATT negotiation rounds 20 40 60 80 100 120 0 30 60 90 120 150 number of participants duration (months) predicted duration of Doha round Annecy Kennedy Dillon Geneva II Torquay Geneva Uruguay Tokyo regression line January 1, 2005? 39 months April 1, 2010: 102 months © HKU ECON 0602 Larry QIU 9/169 China ’ s WTO accession ¡ Why enter? ¡ MFN status renewed every year ¡ DSB helps ¡ How to enter? ¡ WTO re-entry (1986) ¡ Requirements (laws and policies to confirm with WTO rules) ¡ Negotiations (2/3 members’ support) ¡ Result? ¡ Dec 11, 2001 ¡ Conditions and promises (next slide) © HKU ECON 0602 Larry QIU 10/169 Agreement and implementation ¡ Bind all tariffs. The average tariff for industrial goods will fall to 8.9% and to 15% for agriculture. Most tariff cuts will be made by 2004; all cuts will occur by 2010. ¡ Implementation : tariff-rate quotas introduction ¡ Limit subsidies for agricultural production to 8.5% of the value of farm output and will not maintain export subsidies on agricultural exports. ¡ Implementation : only in corn and cotton exports ¡ Within three years of accession, grant full trade and distribution rights to foreign enterprises (with some exceptions, such as for certain agricultural products, minerals, and fuels). ¡ Implementation : ok © HKU ECON 0602 Larry QIU 11/169 Agreement and implementation (cont ’ d) ¡ Provide non-discriminatory treatment to all WTO members. Foreign firms in China will be treated no less favorably than Chinese firms for trade purposes....
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Econ0602-Lecture-6 - 1 ECON 0602: Lecture 6 China’s...

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