In 2001 the whole world was marveled by the milestone entry of China into WTO. Statistics show that within the decade thereafter, the Chinese imports and exports have surged by 4.9 and 4.7 times respectively; it absorbed over$700 billion of foreign investment; Over 480 of 500 top enterprises worldwide started business in China.
Tracing back to the pre-WTO days, we see that it took China fifteen years’tenacious and long-lasting efforts in negotiation to gain admission to WTO from 1986 to 2001. Within the fifteen years, China first managed to get through the GATT negotiation to restore the GATT status of China, and then the WTO entry negotiation. Our journalists held a special interview of Mr. Yu Xiaosong, former CCPIT president who took an active part role in the negotiation, to explore deep into the historic negotiations.
“China spent more time in WTO negotiation than any other countries”
China’s Foreign Trade (hereafter mentioned as “CFT”): Since you have participated the GATT negotiation, you must remember the process very well. Would you mind telling us how the GATT negotiation was like?
Yu Xiaosong (hereafter mentioned as “Yu”): The three pillar trade and development organizations of world economy are World Bank, International Monetary Fund Organization, and GATT (the precursor of WTO). Before the entry into WTO, China had been member to the former two organizations. As for GATT, China was one of the parties when it was signed in 1947. After the withdrawal of Taiwan, the People’s Republic of China didn’t succeed. The guideline of opening policy naturally drove the country to launch negotiations to restore its GATT status, or the “GATT negotiations”.
In 1986, China proposed the plan of “GATT negotiations”. At the same year, a GATT minister-level conference was held in Punta del Este of Uruguay to begin a new round of negotiation to restructure the multi-lateral trade mechanism which aims to upgrade GATT into WTO. It was also called Uruguay Round. China participated in the negotiation all through eight years, and finally signed on the final agreement.
China spent fifteen years on the GATT and WTO negotiations, longer

than any countries admitted by WTO. The cause of the long process is multifold, including the great changes in international politics and diplomacy, the new requirements of the member countries (and regions) in the Uruguay Round, and the development of the reform and opening up in China.
In terms of reform and opening up, China’s total international trade volume ranking 30th-plus worldwide was considered “trivial” at first; barriers for the negotiations were low at that time. However, with the drastic increase of China’s status in international trade, the other parties began to raise the barriers. Sometimes they would repeat the issues already settled before after a notso-long period; that’s the reason why the negotiations drag so long.
The economic reform in China is also gradual. GATT and WTO regulations are both based on market economy. China established planned commodity economy in 1980s and socialist market economy. Regulations and policies on economy and trade have been ever-changing in development. The representatives from China had to consider the articles based on the conditions in China. We could accept some clauses immediately, but for some we need to wait several years. For some articles touching upon current law in China, the representatives didn’t have the authority to promise. All the above factors postponed the negotiation process.
“Agro-product Negotiation led us to think more”
CFT: which were the thorniest problems in the Uruguay Round? Did some events impress you most?
Yu:No articles of G ATT and WTO are apparently against China based on China’s situation for now, but some problem existed in the process of ne- gotiations. Trade liberalization is the cornerstone of international trade. To put it simply, it means that any enterprise could run international trade. However, in those years the Chinese enterprises have to won approval of the central government to run international business. The situation promoted the promulgation of Foreign Trade Law soon. It was until the year of the entry into WTO that China implemented international trade registration mechanism. Another case is the articles about “government purchase”. It mainly requires that government purchase should open to all enterprises, and domestic and overseas enterprises should be equal in competition. At first the relevant authorities in China didn’t agree with that. Since it’s not an important article, no further dispute took place in negotiation. But later we also realized that intransparent government purchase would engender many problems, and therefore China made Law on Public Bidding.
Agro-product negotiation impressed me most. The most intense debate between developed and developing countries lay in the subsidies on agro-products. Some friendly countries reminded us that since the subsidies of agro-products were lower than those in developed countries, the agricultural subsidy must be detailed as the basis for future negotiations. However, according to the domestic statistics, the subsidy was so low that it was considered unnecessary for negotiation. At the same time, China was investing less and less in the “green subsidies” as agreed by different parties, including promotion of improved seeds, pesticides, and agricultural techniques. It triggered deep thoughts of all representatives including me. As a great agricultural country, the support of three agricultural issues by the central government is partially associated with the feedback in the WTO negotiation.
“Tariff negotiation is of much difficulty”
CFT: Tariff is an inevitable issue in GATT and WTO negotiations. Could you brief us more on thetariff negotiation?
Yu:Tarif f negotiation is of much difficulty, of c ourse. I t wa s also the item taking the largest part in the negotiations. Every member country (region) hoped to cut down on the import tariff of its main products as much as possible. Negotiation on the total tariff rate was not enough; we had to negotiate on every tariff heading in discussions with every country.
In retrospect, we thought that we had to change in our traditional conception. In the era of globalization, the high-quality commodities which are scarce in China should be imported. Though the tariff barriers could protect domestic products, but it also maintained lagging-behind situation at the same time. For example, lathes are the machine tool for the production of different products. If the lathes manufactured by ourselves are inferior in standardization and precision, and the country restricted the import of overseas lathes; it protected the domestic manufacturing industry, but at the same time it would result in low quality of the products in other related industries, reducing their international competitiveness. Some people argue that the reduction of tariff would reduce the fiscal revenue, the reduction of the tariff would lead to the increase of the total import, or the tax base. Within the five years when I was in charge of the Customs Tariff Commission before the entry into WTO, the total tariff decreased to 18% from 42%, but the revenue of the customs increased year by year. After the entry the total tariff has been dropped to less than 10%, but the customs revenue

still rise. Also some people were anxious that the reduction of tariff might lead to the dominance of overseas goods in Chinese market. In that case the foreign exchange reserve would play its role. Without foreign exchange reserve, disqualified overseas goods could not enter Chinese market even if the tariff dropped down to zero. With demand in domestic market and enough foreign exchanges, it’s conducive to the development of the country to import more goods.
In brief, the lowering down of tariff could make better use of international and domestic markets and relevant resources.
“Entry into WTO resulted in positive effects in various aspects of Chinese society”
CFT: Could you summarize the chang- es in China’s economy and society in the decade after the entry into WTO?
Yu: great changes have taken place in econ-omy, culture, and society in the decade that passed. Of course, it is mainly attributed to the reform and opening up policy of the central government; and the WTO negotiation and the entry into WTO also made certain positive contributions. A basic principle in WTO is transparency, which refers to transparent policymaking. The principle should also be the same for domestic enterprises and citizens. The making and amending of laws and policies would ask for advice in advance. The content discussed at State Council Standing Committee meetings would be televised at night on that day. This is also a part of social progress.
The principle of trade liberalization is fairness. At the beginning of the reform and opening up policy, China adopted preferential measures on the foreign-funded enterprises in order to absorb more foreign investments. They were treated better than domestic enterprises. The feedback from overseas was good. But later on the restrictions on the private-owned enterprises were debated, and the two editions of Thirty-eight Regulations of Private-owned Enterprises were published, representing a progress in society.
IPR protection and opening of cultural market are also included in the WTO regulations. Great improvements have been observed in the public awareness, social conception, and implementation of laws in these aspects after the entry into WTO.
In order to embrace the WTO, China amended and canceled about 2,000 laws and regulations while ensuring the interest of the country. In retrospect, these laws and regulations should be subject to amendment or cancelling sooner or later. The WTO negotiation accelerated the process.
The changes in China during the WTO negotiation and the decade after the entry into WTO are mainly resulted from the current guidelines and policies made by the country to suit the economic globalization process and the formation of socialist market economy mechanism, while the entry into WTO also promoted the changes; it’s both conducive to the country and citizens.
“Chinese enterprises have a long way to go international”
CFT: What issues are imperative to be dealt with in the docking of Chinese economy with the outside world?
Yu: Economic globalization was derived from the development of science and technology. It’s an inevitable trend. China benefits from the globalization process with the making of reform and opening up guidelines and the entry into WTO.
China has become one of top economies worldwide, but GDP per capita is ranking about 90th, far lower than the world average level, with Renminbi appreciation considered. Though China is a great economy of trade for now, its trade volume per capita is also far lower than the world average level. Within only thirty years of reform and opening up in the past, we are struggling to follow the existing game rules after the entry into WTO. With Doha Round to be continued, these rules will also be changed. China has not much say in this area. We still need more efforts.
Chinese enterprises have a long way to go if they want to take shares of the international market. Two decades ago, only some governmentowned foreign trade companies or a few large enterprises conducted international business, the scope of which is also limited. Probably in 1990, the first private foreign trade company was officially approved to be set up. That was a small-scale one, mainly in charge of exportation. I remembered that media was prohibited to cover this event at that time.
Today, if having interest, any enterprise can participate in international commercial activities. However, among the top leaders of those enterprises, few can acquire international business language (like English), let alone the talents of international business.
Every year, China sees a growing number of enterprises make them on the “World Top 500” list. But most of them got the name for having large scales, instead of competitiveness. The numbers of the enterprises that are proficient in mastering the rules of international business or have influential brands are meager. Chinese enterprises have to grow strong in the wave of economic globalization; it would need the effort of several generations. CCPIT should provide better service for them.