World Trade Organization:

China's Membership Status and Normal Trade Relations Issues

NSIAD-00-94: Published: Mar 17, 2000. Publicly Released: Mar 17, 2000.

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Benjamin F. Nelson
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GAO provided information on efforts to grant China membership in the World Trade Organization (WTO), focusing on: (1) the status of negotiations for China to join WTO; (2) the results of the negotiations as compared to U.S. objectives for these negotiations; and (3) trade and legal considerations about granting China permanent normal trade relations status.

GAO noted that: (1) although the United States and China have reached agreement on many issues, the negotiations with China about its membership in WTO are not complete; (2) while the President announced a bilateral agreement covering market access issues with China in November 1999, some U.S. negotiating objectives have yet to be achieved, and many of those tentatively achieved must still be finalized in a WTO agreement that outlines the terms of China's membership; (3) China must also conclude similar bilateral negotiations with some other WTO members, notably the European Union; (4) China must finish the multilateral negotiations with WTO members; (5) then, all participants must complete several important tasks, including verifying the text of the agreement, before the approval and implementation phases of the accession process can begin; (6) it could take several months after all these negotiations conclude before China can become a WTO member; (7) based on GAO's review of the negotiating record as of November 1999, U.S. and Chinese negotiators have reached tentative agreement or have only minor differences in eight broad areas where the United States is seeking to change China's trade practices; (8) however, the negotiators still have major differences to resolve in some other areas; (9) the actions that China has committed to take to address the minor differences are generally consistent with what U.S. negotiators originally sought; (10) the result of the agreed-upon actions would be a Chinese market more open to foreign goods, services, and investment, enhanced protection against import surges of Chinese products, and a Chinese commitment to comply with many WTO requirements; (11) the administration plans to ask Congress to agree to grant China permanent normal trade relations before China joins WTO; (12) if Congress does not do this, the administration plans to invoke a WTO provision, called the nonapplication clause, which would permit the United States and China, as an incoming member, to not apply WTO trade liberalizing commitments and obligations to each other; (13) the administration believes this is necessary to avoid a conflict between U.S. law, which requires annual approval of China's normal trade relations status, and the U.S.' obligation as a WTO member to provide unconditional most-favored-nation status to other members; and (14) should the U.S. invoke the nonapplication clause, the U.S.' trade relations with China would continue to be based on a 1979 U.S.-China trade agreement and other bilateral agreements.

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