China's Accession to the WTO: Timing is Everything

Under the WTO's Uruguay Round Agreement on Textiles and Clothing (ATC), North America and Europe will be required to abolish the quotas currently levied against China. In the accession negotiations between China and the United States, the timetable for quota abolition was a subject of heated debate, with the United States arguing for a significant delay beyond 2005. In this paper, the effects of alternative target dates for the elimination of quotas under the ATC agreement, are examined. Since the issues revolve fundamentally around the question of timing, they are most appropriately addressed in a dynamic model. In this study we use the Dynamic GTAP model. In light of their respective stances on timing of ATC implementation, it is interesting to note that results suggest that slower implementation of the ATC agreement increases the expected gains to China. On the other hand such a delay is detrimental to North America and Europe. In 1986, China notified GATT/WTO members of its wish to resume membership in that organization. China's application to join the WTO has aroused a number of concerns from both developing and developed member nations. Some of the issues raised have included how China's growth and accession will affect the world food markets (Anderson, Dimaranan, Hertel and Martin, 1997); whether China's accession will further increase the U.S. trade deficit; whether increased competition will result in lower real wages for skilled and unskilled workers (Scott, 1999); and how increased competition will effect the development prospects of other nations in South Asia who compete in similar markets to China. China's bid for WTO accession has involved negotiation of individual agreements with key WTO members. These bilateral agreements will then be extended to all WTO members upon accession. This long process of negotiation began in 1987. In November 1999, an agreement was reached between China and the United States, leaving the European Union as the major remaining obstacle to membership (Barry, 1999). The main concern of WTO member states has been to secure greater access to the growing Chinese market. The issues addressed during these negotiations provide for further market access for foreign companies and foreign investment, the reduction of tariffs and the implementation of bindings, elimination of quantitative restrictions, and the participation of China in other multilateral agreements relating to information technology, telecommunications