HTML _ RL30175 - China's Accession to the World Trade Organization: Legal Issues
2-Jun-2000; Jeanne J. Grimmett; 11 p.

Abstract: The People's Republic of China (PRC) applied to resume membership in the General Agreement on Tariffs and Trade (GATT) in 1986 and continues to negotiate its accession to GATT's successor, the World Trade Organization (WTO). A country may join the WTO on terms agreed by the applicant and WTO Members if two-thirds of Members approve the country's accession agreement. A Member may ¨opt out¨ of WTO relations with another country by invoking Article XIII of the WTO Agreement, its ¨non-application¨ clause. The United States and the PRC agreed to bilateral terms for the PRC's accession in November 1999. U.S. trade relations with the PRC are primarily governed by Title IV of the Trade Act of 1974. Section 402 of the Act (Jackson-Vanik Amendment) prohibits the extension of nondiscriminatory trade treatment and other commercial benefits to the PRC unless it meets freedom-of-emigration requirements or the requirements are annually waived. The PRC is also subject to nonmarket trade remedy provisions in Title IV and elsewhere. Section 1106 of the Omnibus Trade and Competitiveness Act requires the President to make determinations as to the restrictive trade impact of a ¨major foreign country's¨ use of state trading companies before the country accedes to the WTO. Absent express legislative conditions or prohibitions, the President generally may approve the accession of countries to international organizations to which the United States belongs, invoking authority under the international agreement underlying U.S. participation as well as his constitutional foreign affairs authority. There is no statutory prohibition on U.S. approval of the PRC's accession to the WTO nor an express legislative requirement that the President necessarily obtain statutory authorization before the United States may support this action. As a WTO Member, the United States must grant immediate and unconditional most-favored-nation (MFN) treatment to like products of other WTO Members as to tariffs and other trade matters. Application of Title IV to a WTO Member is inconsistent with U.S. WTO obligations because of the conditions that it attaches to the grant of MFN treatment to the country's goods. Were the PRC to accede to the WTO and were its accession terms not to permit the United States to derogate from MFN obligations, the United States would need to invoke Article XIII of the WTO Agreement or risk violating its MFN obligation as it pertains to the PRC. [read report]

Topics: International, Economics & Trade, International Finance

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