The Significance of WTO Accession for China

The PRC, formed in 1949 following the victory of the Communist Party in China’s civil war, has a long and uneven history of interaction with the international trading system of GATT/WTO. Nationalist “China” became an original contracting party to GATT on 30 October 1947, as the Republic of China (ROC). However, China’s initial membership in GATT came to an end in 1950, when in March 1950, “the Taiwan authority informed the UN Secretary-General of its intention to withdraw from GATT” (Li 1998). From 1950 until the early 1970s, Taiwan participated in GATT proceedings as an observer. However, following a thaw in relations between China and the US, the UN shifted diplomatic allegiance from the ROC (Taiwan) to the PRC based on the mainland and governed by the Chinese Communist Party. In 1971, the UN General Assembly passed resolution 2758 (XXVI) that recognised the PRC government as the sole representative of

China and expelled Taiwan. Subsequently, GATT followed suit and nullified Taiwan’s observer status.

As China commenced the process of opening up to trade with the outside world from 1978 onwards, greater interest began to be shown in the benefits and membership of various international financial organisations. In 1980, China became a member of the World Bank and International Monetary Fund (IMF) and started to show an interest in GATT. However, China did not immediately apply to resume its membership of GATT, although it began to participate in GATT as an observer from 1982 (Pearson 1999, p. 169). It was not until July 1986 that this application to resume full membership was made (GATT 1986). Subsequently, GATT acted swiftly to consider China’s application with a working party established to negotiate for China’s full membership in June 1987 (GATT 1987).

Initially, the GATT working party made steady progress in the admission process. However, the events in Tiananmen Square in June 1989 halted further negotiations; “although the working party continued to meet periodically, its members developed a more hardened attitude, despite their declaration of support for China’s accession in principle” (Pearson 1999, p. 169). China’s application to GATT was further complicated by Taiwan’s application to join GATT as a separate customs territory in January 1990. In effect, the accession process halted from 1989 to around 1992. Nevertheless, as China had at that time applied to resume GATT membership, “China was permitted to participate fully in the Uruguay round of multilateral trade negotiations,” and as part of this participation, Chinese representatives had been included in TRIPS discussions “in 1991 and before that time” (Zheng 1997, p. 243). Therefore, China attempted to follow TRIPS provisions in subsequent amendments to its intellectual property laws, and the influence of TRIPS on the Chinese IP system should thus be considered as beginning much earlier than China’s eventual formal WTO accession in December 2001.

Although China failed to join GATT in time to become a member of the newly established WTO in 1995, negotiations resumed soon after and good progress was made towards accession. Several factors did stymie this process, including the bombing of the Chinese embassy in Belgrade in May 1999 (Hamada 2004, p. 28). However, after furious negotiations, China finally entered the WTO on 11 December 2001 and from that date, had to formally comply with all the agreements that together make up the framework of the WTO. In the case of the TRIPS Agreement, China agreed to comply with its TRIPS obligations immediately upon accession, with no transition period (World Trade Organisation 2001).

The issue of intellectual property protection in China was one of the key issues in China’s WTO accession negotiations. Furthermore, the importance of IP protection can be witnessed in the final Working Party Report on China’s WTO accession, which devoted 55 paragraphs out of a total of 343 paragraphs to China’s commitments under the TRIPS regime.⁴ In addition, China’s capacity to fully implement its TRIPS commitments was “one of the most frequently aired concerns” prior to entry in December 2001 (Gregory 2003, p. 321). These concerns arose from the recognition that “government commitment and a sound legal framework would not suffice to ensure enforcement, as IPRs involve millions of enterprises and hundreds of millions of individuals” (Long 2003, p. 169).

Therefore, China’s compliance with the TRIPS Agreement as evidence of the maturity of its intellectual property system as a whole is an area of considerable interest for several of China’s trading partners and given the level of concern regarding China’s TRIPS implementation prior to accession; it is clearly an issue worthy of further study. Furthermore, as 15 years have passed since accession, now is an ideal time to research both the short-term and longer-term impact of the TRIPS Agreement on China’s IP system.