EU’s Monitoring of China’s Compliance with WTO Obligations

Abstract

To World Trade Organization (WTO) members, admitting a country with a rapidly expanding economy into the WTO was a great experiment as the country would make significant decisions concerning resource allocation. In the history of the world trading system, never has a country of such trading importance and system incompatibility with WTO norms been admitted. Given China's trade weight, its anticipated gigantic trade surge would disrupt the market of its trading partners, and the rule-based multilateral trading system would be endangered if China opted to ignore the WTO rules. To safeguard itself, the European Union (EU), like the United States, imposed upon China a comprehensive protocol which has more far-reaching obligations beyond the WTO. The EU also kept a close watch on China's behaviour in the WTO. With no task forces to monitor China's compliance, the EU has taken full advantage of the built-in mechanisms in the WTO, i.e., Trade Policy Review Mechanism and the Dispute Settlement Mechanism, as well as other measures (including bilateral channels and unilateral measures). This is pursued in the broader context of China's rise and with a broader vision of integrating a rising China into the existing global economic order. After all, a WTO-adhering China is conducive to cementing China's place in the global economy, buttressing the internal reform process, and strengthening the rule of law, which is in the interest of the world. For the EU, the real question is how to encourage China to change its economy into one that relies more on domestic demand than on export on one hand, and one that allows market access to more imports and protects IPRs on the other hand. Therefore, monitoring shall be conducted to facilitate a smooth and thus healthy China-EU trade relation, which will .nally hinge on EU's patience and skills in dealing with a rising China.