China and the WTO - Legal Restructuring in Preparation for the Accession

Abstract: Finally, after 15 years of effort, China is expected to become a member of the World Trade Organization (WTO) later this year. China has experienced a rapid economic growth in the last 20 years. With the world's largest population, China could very well become the largest market in the world. It is therefore understandable that China's entry into the WTO is a major event in the world trade. China has worked hard to become a WTO member. In the transformation from a planned economy toward a market economy there have been extensive reforms. In the bilateral WTO accession agreements, China has agreed to open up its markets, and to lower its tariffs and other trade barriers. The advantages of a WTO membership are many, but China will also have to make a lot of difficult adjustments. With the opening of new markets to foreign companies the state-owned enterprises will have to face new competition. To adjust to the WTO it is necessary for China to improve its legal system. China has already made some preparation in the legal field, but still hundreds of laws need to be examined and amended. Much of China's legal system has been established after the late 1970s. The speed of the lawmaking has been very rapid. In order to comply with the WTO principles and create a more transparent business environment, changes have been made in the legal framework for foreign investment and trade. In 1999, China's long anticipated unified Contract Law was issued, clearly showing China's willingness to adopt international principles. There has also been great improvement in the field of intellectual property right, however the enforcement of the rules needs to be strengthened. A new Tax Law unifying the current domestic and foreign income tax laws is also expected to be drafted. The WTO accession will have great impact on China's trade regime and it will help China to become a full member of the international trading system.