China and its Effects on World Trade Organization (Research Paper Sample)

CHINA AND ITS EFFECTS ON THE WTO
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China and its effects on the WTO
Countries have often formed organizations to control activities of common interests like trade, peace and tourism among other interests. Member countries play by the rules and standards set by the organization to enable peaceful operation and getting maximum utility from the arrangement. World Trade Organization (WTO) works with other international governmental organizations that promote "coherence," a word depicted in the one of the WTO’s mandate statement, "Decision on achieving greater coherence in global economic policy-making" as agreed in Marrakesh in April 1994. WTO has over 140 international organizations with observer status across the world including the China. China and the US have had strong relationships mostly in trades and exports with complex relationship in politics and other political agendas. China has had several disputes with major trading partners like US, Russia and Europe among other nations. This paper looks at the challenges that China presents to the world trading systems and whether it abides by the WTO’s rules on dealing with its international relations.[WTO. 2015. China and the WTO./english/thewto_e/countries_e/china_e.htm]
China has had complications and challenges when dealing with other trading partners in the WTO or other trading organizations. China joined the WTO in December 2001 and over the time; it has filed cases of trade disputes against several countries including the European Union, the US and other major trading countries. Despite the country joining the WTO and growing its economy to the second largest in the world, it has failed in some sections as it has not fully followed the rules of WTO. The cases involving China as the main complainant are 13 as of December 2014, 33 cases involving the country as the respondent and over 119 cases involving China as a third party in the cases. This data indicates that China has had not a rosy relationship with other trading partners and this presents the question whether China is playing by the WTO’s rule and what could be the sources of the challenges that China presents to other countries. WTO Ministerial Conference approved China’s accession to the organization with the country agreeing to the organization’s protocols, constitutions and procedures. There are tariffs and other foreign exchange protocols that should be followed when exporting and importing goods. China is a major trading partner across the world and thus she cannot be neglected or sidelined as it supports many economies in the world. Sudworth, writing for BBC media, notes that China has extensive portfolio of industries that supply other world countries with necessities. China has exported technology and phone accessories to other countries with the home market being promising. The mobile network in China has seen over 80 million subscribers in each year and currently overpassing one billion subscribers. The author observes that China is geared to overtake America as the world’s biggest smartphone market and thus China has had strategies to control the domestic markets and gain maximally from the WTO agreements.[Lamy, Pascal. China’s Role in the WTO. /chinas-role-inthe-wto/ (Accessed 27 April 2015)] [Ibid. 1, 1] [Sudworth, John. 2010. Squeezing cash from China's billion phone app market. /news/business-18119515 (Accessed 27 April 2015)]
The total US-China trade increased to over $592 billion in 2014 from $2 billion in 1979. China is rated as the US’s second largest trading partner and it provides the third largest market for US exports. China is also the biggest source of imports for the US citizens especially the middle and the low class population. US gains over $350 billion from China from both direct and indirect investments. Most trading experts argue that China is a critical player in the international trade as it keeps the global market competitive. With this importance put on China, it prides its importance in the world market by breaking some WTO and other international rules in its trading. The tensions between the US and China, and possible with other countries arise from the rigid market economy of China. The US views China as to be having not completely transitioned to free market economy to allow free movement of goods and services. There are several state-directed policies imposed by China that control its exports and imports and this makes the liberated economy less free. With these restrictions, China has been embroiled in disputes that pit it against other members of the WTO who face unfair play at the international stage.[Morrison, Wayne M. 2015. China-U.S. Trade Issues. http://fas.org/sgp/crs/row/RL33536.pdf(Accessed 27 April 2015)] [Ibid. 5, 1]
Sudworth observes that for the next 12 months, there will be 200 million new smartphone users and the US is among the greatest producers of the smartphones. This promising market has created "copy cats" who use patent rights of other companies and benefit from the illegal activities. This illegal business action is done by large companies that steal from the small companies or starters. U.S. and other countries condemn China for having weak "notoriously weak protection for intellectual property.”[Ibid. 4, 1]
Despite the poor unfair economy presented by China, it produces big range of products where big companies employ over 100 millions of Chinese. One such company is the Foxconn works that employs over 240,000 Chinese nationals in its assembling plant. With the increasing market forces and competition from other countries, China has had to be forced to have stringent control measures that have contributed to the many disputes, more than any other member of WTO. China supports FTA (Free Trade Agreements) with many members including ASEAN countries, EU, some countries in the Americas. China sees FTA as the new platform for furthering its international trade and getting opportunities for exports. Despite having over 160 cases filed under the WTO, the country has continuously engaged countries on the FTA platform with 20 FTAs being under consideration and 12 of them having been signed. This shows the shifting focus of China to free trading agreements that seem to boost its economy. Among the many arising complaints on the China unfair policies are the Chinese trade policies where the China’s currency, yuan renminbi, is of low value when compared to dollar. Another case is the Chinese government subsidies for exporting industries that favor the Chinese nationals over the foreigners on the international trade. There are complaints of "slave labor" where millions of people working for the factories are underpaid and the government does not care to constitute wage policies. Widespread abuse of intellectual property has been cited by many foreign and local investors as a major hindrance to investing in China. The country has not respondent to the complaints and thus "coherence" as demanded by WTO partners is not applicable. Aaronson also argues that China’s competitive advantage to some degree is based on its inadequate governance with the...