Question

1. What were the terms of China’s admission to the WTO, and has its admission been good for China and the WTO? Why is Russia still not a WTO member? What are some of China’s and Russia’s trade conflicts with the West today? 2. What are the similarities and differences between GATT and the WTO? What are the competing explanations for the Doha Round problems, and which explanations do you think are the most plausible?

Answer 1

Terms of Admission of China and has it been good for both WTO and China:-

China today, happens to be one of the largest world manufacturers around the globe. This has happened primarily because it is the most populous country in the world, and also because of systematic reforms which each subsequent governments has conducted after the economy changed from communist to being an open economy.

China was part of the General Agreement of Trade and Taxes as an observer country, and had to make numerous changes to its economic system through active reforms, before which it was inducted into the World Trade Organization.

These changes were what is called as the Terms of Admission of China into the World Trade Organization which was indeed a lengthy process owing to the nature of the economy.

China formally became a member of the World Trade Organization in the year 2001. This happened only after China changed its key economic policy from that of being a communist country to an open economy. The process involved reducing trade and tariff barriers with other countries, which would allow for easier import and export of goods and commodities.

Further, the country primarily had no land laws since most of it was government owner. This changed, and also the communist nature was abolished which led to dilution of state owned companies which were sold to private players.

After these changes were implemented, China finally was inducted into the WTO.This has since then been advantageous for both the Organization and the Country respectively.

China is a major contributor to the funds required for smooth functioning of the WTO and also has grown rapidly and has become one of the manufacturing giants which has made growth and economic development possible for the entire globe.

It is important to note however, that this admission was extremely tough in the initial years, as United States and major European countries were against admission of China into the Organization.

Q 2 "Reason Why Russia still not a WTO member"? "China’s and Russia’s trade conflicts with the West":-

Answer:-

Russia has always been a key exporter of natural gas and petroleum exports across the globe. Also, because of its military advancements, the country was always in conflict with countries such as the United States which stopped its entry into the World Trade Organization for a very long period of time.

The country remained a closed economy and could not fulfill most of the conditions of the WTO involving removal of trade and tariff barriers. The country could easily earn its revenue from exporting military equipment which made big profits in the international markets. Because of this, the concept of open economy were avoided by each subsequent leadership which is one of the biggest reasons why the country was never a part of the WTO.

Conflicts:-

It is a known fact that China and Russia have been in trade conflicts with the West primarily because these two countries have become economic giants over the past decade or so. With China's global competitiveness in terms of the overall cost of production and the quality increasing, exports have risen rapidly into the United States and other European markets.

This has led to a trade deficit with most of the countries which the Western counterparts are looking to plug. The Western counterparts have argued, that China adopts selective open market strategies in which it provides indirect support to manufacturers that compete with key imported or exported products and reduces the prices in the international and domestic prices which causes trade deficits with countries.

China on its part has blamed the West of not allowing it to grow in a similar manner in which most developed countries grew which has caused its conflict with America and most other European nations respectively.

Russia on the other hand is involved in export of military equipment, to countries such as India, Sri Lanka, and Pakistan which were only solo markets previously for the West. Due to declining profits for the west, thus trade tensions have emerged respectively.

Similarities and Differences between GATT and WTO:-

The primary similarity between the General Agreement on Trade and Tariffs and the World Trade Organization are, that both of them tried to abolish tariffs and barriers between member nations, and aimed to have a more open economy which would allow for easier trade to take place and would make the entire world a global market.

On the contrary, the major difference is the fact that GATT was only arbitrary in nature, and local laws still superseded its existence. Further, GATT only had rules on trade of goods whereas services were only included in the World Trade Organization. A formal structure in case of GATT was missing which the WTO fulfilled and became thus a part of how the world economy runs.

Doha round failure:-

The Doha round took place between 2001 and 2005 and was based on the fact, that developing countries must be allowed a level playing field in exports of agricultural products and in return for which, they would open up to services which the developed countries were offering primarily Banking Sector.

The Doha round, in my opinion primarily failed due to the hostility of the United States and European countries towards agricultural subsidies which it were providing to the local farmers. The Western powers are one of the largest exporter of this and as a result, they relented on allowing subsidies towards agriculture to be abolished and agreed that it would make the section of society vulnerable to alternatives.

Also, since it was mandatory for all parties to agree to the round and a majority concept did not apply, the round of the WTO failed and was called off in 2006 due to lack of participation of the Western Countries respectively.

Please feel free to ask your doubts in the comments section if any.