Doing Business with China

The simplest way to describe the WTO is to compare it to the original European Economic Community (the predecessor of the European Union). The original EEC concentrated on opening markets via 'free movement' and non-discrimination disciplines that were legally enforceable on the Member States via a specialized international court . Those same principles underpin the WTO. In fact, some of the most important provisions of the EEC Treaty were inspired by provisions of the General Agreement on Tariffs and Trade (GATT), the predecessor of the WTO.

Not direct reciprocity but 'most favoured nation' treatment

On the other hand, there are significant differences between the WTO and the EEC/EU, the most important being that whilst in the EEC/EU all Member States have the same obligations, this is not the case in the WTO. The obligations of a WTO member are to a large extent determined by the commitments and concessions made by the country concerned in a specific sector or for a specific product. These commitments and concessions are set out in detail in 'Schedules' that each WTO Member has deposited with the WTO. It is important to note that once a WTO member makes a market access commitment the benefit of that market access commitment extends to all other WTO members (and of course their companies). This is referred to as the 'Most Favoured Nation' (or MFN) principle.

However, it is important to note that the commitments made by WTO members are not necessarily parallel between members: the fact that country X gives access to services sector Y does not mean that country Z also does. This is fundamentally because of the way in which market access commitments are negotiated in the WTO (ie 'trade-offs' are made as between market access 'offerings' across a wide range of services and products), with the result that access is not parallel across all sectors and products for all WTO members.

For instance, during the Olympic summer games in Australia in 2000 the EU based press agency Reuters was denied access to certain areas of the stadiums where only Australian and US news agencies were allowed to bring their cameras . The European Commission successfully intervened on behalf of Reuters pointing out that Australia had made relevant commitments in the relevant sector (ie the audio-visual sector). This is despite the fact that the EU itself has made no WTO commitments in that sector and that under WTO law the EU could lawfully apply such discriminatory measures against Australian press agencies.

This may seem awkward but the WTO should be looked at as a global deal whereby every member country has accepted that the market access level offered by all other countries is sufficient. This functions like an entrance fee that is different for all members but once the other members have accepted the entrance fee, the acceding country can come in and enjoy all the rights and benefits of the club.

An important consequence is that, whilst China's obligations in the WTO are determined by China's commitments and concessions in the WTO, China's rights as an exporter are largely determined by the commitments and concessions of the other WTO members. It is to be presumed that China has undertaken its obligations in full knowledge of the rights it obtains as a result of doing so.