The WTO and China: Still of Relevance for Foreign Investors?

China has been a World Trade Organization (WTO) member for almost thirteen years. The titanic battles over its admission to the globe’s leading international economic organization have long passed. While some were anxious about China’s WTO accession, many were exuberant. They foresaw new markets for the goods they manufactured outside and inside China, new opportunities to invest in China’s automobile, banking, insurance, telecommunications, and wholesaling sectors, and better protection of their intellectual property (IP).

Many have not been disappointed as China dramatically cut tariff and non-tariff barriers, ended numerous operating restrictions on foreign firms, and opened up various sectors. However, the exuberance has faded as businesses and government have shifted their attention towards pushing China to fulfill certain WTO obligations such as not requiring technology transfers from foreign investors and to completely meet other WTO commitments such as enforcing IP and opening its markets to foreign cultural goods. Relatedly, many are questioning the efficacy of the WTO as a tool for dealing with China. After all, it easily can take 5-6 years from the time a case is filed to the time a WTO dispute settlement system (DSS) ruling is implemented. And during this span of time China’s firms grow stronger while foreign firms confront reduced profit opportunities. China’s recent move to open up its electronic payment processing market to foreign firms like Visa and MasterCard, however, shows the DSS’s continuing salience. The DSS can be maddeningly slow, but it is entirely possible this market would have never been opened in the absence of the DSS. Aside from this, progress in opening the express delivery sector to diverse firms, terminating China’s rare mineral export limits (the subject of two DSS cases), and so on have something to do with the WTO. The WTO clearly remains of relevance to foreign investors.