China's accession to the WTO will change the world, according to the director-general of the international trade body, Mike Moore.
"WTO membership will provide the 1.3 billion Chinese people with secure, predictable and non-discriminatory access to the markets of 142 trading partners. It will commit China to implement legal and domestic policy reform," says the former Prime Minister of New Zealand.
"For other WTO members, China's accession will cement and accelerate the benefits of the dramatic liberalisation undertaken in China over the past 20 years. The first [WTO] dispute with China will be interesting, but the whole world will be watching. China leaders have said to me that this is the most important decision in 60 years. They are working hard to build up their public infrastructure to handle this. Now that China has a seat at the table, the WTO has a more legitimate claim as a truly universal organisation," Moore says, adding that mainland China and Taiwan account for half of all world trade.
He admits, however, that Asia's businesses will probably find it a "hard slog working with [the Chinese] Government", particularly in regard to market access for government procurement, given past transparency issues.
While obviously pleased China had actively pursued and succeeded in gaining WTO membership, Moore is not against countries in the region forming other regional trade agreements (RTAs). "I see benefits in open regionalism. However, if it is a substitute for a multilateral system then it becomes dangerous... closed, inward-looking regionalism can be hostile. I would, however, never criticise China, Macau, Taipei and Hong Kong for establishing a regional trade agreement."
Dr Supachai Panitchpakdi, who replaces Moore as WTO director-general at the end of his term in September, echoes the current chief's enthusiasm for China's entry into the global trade organisation. Panitchpakdi, former Thai Deputy Prime Minister and co-author of China and the WTO, says he is confident that China will not "intentionally" violate its WTO commitments.
"They are ready for this... the determination is there. Over the next eight years, China will have to submit all kinds of measures on all aspects of its reform - on IT, prices, telecommunication and agriculture - to the [WTO] committees. Each year the general consul [of the WTO] will assess China's performance. This will be good for reform momentum."
Panitchpakdi says the money China saves by not paying out subsidies on agriculture and telecommunications can be used to create jobs on more productive projects. He says China should avoid micro-management of its economy and learn to macro-manage... instead of intervening. "When there is full transparency and consistency in the application of the laws... this will allow international players and foreign investors to make a decision to invest in China with more clarity."
The WTO chief designate also predicts that banks will be reformed quickly. "They have been trying to do this for years but without any outside competition, this reform has been bogged down. The Chinese government has been left with huge debts. Management practices haven't changed, they are still adopting the easy way out by looking to the government for compensation. With accession, China will open up its banking system and within five years will need to get its act together."
Panitchpakdi says he would like to see a reduction in the number of disputes that come before the WTO for resolution. "We should not allow over litigation to go on. We need to introduce a new mechanism [to avoid WTO dispute settlement management]. China already is facing more than 450 [anti-dumping] cases."
"Free trade cannot solve the world's problems," Panitchpakdi writes in China and the WTO, "but it is the most powerful tool that the international community has at its disposal," adding that while supporting globalisation, the WTO's agenda must be broadened to include eradication of poverty.
While the 15-year negotiation process to enter WTO has challenged China's patience, Panitchpakdi says 200 million Chinese have been lifted out of poverty by the reforms.