The
World Trade Organization (WTO) is an international body tasked with administering
the rules of trade between nations, providing a forum for trade negotiations,
and handling trade disputes and monitoring national trade policies. (Kobayashi
2007) Previously known as the General Agreement on Tariffs and Trade (GATT) and
limited in its scope to trade in goods, a fully-functioning, multifaceted World
Trade Organization subsumed the GATT at the conclusion of the Uruguay Round of
trade negotiations in 1995. (Jackson 1997) The WTO introduced agreements on
trade in services and intellectual property, and provided for the creation of a
fully-functioning organization, and a more procedurally-sound, binding system
of dispute resolution. (Jackson 1997) In 2001, China was permitted to join the
WTO after a fifteen-year-long accession process that required deep reforms to
China’s political, economic, and legal systems in exchange for it to be
permitted to avail itself of the many benefits of membership in the WTO system.
(Kobayashi 2007) Yet, almost ten years after the fact, scholars continue to
question the extent to which these reforms have facilitated the creation of a
more transparent, rule-based system of Chinese law. To what extent has
membership in the WTO contributed to the establishment of the rule of law in
China, and what is the status of the rule of law in China today?
When it comes to trade law and
policy, membership in the WTO was predicated on China agreeing to undertake a
series of legal reforms and consenting to the application of the entire body of
WTO substantive principles and regulations. Among these were requirements that
China substantially reduce its imposition of tariffs, or taxes imposed upon
imports; and that China provide for fair trade by putting an end to its
practice of subsidizing its domestic industries or permitting the “dumping” of
its products on other markets through the use of predatory pricing (Hu 2001:
101) China also consented to the non-discrimination principles embodied in the
GATT agreement, including “national treatment,” which mandates that “treatment
for foreign products be no worse than that for like domestic products,” and the
“most-favored-nation” obligation, which requires “each contracting party to
grant to every other contracting party the most favorable treatment that it
grants to any other country with respect to imports and exports of products”
(Hu 2001: 101; Jackson 1997: 157). With respect to its commercial relations,
China’s Accession Agreement ultimately involved over six hundred commitments;
at least ten percent of which were determined to require China to “enact,
repeal, or modify” trade-related laws, policies and regulations (Westin 2002:
3).
Yet, the reforms that China was required to undertake went
far beyond substantive economic policy. Among these were obligations to provide
for “transparency,” “judicial review,” and the “uniform enforcement of laws”
(Westin 2002: 2). With respect to transparency, China agreed to publish its
trade regulations and “provide a reasonable period of public comment before
implementing them” (Kobayashi 2007: 5 Westin 2002: 4). Regarding judicial
review, China agreed to mandate that the “central government…address areas
where WTO [law] is violated and provide a meaningful remedy” (Kobayashi 2007:
5). China also agreed to “establish or designate tribunals to promptly review
trade-related actions of administrative agencies” (Westin 2002: 4). As to
uniform enforcement, China agreed to apply trade-related laws and regulations
“uniformly throughout China” and provide for a complaint procedure whereby
“individuals and enterprises can bring complaints to China’s national
authorities about cases of nonuniform application of the trade regime” (Westin
2002: 4). Finally, and perhaps most significantly, membership in the WTO
required China to consent to becoming subject to the jurisdiction of the
Dispute Settlement Body, an international body capable of adjudicating disputes
over WTO rules and enforcing decisions against China’s own will. (Hu 2001)
It is of course, one thing to agree to a series of
obligations and quite another to actually put those agreements into practice.
To what extent has China followed through with its WTO commitments? For one,
China began to make positive rule of law changes to its domestic legal system
in advance of its securing membership to the WTO, as demonstrated by the 1999
amendment to its Constitution, which recognized for the first time that “[t]he
People’s Republic of China shall be governed according to the law and shall be
built into a socialist country based upon the rule of law” (Chow 2003: 78). By
the end of 2002, China had already revised fourteen of its laws and
thirty-seven administrative regulations, annulled twelve administrative
regulations, suspended thirty-four relevant documents, and changed more than
one-thousand departmental rules to comport with WTO obligations. (Zou 2006:
89) By 2003, China had lowered its
tariff rates, eliminated non-tariff measures, and relaxed limitations on
foreign investment. (China Daily 2003) As a result of China’s having undertaken
domestic reforms permitting increased market access, its total trade vis-à-vis
the rest of the world more than doubled from $509.8 billion in 2001, to $1.2
trillion in 2004. (Winn 2005)
Furthermore, the key legal institutions in China have become
increasingly accessible and transparent. (Horsley 2006) Draft legislation is
now made available on the Internet for public comment, and public hearings are
increasingly being held on proposed legislation believed to be of public
concern. (Horsley 2006) Additionally, as
of 2006, Chinese citizens were permitted to “audit” all legislative
proceedings; rendering them open to the public (Horsley 2006: 96). In June
2004, the Standing Committee of the National People’s Congress established a
special office under its Legislative Affairs Commission, which was made
responsible for reviewing all central and local government regulations and
legal interpretations in an effort to harmonize legal process throughout the
country. (Wang 2007) In January 2007, the government was set to approve China’s
first-ever national, administrative “freedom of information” ordinance, a
measure believed to be a precondition for the creation of an information access
law (Horsley 2006: 101).
Yet in the midst of all of these reforms, scholars have noted
that China still has a long way to go before it claim to have a society built
on the rule of law. For one, some have said that the creation of a Chinese
system of rule of law is impossible in a system marked by the subordination of
law to Communist Party policy and the lack of independence of the courts.
(Westin 2002: 2) In fact, it is often argued that the key function of the law
to the Chinese government is “to order and regulate the exercise of government
power” (Horsley 2006: 93). As of May 2009, approximately one-third of
registered lawyers were party members, and almost all law firms had party
committees, which allocated attorney remuneration based on loyalty to the
party. (McGregor 2010) In a 2009 pronouncement by the Party, it was said that
judges must remain loyal “to the Party, the state, the masses and finally, the
law,” in that order (McGregor 2010: 24). Furthermore, despite the establishment
of a procedure in 2005 that made it possible for individuals to file petitions
with the central government to challenge the legality of local regulations,
attempting to do so is said to be futile, as “the Party sits outside, and above
the law,” and that “[n]o legal obstacle is so great that the party cannot brush
it aside” (Horsley: 2006; McGregor 2010: 22, 25).
Another significant problem said to be plaguing the court
system is the incompetence of Chinese judges. (Horsley 2006) In some respects,
there have been signs of improvement. For instance, unlike in the past, where
“judges were typically drawn from the ranks of the retired military” and
“[a]ppointments were based more on political correctness than on relevant
experience or legal knowledge,” today’s judges are “required to hold university
degrees” and “pass a national unified bar exam,” as well as “participate in ongoing
legal education programs” (Horsley 2006: 102). Yet, judges remain highly
“susceptible to pressure” from the Communist Party, as it continues to control
judicial salaries and court budgets; as well as judicial appointments and the
personnel arrangements of the Courts (Inch 2010; Hung 2002: 9).
Accordingly, the aforementioned analysis suggests that there
continues to be significant limitations to the rule of law in China. Although
membership in the WTO marked a turning point in China’s socio-legal culture in
that it ushered in a series of reforms designed to improve transparency and
uniformity in the application of law, there continues to be significant
barriers to the effective implementation of the rule of law; among which are
the continuing retention of significant control over the legal system by the
Communist Party, both with respect to litigants and attorneys, as well as over
judges and their staffs. One significant limitation to empirical analysis in
determining the true status of the rule of law in China is that one cannot
simply come to conclusions based on documented materials since sensitive
information is kept secret by the communist party, and as such, goes
unreported. As a result, an analyst must look to anecdotal evidence, on a
case-by-case basis, to determine the extent to which reforms are being
implemented. Accordingly, based on the forgoing evidence, one can conclude that
while China appears to have made great strides in consolidating the rule of law
when it comes to trade-related matters in the WTO setting, it appears that
these reforms have not yet firmly established the right of an individual to
challenge the interests of the ruling Communist Party.
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