BOOK REVIEWS

Rule of Law Through Internationalisation: The Objective of the Reforms?

On July 10th 1986, the Chinese government submitted an official request to the Director General of the General Agreement on Tariffs and Trade (GATT) aiming to seek the resumption of its status as an original contracting party to the GATT(1). This decision seemed motivated not only by Peking's desire to resume its place at the heart of an institution that, with the negotiations of the Uruguay Round, was well on the road to taking up an instrumental position in the regulation of international exchanges, but also by internal considerations linked to the policy of reform and opening up launched by Deng Xiaoping in 1979(2). As Pierre-Louis Girard, chairman of the Working Party on the participation of China to the GATT and then to the World Trade Organisation (WTO), rightly underlines, there was at the time a feeling that a major political decision had just been taken involving “China's future in the world just as much as the future of its economy”(3).

Indeed, China's development strategy rested largely on internationalising the economy by expanding foreign direct investment and trade(4). China's accession to the GATT could thus only support the aims of opening up to the market economy that the government had set for itself. Nevertheless, the gamble of liberalising a foreign trade regime that was still tightly closed and based in part on a series of exceptions from the GATT principles in terms of national treatment, the most-favoured-nation rule and, to a lesser degree, reciprocity—if one considers that China would be able to benefit from the dispensations particular to developing countries—was particularly risky(5). Beyond the economic considerations, one is entitled to wonder what it was that pushed the Chinese leadership to embark on this difficult path and to make a realpolitik choice that would lead the country to negotiate for more than fifteen years on bilateral and multilateral fronts and to sign 37 trade agreements before arriving at a modus vivendi. One has to assume that Peking's objectives were more far-reaching than may have been supposed. In particular, they involved clarifying the position that had to be adopted in order to respect Taiwan in international organisations while preserving an absolutist theory of state sovereignty, occupying a leading role in the concert of trading nations and bringing pressure to bear on the multilateral negotiations, attracting the foreign capital necessary for strong growth and thus for maintaining social stability, but also being able to benefit from an adequate stimulus to carry transformations of the internal order through to a successful conclusion. To adopt the metaphor used by renowned expert and professor at the faculty of law of New York University, Jerome Cohen, during a conference held at the University of Hong Kong in November 2001, the WTO would act as a screen behind which it would be possible to pursue or to put in place a whole raft of necessary reforms that the divisions among the Party elite or the threats of social destabilisation had up to then encumbered. Although the WTO is technically responsible only for regulating exchanges and investments linked to multilateral trade, the integration of a state into the system of free trade may, through the observance of certain fundamental principles that we will discuss later on, enable its legal framework to undergo lasting modifications as economic reforms take root.

The advent of the rule of law, the genuine outcome of the legal reforms launched over twenty years ago now, would thus figure in the interminable litany of virtues ascribed to the WTO. Although the transformation of the legal system has never been placed on an equal footing with the economic reforms conducted by the Chinese leadership, as represented by Zhu Rongji and his plan to reform the state enterprises, it is no exaggeration to speak of a legal revolution when we evaluate the codification and institutionalisation work that has been accomplished in the last twenty-five years and in particular since 1992 and the adoption of the concept of the “socialist market economy”(6). The final stage of this revolution based on the internationalisation of the law would thus be the founding of a “socialist rule of law” that would contribute, if not to the democratisation of the regime, then at least to the installation of a regulatory framework that would be more secure because it would be rational, i.e. transparent, and applied uniformly to the whole of the Chinese territory. This singular negotiation of accession to the WTO would thus have resulted in the birth of a kind of rule of law sui generis or an “economic rule of law”, if indeed such a concept can be created.

 

A singular negotiation, but one inscribed in the continuation of the policy of reform

From July 1986 to November 2001, China had to traverse over fifteen years of particularly difficult negotiations that ended, at the Ministerial Conference of the WTO in Doha, with the signing of a Protocol of accession more than nine hundred pages long. This incredible diplomatic marathon can only be understood if it is placed in the historical context of international economic relations in the second half of the twentieth century and of the People's Republic of China (PRC) itself.

 

Economic multilateralism as an instrument of the policy of reform and opening up

The conference at Bretton Woods on July 1st 1944 and the creation of the International Monetary System (IMS) initiated a particularly dynamic period of diplomacy for China, as it was widely involved in the activities of an international community searching to draw a line under the war and to put in place a new world order that would be able to learn lessons from the failure of the League of Nations. Present at the Conference of Dumbarton Oaks from September 21st to October 7th 1944 for the same reasons as the United States, Great Britain and the Soviet Union, China took part in the preparatory work to create an international organisation that would guarantee peace. On June 26th 1945, the United Nations Organisation (UN) was created in San Francisco, and China took up a seat as a permanent member of its Security Council. On December 27th of the same year, Peking became a member of the two main institutions with a specialist technical vocation within the United Nations, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD, or the World Bank).

Less than two years later, from April to October 1947, China took part in the second UN conference on trade and employment that took place in Geneva under the UN's Economic and Social Council (ECOSOC). On April 21st of the same year, Peking signed the Protocol of Provisional Application of the GATT and became, when it was concluded in Geneva on October 30th 1947, one of the 23 original contracting parties to the agreement(7). As such, China took part in the first two tariff negotiations of 1947 in Geneva and 1949 in Annecy and accepted in principle to grant tariff concessions on manufactured products.

The day after the PRC was founded, the Republic of China (ROC), which had lost control of mainland China but still occupied China's seat at the GATT, decided to withdraw from the organisation. It communicated this decision through its delegation in New York to the Secretary General of the UN, who himself informed the Executive Secretary of the GATT. This withdrawal became effective on May 5th 1950. A number of countries that had granted tariff concessions to China within the GATT framework then cancelled these commitments in line with the possibility offered to them by Article 27 of the Agreement(8). Peking immediately considered this decision to be null and void as, in its eyes, the nationalist government of the Kuomintang (KMT) had no right to represent the Chinese state in international organisations(9). This rigid position with regard to Taiwan was in keeping with a political line from which Peking has never departed and which continues to form the basis for its view on participation in international organisations, as evidenced in the PRC's recent opposition to the ROC's entry into the World Health Organisation(10). For China, it is a point of never sitting alongside the “clique of Chiang Kai-Shek” and thus implicitly approving the existence of two Chinas(11). So China was de facto virtually excluded from all international governmental organisations for more than twenty years, during which time it occupied with steely determination the terrain of non-governmental international organisations with a technical, educational or professional vocation(12).

It was not therefore until October 25th 1971 and Resolution 2758 of the General Assembly of the United Nations that the PRC was able, after a long wait, to regain its seat at the heart of the UN and launch a diplomatic campaign to rejoin the principal international organisations. At the same time, Taiwan was excluded from a good number of organisations, losing its observer status at the GATT. From this point on, China began to understand that multilateralism can be a valuable arm of the foreign policy of a state that aspires to projecting its world view and to reforming its economy quickly by opening itself up to foreign countries. Indeed, China at the end of the 1970s was not slow to exchange the Maoist theory of three worlds, the five principles of peaceful co-existence and its status as designated champion of the Third World cause for a very pragmatic approach to economic development and to the aid granted in this context by the international economic organisations(13).

So it came as no surprise when Peking, which had refused to be associated with the Group of 77, reoccupied its seat as a founder member at the IMF and the World Bank on May 15th 1980, and then took part in the Third Multi-Fibre Agreement in 1981, finally becoming a formal member of the GATT committee on textiles in 1984(14). It has to be said that the policy of rapprochement with the GATT had made its debut in November 1982 when a delegation was dispatched with observer status to attend the 38th conference of the contracting parties to the GATT, with China insisting at the time that it was one of the original contracting parties to the agreement. In November 1984, China had to obtain authorisation to attend the GATT Council and the conferences of its subsidiary organs as an observer. Then, in April 1985, China became a member of the Consultative Committee for developing countries.

Finally, on July 10th 1986, Peking presented its official request to the Director General of the GATT to resume its status as an original contracting party. The request read: “[…] the Government of the People's Republic of China, recalling the fact that China was one of the original contracting parties to the General Agreement on Tariffs and Trade, has decided to seek the resumption of its status as a contracting party to the GATT”(15). It went on to specify that China was currently in a phase of “opening to the outside world and revitalising its domestic economy”, but also that it was firmly convinced that “the ongoing process of economic reform will contribute to the expansion of economic and trade relations with the contracting parties and that the participation of China as a contracting party in the works of GATT will reinforce further the objectives of the General Agreement”. Peking concluded this request for reintegration into the GATT by insisting on its position as a developing country and on its wish to benefit from the trade regime granted to this type of country.

Yang Guohua, Deputy Director of the treaties division of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), identified very precisely the five reasons that had pushed China to notify its application to the GATT: “to extend foreign trade, to participate in international economic affairs and for the formulation of comprehensive trade rules, to resist trade protectionism, to acquire more commercial information”(16). No doubt here, then, about the decisive influence exerted by internal political objectives on China's international strategy. In the space of thirty years China had thus gone from association, through exclusion and opposition, to the participatory use of the international legal order.

 

A unique accession process marked by the hazards of history

It was thus possible to start the procedure for participation in the GATT, then for accession to the WTO, under the terms of Article 33 of the Agreement, then under the set of more complex provisions contained in particular in Article XII of the Agreements of the Final Act of the Uruguay Round establishing the World Trade Organisation(17). Article XII of the Marrakesh Agreement in fact stipulates: “Any state or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. […]”(18). Though similar to any accession procedure, the procedure for China's accession is no less exceptional when one refers to the number of states that requested to be included in the Working Party (68, the highest number at the time of the GATT), and to the record length of the procedure itself (15 years and 5 months)(19).

Once the accession request is drawn up, the second stage consists in the presentation by the applicant of a memorandum describing in detail its foreign trade regime as well as information on applicable customs tariffs and copies of laws and regulations in force in one of the official languages of the WTO (English, French and Spanish). This memorandum is then examined by the members of the Working Party previously appointed by the General Council of the WTO and made up of members of the organisation who wish to take part in it. So it was on February 13th 1987 that China submitted a memorandum on all of the aspects of its foreign trade regime, which meant that it was possible to set up the Working Party to examine the Chinese application on March 4th in the same year, and which then took up its duties in the autumn.

The analysis of this memorandum is especially revealing of the state of the Chinese economy at the time and allows us to understand more easily the difficulties encountered by the Working Party as well as the length of this initial phase. For the chairman of the Working Party, it was in fact the examination of China's foreign trade regime that posed the most problems for the members of this group, of whom only the Americans and Europeans enjoyed any practical experience of Chinese affairs. This laborious exercise also enabled China to gain a more sensitive awareness of the reality of its future commitments(20). Around thirty pages long, the Chinese memorandum was divided into three main parts—general summary, Chinese trade regime and policy, institutions and publications relating to trade—and was embellished with an annex bringing together the Chinese laws and regulations in force(21). A good number of questions were then drawn up by the members of the Working Party on the compatibility of a planned and centralised economy with GATT principles, on the organisation of the Chinese economic and trade system and the role played by the State Council, on the functioning of MOFERT (Ministry of Foreign Economic Relations and Trade), and even on the economic basis for the priority granted to the reform of small and medium-sized enterprises. China responded to this whole series of questions with the greatest of care and set up a co-ordination group under the authority of the State Council chaired by Zhang Jinfu with a view to accelerating the process of reintegration in the GATT. It was possible to bring this phase to an end in 1989 after Washington and Peking had managed to reach an initial consensus.

Here is a good place to remind ourselves of some of the procedural elements for accession by a state to the GATT and then to the WTO. When it believes that the examination of the foreign trade regime is sufficiently advanced, the members of the Working Party and the applicant start bilateral negociations on market access. As in the majority of cases, China had to negotiate with the members of the Working Party who had requested it on the multilateral and the bilateral fronts, at the same time. The bilateral negotiations obviously assume a very special importance, as both the applicant and the WTO member wish to obtain, in accordance with the principle of reciprocity, comparable concessions on market access. It is not surprising, then, that the Sino-US and Sino-European negotiations were decisive here.

This first phase of negotiations that commenced in 1987 was abruptly terminated in May/June 1989 with the “Peking Spring” and the bloody suppression that followed. China became an international pariah. It restored a series of administrative measures to control its foreign trade and to oppose Taiwan's application to join the GATT in January 1992. It was thus necessary to wait for an economic recovery, the pumps of which were primed in January/February 1992 by the voyage that Deng Xiaoping undertook to the south of the country, and the legalisation of the themes broached by Deng during the 14th Congress of the Chinese Communist Party the following October when the concept of the “socialist market economy” was adopted. China was now to enter a period of powerful growth, which allowed it to buy some credibility for itself and thus take up its international position.

A phase during which negotiations were first resumed, then intensified, was launched in Geneva with the goal of reaching a compromise before the Uruguay Round ended and the WTO was created, as China wished to take part in it as a founding member. The negotiations, however, were to prove more difficult than expected because the themes involved had multiplied, a phenomenon linked to the future enlargement of the competences of the WTO compared to the GATT(22). The members of the Working Party were in fact to touch on a number of questions related to the intellectual property regime, agriculture, textiles and services, new areas over which the WTO negotiations, as we now know, would stumble for several years.

In order to find a way out of these difficulties, but also because it had a foreboding that negotiations for accession to the future World Trade Organisation could turn out to be even more fraught with complications, China announced publicly that it would leave no stone unturned in its efforts to reach an agreement before the end of 1994. The PRC's European and US partners seemed fairly confident at the time and largely supported Peking's ambitions, as is shown by a European Union delegate in Geneva on March 18th 1994: “We see their presence as crucial to the formulation of an effective World Trade Organisation, and we are keen that there is not held up in any way”(23). An initial draft accession protocol was drawn up and presented by the European Commissioner, Sir Leon Britten, to Wu Yi, China's then minister of foreign trade, during a visit to Peking on February 28th 1994. However, from the month of May, the tone clearly changed. The European Union, but above all the United States, started to sound more and more critical about Peking's abilities to observe the commitments to which it had signed up in order to reach a definitive agreement by the end of the year. The negotiations stumbled in particular over questions of intellectual property, something that is brought home to us in a memorable statement by Zhang Yuejiao, a high-ranking government official at MOFTEC: “we pay great attention to protecting intellectual property but China is a country ruled by law. We cannot just issue an order to close the factories. Let those concerned present evidence to the proper legal authorities ”(24). Beyond the obvious economic considerations, the theme of a state governed by law, not to say the rule of law, was touched on directly. The ambitious draft protocol for the “reintegration” of China in the GATT indeed already provided for a whole series of provisions relating to the questions of transparency and judicial control of administrative acts, something which, as we shall see, is not without influence on the gradual installation of the rule of law. Chinese determination thus ran into the brick wall of reality: China was not ready, and it was better to wait than to grant concessions negotiated in haste. The Chinese negotiators seem to retain a slightly bitter memory of this period, as they had gained the impression—no doubt unjustified in terms of the actual state of the Chinese foreign trade regime—that “the more China did in carrying out reform and open policies and perfecting trading system, the farther China went from requirements of the GATT”(25).

For all that, China's desire was not extinguished, despite the internal struggles within the Party and among the negotiators themselves, and China continued to display, in the words of Pierre-Louis Girard, “a great deal of consistency” in the pursuit of its goals. Indeed, no retrograde renegotiation took place if one compares the draft protocol from 1994 and the accession protocol of September 2001. Edging gradually closer, China became reconciled with the WTO demands at the price of difficult concessions.

From a candidate for reintegration in the GATT, China became an applicant for accession to the WTO created by the Marrakesh Agreement that came into force on January 1st 1995. The Working Party on China's participation to the GATT was then transformed into a Working Party on the Accession of China to the WTO, and its competences rationae materiae were enlarged in line with the provisions of the Marrakesh Agreement. In March 1996, China's vice foreign trade minister and chief negotiator, Long Yongtu, took part in the first session of the Working Party on the Accession of China to the WTO. From this point on, the progress of bilateral negotiations, and of Sino-US negotiations in particular, played a decisive role in the conclusion of a final agreement. From 1996 to the end of 1999, we were witness to a veritable diplomatic ballet between Peking and Washington and, though grabbing less media attention, between Peking and Brussels(26).

This is not the place to review point by point the reductions in customs duties granted sector-by-sector within the framework of these agreements or of any other agreement resulting from the 37 bilateral negotiations concluded by China, not only because they have been very extensively treated elsewhere, but also because we are now in possession of the final conditions of China's accession to the WTO (the report of the Working Party, the Protocol of Accession, the schedules of specific commitments on goods and services)(27). The Sino-US negotiations merit some attention, however, so crucial did they prove to be for the whole process of accession.

The regime for exchange between China and the United States has been determined since 1974 by Section 402 of the Foreign Trade Act (Jackson-Vanik Amendment), which stipulates that the United States may not grant non-discriminatory treatment to a communist state(28). This provision, however, has been circumvented every year since the Sino-US trade agreement of 1979, which has permitted the parties to work to their mutual benefit the most-favoured-nation status (MFN) granted to China, a status that was re-christened “Normal Trade Relations” in 1998. This practice has not been without a destabilising effect on Sino-US relations, as the renewal of MFN status has been systematically linked—without any effectiveness, it must be said—to human rights in China. After several years of intense diplomatic negotiations—negotiations that were accelerated in October 1997 with the visit to the United States of Jiang Zemin, but which then encountered an initial failure in April 1999 with the inability of Zhu Rongji to conclude any agreement other than on agricultural products—Peking and Washington, forgetting the small matter of the bombing of China's embassy in Belgrade, reached a compromise on November 15th 1999(29). This agreement, made very rapidly public, proved to be crucial for speeding up the procedure for China's accession to the WTO, as China and Canada signed a bilateral agreement on November 27th 1999, and then above all because an agreement was reached between China and the European Union on May 19th 2000. It only remained for the PRC to obtain the definitive extension of non-discriminatory trade treatment from the United States (PNTR, or Permanent Normal Trade Relations). This was an issue, however, that provoked tempestuous debates in Congress and was passionately defended by the Trade Representative and chief negotiator of the bilateral agreement, Charlene Barshefsky: “Regardless of our decision, China will enter the WTO. Regardless of our decision, it will continue to sell in the American Market. The only question Congress will decide is whether we accept the benefits of China's accession and the agreement we negotiated, or whether, on the contrary, by turning away from permanent NTR, we enable our competitors in Asia, Latin America, Canada and Europe to take advantage of these benefits while American entrepreneurs, farmers and factory workers are left behind ”(30).

A compromise was finally reached and the benefits of non-discriminatory treatment were extended on a permanent basis to China by the Proclamation of President George W. Bush of December 27th 2001 that came into force on January 1st 2002. This was a decision that had been made possible by the adoption by the Senate on September 20th 2000 of a text on the extension of PNTR with China(31). The text of the Proclamation specified a certain number of conditions necessary for the extension of PNTR, some of which, such as the annual examination of the implementation of the commitments agreed to by China, are taken over directly into the Protocol of Accession to the WTO of September 2001.

Conducted in parallel, the bilateral and multilateral negotiations for China's accession to the WTO influenced each other to conclude in an accession protocol that, in numerous points, owes much to the Sino-US and Sino-European bilateral agreements.

 

Time, the ally in the implementation of long-term objectives

For Paul-Henri Ravier, Deputy Director-General of the WTO who was for a time temporary chairman of the Working Party studying China's accession, never were negotiations for accession to the WTO so long and so complicated and never was the applicant subjected to such numerous demands(32). The agreement on China's accession to the WTO is indeed a rich and complex one, but it is also a made-to-measure agreement that makes time China's best ally in the no doubt difficult implementation of demanding concessions(33). This gradual approach had been adopted on the initiative of a European proposal aiming in 1996 to re-launch negotiations. Thus China has committed itself to 82 different points, which exceeds by far the number of commitments made by other new members, for example 21 specific commitments by Ecuador, 26 by Bulgaria, 29 by Jordan and 63 by Taiwan(34). The Chinese Protocol furthermore opens in a singular manner, as it is recalled that “China was an original contracting party to the General Agreement on Tariffs and Trade 1947” and note is taken of the fact that “China is a signatory to the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations”. Moreover, different from the other Protocols, the Chinese Protocol is supplemented by detailed specifications in fields as diverse as the administration of the trade regime, non-discrimination, non-tariff measures, and even a Transitional Review Mechanism and a Transitional Safeguard Mechanism for specific products. And numerous annexes have been added(35).

Extremely varied in the field of application rationae materiae and rationae temporis depending on the sector in question, the Chinese commitments can nevertheless be briefly summarised along a few broad lines. In accordance with one of the basic principles of the Organisation, China will grant non-discriminatory treatment to all members of the WTO, abolish dual pricing practices and the differences in treatment accorded to goods destined for the domestic market and to those produced for export, implement the Agreement in an effective and uniform manner throughout the whole of its territory, and observe the right to trade, which means that the right to export or import any goods and to trade them on Chinese territory will be applied to all enterprises by 2004. Finally, China will in the long term not maintain any export subsidies on agricultural products. Furthermore, Peking has undertaken to implement, from its accession, all of the provisions relating to the TRIPS agreements (Trade-related Aspects of Intellectual Property Rights). China will, however, reserve the right of exclusive state trading for cereals, tobacco and minerals, while some restrictions on transportation and distribution will also be maintained. So as to protect the markets of other WTO members from disruption caused by a large number of imports of Chinese origin, a Transitional Safeguard Mechanism has been put in place for a period of 12 years, but the restrictions or prohibitions affecting Chinese imports will be phased out. As far as non-tariff or technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS) are concerned, China has set up authorities responsible for issuing notifications of these TBT and SPS and has made a commitment that these measures will be announced in official publications such as the MOFTEC Gazette. Some key dates help us understand how these tariff concessions will be phased in sector by sector. For goods, the majority of customs tariffs will be eliminated or reduced between now and 2004 and all of them by 2010. December 31st 2004 will mark the end of the quotas imposed on textiles, but a safeguard mechanism will remain in place until 2008 to protect members' markets from too large an influx of Chinese imports. On December 31st 2006, the geographical restrictions on Sino-foreign service suppliers in the telecommunications field will be lifted, foreign banks will be able to carry out transactions in local currency with all of their Chinese customers and the creation of wholly foreign-owned subsidiaries in the field of insurance against large-scale insurance risks will be permitted. The final report of the Transitional Review Mechanism monitoring the implementation of the agreements will be conducted in year 10 or at n earlier date decided by the General Council of the WTO. Finally, in 2013, the Transitional Safeguard Mechanism will expire.

This, then, is the general and theoretical framework housing the future relations between China and the WTO. It remains to be seen, however, how these provisions will be put into practice, and at what price.

But what of the status of China's presence within the WTO ? Will China's participation contribute, as Peking indicated in its request to be reintegrated into the GATT, to strengthening the objectives of the Organisation? In a nutshell, what influence will this state of one billion three hundred million people, the world's seventh leading exporter and eighth largest importer, have on an international organisation with a universal vocation?

Contrary to what may sometimes have been suggested, and although any forecast remains a hazardous proposition, it seems to us that it was never China's wish to accede to the WTO as a way of setting itself up as the unconditional champion of the interests of the Third World, nor even to associate itself with certain groups—one can think, for example, of the Cairns Group in agriculture—or with large countries such as India during future trade negotiations. China will only adopt this strategy of alliances when its national interests demand it. If China has fought to be accepted as a developing country in the court of multilateral trade, it is to benefit from the system of exemptions that is granted to these countries by Part IV, the famous clause on “trade and development” inserted by a revision of the GATT that entered into force on June 27th 1996(36). It is in fact the principle of non-reciprocity that continues to govern the negotiations between developing countries, as the new Article XXXVI of the GATT stipulates: “The developed Contracting Parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of developing Contracting Parties”(37).

A brief review of China's behaviour in other international organisations provides us with some support for this feeling. One of the characteristics of the Chinese attitude is a constant refusal, since its reintegration into the UN in 1971, to make a firm commitment alongside developing countries despite a declaratory policy heading in this direction. At a time when the new world economic order is in full swing, Peking rejects any link-up with the two organisations that lead the Third World cause, the Group of 77 and the Non-Aligned Movement. In the same way, the Chinese conception of sovereignty is closer, in its absolutist aspects, to that of the United States than to that of the small Third World states. In addition, China has never “disturbed” the work of the international organisations in which it participates; at the very most it contents itself with an attitude of non-participation if it wishes to make any form of protest, as has been the case at the heart of the UN Security Council. The recent statements of Stuart Harbinson, Hong Kong ambassador to the WTO, point in this direction: “One should not see the WTO in simplistic terms; everyone talks about developing countries, but there's a tremendous range of developing countries. Interests are not identical and the group of developing countries is note monistic. It's not a simple picture that China would fit into”(38).

This China that aspires to the status of a great power will not hesitate, moreover, to make use of its right of recourse to the WTO's Dispute Settlement Body (DSB), as the recent incidents with Japan over agricultural products and with the United States over steel may suggest. This quasi-judicial and impartial inter-state mechanism for settling disputes is one of the great innovations of the WTO compared to the GATT and has enjoyed growing success since it was created, above all among the developed countries, which continue to be responsible for the vast majority of appeals, but also among developing countries that currently account for 25% of cases(39). Between negotiation and sanctions, the WTO's dispute settlement mechanism has turned out to be a system that is both rapid (averaging less than three years per case) and effective (85% of the complaints examined have concluded in reports ruling against the country “in the dock”, and these reports lead nine times out of ten to an amicable solution)(40). Whatever the case, the DSB is a very useful mechanism for keeping track of whether the commitments agreed to are being implemented. Many expectations among the business community today weigh on the possibility of recourse to this mechanism in the Chinese context. If the United States, experienced in this exercise as it is, by far the leading complainant and the leading defendant, has adopted a relatively aggressive attitude towards China, the European Union has chosen a more flexible position, as European Commissioner Pascal Lamy has repeatedly reminded us. In an initial period, the aim, from a diplomatic viewpoint, is to integrate China into the Organisation and not to stigmatise it.

The underlying idea of the negotiations was in fact to get China to accept a number of key principles that could, in the long term, modify its legal environment by bringing it into greater conformity with international standards, and why should that not head in the direction of a reform of the institutions and of the regime?

 

A legal framework that has been completely overturned, but for what “Rule of law”?

In a letter to President Clinton of November 14th 1999, Martin Lee, leader of the Democratic Party of Hong Kong, underlined the hopes raised by the signature of a bilateral Sino-US agreement: “the participation of China in the WTO would not only have economic and political benefits, but would also serve to bolster those in China who understand that the country must embrace the rule of law”(41).

Regarded as useful because it helps maintain the social stability on which economic growth depends, Chinese law only concerns itself with considerations of justice and respect for the human person in a totally secondary manner. Pragmatic and utilitarian, it has above all been working away at a definition of a legal framework for business, and in particular for foreign direct investment, supposed motor of economic growth(42). This evolution has largely been made by reference to international standards and practices. Thus, as Pitman B. Potter underlines, the major part of the history of legal reforms in the PRC refer to the difficulties encountered in adapting international standards to the local environment(43). China's accession to the WTO would thus share some of the same instrumentalist logic, all the while having a long-term effect on the whole of the politico-legal system.

 

A new legal revolution with an uncertain effect

In October 2000, according to Chinese legislators, more than 1,300 pieces of national and local legislation did not conform with WTO law. For a time, the most fantastic rumours circulated about the number of non-conforming texts, and it was learned in 2001 that the National People's Congress (NPC) and State Council were buckling down to the work of drafting 26 new regulations, amending 140 laws and national regulations and abolishing a further 573(44).

This veritable bulimia of legislation was not to stop after China's accession to the WTO. In the space of one month, the State Council and MOFTEC had published 70 texts—amended texts or new laws and regulations—that were revised to reflect the spirit of WTO law, although it may be assumed from the tardy translation into Chinese by MOFTEC of an accession agreement drawn up in English that certain inaccuracies may have been discovered.

This legal revolution affects virtually all aspects of Chinese business law. A good number of key areas have thus been profoundly transformed. The amendements published on July 22nd 2001 by the State Council on the implementation measures of the law on equity joint ventures, the amendments of the patent law, the suppression of price controls on 128 categories of different products on August 1st 2001, or even the reinforcement of the application of the provisions relating to copyright infringements, the revision of the trademark law, the new anti-dumping regulations, or again, the provisions relating to representative offices of foreign law firms of December 22nd 2001, all form part of this process(45).

Confusing, contradictory and difficult to apply in a uniform manner, Chinese law has nevertheless led very quickly to a kind of repeal by disuse, which serves by default to regulate the excesses of this legislative inflation. Will it be the same for the new texts adopted with the aim of harmonising the Chinese legislation with WTO law?

A number of guard-rails have been put in place in the form of the WTO Transitional Review Mechanism for monitoring the implementation of the agreements, an original and more demanding mechanism than the Organisation's general mechanism for the examination of trade policies that provides for annual reports each year for 8 years after accession and makes a final report in year 10 or at an earlier date decided by the General Council(46). The publication of an official Chinese journal is, as we will see, demanded in accordance with the principle of transparency. In 2002, the United States has, moreover, created a China WTO Compliance Committee under the auspices of the United States Trade Representative (USTR), which will work in collaboration with all of the American administrative departments and will be supported by the private sector, and the two Congressional commissions created in the context of the debates on PNTR, the Congressional Executive Commission and the US China Security Commission, whose mandate consists in part of noting the barriers to the application of the WTO agreements in China. We should also note the formation of the China WTO Notification and Enquiry Centre within MOFTEC, which has to reply to all questions relating to the application of WTO law within a maximum time limit of 30 to 45 days of receiving a written request.

A few words should also be said here on the numerous training courses in WTO law for senior government officials and jurists organised on the initiative of the United States, for example within the US-China Business Council, and above all the European Union, which has committed a budget of 24 million euros to technical aid and implemented another project valued between 10 and 15 million euros(47). Also to be taken into account is the setting up of training courses by Chinese institutions in the form of Shanghai's WTO pilot centre, which in July 2001 launched the second phase of its training programme for 200 Chinese officials, or again the creation on August 30th 2001 in Peking of a WTO law department within the Chinese Law Society. The creation in Peking at the beginning of February 2002 of a first collegial bench with the task of settling the disputes relating to foreign interests, soon christened the WTO Tribunal, could eventually play a part in the effective implementation of the agreements, although it is not clearly known what the exact mandate of this institution will be. Finally, the threat of possible recourse to the WTO's Dispute Settlement Body will certainly play a role in improving the application of the texts.

A number of elements relating to the breadth of the task, but also to the specific details of the relationship China has with international law and to the place that it grants to the treaties in its domestic law lead us to wonder, however, how effective the rapid and uniform implementation of the commitments agreed to in the Protocol of Accession for China to the WTO will be. Although China no longer considers international law to be a Western law imposed from outside at the time of the unequal treaties, and has also got rid of its Marxist terminology, the question of the status of treaties within domestic law has not yet been clarified(48). Although from now on China may recognise the existence of an international law with universal application, its attachment to the sacrosanct principle of the sovereignty of the state means that it will not automatically develop into a monist state where international law is applied directly in the domestic legal order and thus avoids the normative conflicts. Only Article 142 of Chapter VIII of the General Principles of the Civil Law of the PRC allow us the consideration that China implicitly recognises the superiority of the treaties over national law: “in the hypothesis where an international treaty to which the People's Republic of China has acceded as a signatory or participating country involves provisions different from the civil law of the People's Republic of China, the provisions of the said treaty shall be applicable, except those over which the People's Republic of China has expressed reservations”(49).

The Chinese Constitution remains silent on this point, and the absence of practical homogeneity sheds no light on the thought(50).

In a more general fashion, it is the question of the direct (self-executing) effect of WTO law that is posed. At the time of the GATT, it was agreed that the standards contained in the General Agreement could not be applied directly in the internal order because of their lack of clarity and precision and the absence of any unconditional obligation. The European Court of Justice thus only recognised an “intergovernmental character” in these standards(51). The Marrakesh Agreement, in its turn, say nothing on the self-executing effect of WTO law. Thus Europe and the United States have asserted during ratification of these agreements that they do not produce any direct effect within the internal order. Recent case law of the European Court of Justice appears to confirm this practice(52). For China, there thus results from this only a very broad obligation to introduce WTO standards into its internal law.

The WTO could be no less useful for the reform of Chinese law through the application of key principles: transparency, uniform administration and the judicial review of all administrative actions .

 

The WTO in the service of Chinese law reform?

At the heart of the Chinese Protocol of accession can be found the key principles of the uniform application of the agreed commitments, of transparency and impartial and independent judicial review of administrative actions relating to WTO law. The application of these three key principles could play a part in introducing the rule of law to the extent where such an introduction requires unprecedented changes in virtually all legal fields.

Far from being a unitary state as its constitution wished, China is in fact subject to the existence of a complex and moving network of legislative and administrative authorities on a national and local scale that permits us to qualify China as a de facto federal state(53). Conscious of this stumbling block from the moment that the debates of the working party on the accession of China to the WTO began, the members of the WTO made a point of turning the principle of uniform enforcement into one of the keys of the negotiations. Section 2, “Administration of the Trade Regime”, of the Protocol of Accession of China thus opens with a number of provisions dedicated to “the uniform administration”: “The provisions of the WTO Agreement and this Protocol shall apply to the entire customs territory of China, including border trade regions and minority autonomous areas, Special Economic Zones, open coastal cities, economic and technical development zones and other areas where special regimes for tariffs, taxes and regulations are established (collectively referred to as “special economic areas”)”(54).

The imperative for transparency posed by point C serves to reinforce the idea of a rationalisation and a clarification of Chinese law. China thus undertakes to publish an official journal bringing together “all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange”. A first step has been made in this direction with the publication in October 2001, in 16 volumes in English, of all of the national texts. The creation of the China WTO Notification and Enquiry Centre furthermore fulfils the requirements formulated in the third paragraph relating to transparency. What we may be witnessing is thus the gradual suppression of the famous discretionary internal (neibu) measures at the very least in the field of economic and trade affairs, something which is not totally without impact for the improvement (or deterioration) of the situation involving the labour and penal laws.

Finally, the impartial judicial review of the administrative actions relating to the implementation of the “laws, regulations, judicial decisions and administrative rulings of general application referred to in Article X:1 of the GATT 1994, Article VI of the GATS (General Agreement on Trade in Services) and the relevant provisions of the TRIPS Agreement” must be put in place. This last requirement is certainly the one that is causing the most problems. While the government highlights the administrative reform of a pioneering city like Shenzhen, the majority of the courts remain incompetent, often corrupt. Meanwhile, the efforts made to train magistrates and to make the justice system more professional with the creation in March 2002 of a unified national examination for judges and lawyers will certainly not bear immediate fruit(55).

The theme of the enforcement of the law and of the urgent reform of the Chinese judicial system is thus addressed again by the integration of international standards.

The advances made here should thus contribute to the establishment of a constitutional state under the rule of law.

 

Hopes and limits of a constitutional state under the rule of law that results from internationalisation

While one now frequently reads in articles by journalists, and even some specialists, allusions to the concept of the “economic rule of law” or the “social rule of law” in reference to the reform of Chinese business or labour law, it is useful here to recall briefly what exactly the rule of law is in our conception.

For the same reason that the idea of governance is dear to a good number of international organisations, the concept of the rule of law should serve as a standard for measuring the progress of democracy in China. It would still be necessary to reach a common agreement on the definition of a concept which in most of Europe originated in the term Rechtsstaat, or constitutional state, used by German theorists in the second half of the nineteenth century, such as O. Bähr, R. von Gneist, R. von Mohl, F.J. Stahl, then in France as Etat de droit by R. Carré de Malberg in particular. The objective pursued, as Jacques Chevallier recalls, is to “set a framework for and limit the power of the state by law”(56). Thus the constitutional state does not refer directly to the idea of democracy or justice, but to a conception of the state based on the principle of legality and its jurisdictional control. The British concept of the “rule of law” and the American “due process of law” also seem to imply other substantial qualities in the standards, such as the publishing of the texts, predictability and recognition of citizens' rights.

At the crossroads where national and international law converge, as it now integrates international standards, the idea of a rule of law is one and indivisible(57). To talk of an economic rule of law only empties of any significance a concept which already has a sufficient number of meanings.

But what is a Chinese-style rule of law if not the incarnation of the contradictions of a system that does not know how to get rid of the arbitrary? Indeed, let there be no mistake about it, despite the undeniable advances that have resulted from the internationalisation of Chinese law, the “rule of law” in China certainly does not signify democracy or the protection of individual freedoms. China has understood how to take habitual advantage from the current tendency to combine the two concepts in a sufficiently fluid manner that an original interpretation can be drawn to legitimise a particular kind of state(58). In the case of China, everything suggests that a technical reading has still to be made of international law and that Peking may be ready to comply in good faith with the letter of the WTO Agreement, but perhaps less so to its spirit. There is indeed a formal judicial order in China, but that is not sufficient for us to be able to talk about the rule of law. At a time when Chinese law remains in many aspects the institutionalised version of directives and policies of a party that exercises its leadership in the name of the state, and when the law is losing contact with the socio-economic reality rather than accompanying its evolution, it is in fact legitimate to wonder what kind of rule of law China is heading towards today. If the turning point of 1992 provided capital for the reform of Chinese law to the extent that, as we have seen, a part of the doctrine has accepted the process of the internationalisation of law, it is the constitutional revision of 1999 that has allowed the debate on the rule of law to be re-launched. The term rule of law (yifa zhiguo) can nevertheless only be understood by reference to the idea of a state governed by socialism (shehuizhuyi fazhi guojia). This deliberate choice of vague terms, with an ambiguous content and subjects open to a more or less large interpretation depending on the political imperatives, will not only feed the endless debates between jurists about the subtle differentiation between rule of law and rule by law, but enables those in power to make sure that the judicial system remains firmly under the control of the Party-state, as there is no control over the constitutionality of the laws nor any separation of powers (sanquan fenli).

The absence of any parliamentary debates on the ratification of the accession agreements signed during the Ministerial Conference of the WTO in Doha seems fairly significant in this regard. The most wide-awake observers will no doubt have noted that China had brought its ratification instruments directly to Doha. This dispensed it from following the normal procedure for ratifying a treaty that is subject, according to the Chinese Constitution of 1982, to the approval of the Standing Committee of the National People's Congress (NPC). Also, an article by Bing Ling, associate professor at the City University of Hong Kong, that appeared in the Hong Kong newspaper Ming Pao calls into question the validity of the ratification of the WTO agreement in so far as President Jiang Zemin had dispensed with the advice of the Standing Committee of the NPC(59). And Bing Ling goes on to note that the situation is in reality more complex, as everything had been planned fifteen months before China's accession protocol was signed. The Standing Committee of the NPC had in fact published, on August 25th 2000 while the negotiations were still in progress, a decision authorising to some degree, and this with the agreement of the State Council, an accelerated ratification procedure simply subject to the approval of the Chinese president. Imperial edict from Jiang Zemin, who wished to guarantee himself a place in history comparable to the one occupied by Deng Xiaoping, acceleration of a procedure that could have been delayed by possible opposition from conservative forces, or a race against Taiwan to become a completely separate member of the WTO? There is a multiplicity of explanations, but it is at least ironic to ascertain that the first decision of a regime that preaches the founding of a constitutional state should in fact be contrary to its own constitution.

 

Three months after China's accession to the WTO, the chorus of praise echoes more weakly and the more pessimistic analyses on the social cost of this shock therapy are once again being heard to better legitimise the reforming efforts of a government in search of a new legitimacy. That is the symbolic dimension of this accession. What other nation has indeed accorded so much importance to its participation in an international organisation destined to regulate world trade and whose conception of globalisation is largely decried by a good number of developing countries as well as by a part of public opinion in the most advanced countries? What has become of the opponents of globalisation who appeared so keenly the day after the Sino-US agreement of November 15th 1999, accusing Zhu Rongji of trading the nation away (maiguozei)(60)? Anti-globalisation appears to exist in China today only among a nationalist “new left” (xin zuopai) with fluid contours and vague political objectives, or an intellectual elite that is rarely listened to and has largely been instrumentalised by the powers that be(61). A miracle of a propaganda machine that has been able to set itself new targets? Probably. But this legitimising discourse also bears witness to the expectations hidden behind accession at a time when reform seems to have become impossible because bound by doctrinal resistance and the prospect of unprecedented social and, in the long term, political destabilisation.

The rationalisation of business law or of economic law, to adopt the Chinese terms, does not, for all that, signify the installation of the rule of law. What type of state are we dealing with in China today, then? With a state sui generis by law that serves the economy and refuses to free itself of the yoke of the Party leadership, but not with a constitutional state based on the rule of law(62).

Translated from the French original by Nick Oates