[OUTLOOK]China's WTO status has a price

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[OUTLOOK]China's WTO status has a price

I once ordered some beer at a restaurant in Shanghai. The price of a 296 milliliter bottle of Chingdaopiju was 20 yuan (about $3), while that of a 640 milliliter bottle was 15 yuan. My companions and I called the waiter back to point out this mistake. He said there was no mistake. The smaller bottle, the waiter told us, was more expensive because the bottle was "prettier." Even if the smaller bottle were of better quality and design, the numbers don't make any sense if customers aren't taking the bottle back home with them. The owner of the restaurant must have been fond of jokes.

China has finally become the 143d member of the World Trade Organization, 15 years after trying to enter the General Agreement on Tariffs and Trade, the forerunner of the WTO. It had been wrong from the beginning to purposely turn away the eighth largest economy in the world with a market made up of one-fifth of the world's population. There have been arguments about human rights abuses in China, but not only is a relationship between human rights and trade indefinable, a relationship in terms of power between China and the United States shouldn't be part of the argument, either.

At any rate, for China, what's to be done is done. For the rest of the world, what's to come has come. As the electric signboards flashing "Welcome WTO" all over Beijing show, China is more than eager to play the host. Expectations of exports and imports of $470 billion jumping to $700 billion by 2005 are being forecast. With the outlook of China's gross domestic product rising by 2 percent, entry into the WTO is indeed something to look forward to. There is no harm done even if this optimism serves merely as a morale booster.

In my leisurely pondering of the subject, I remembered the beer prices in Shanghai. The unrelenting global standards of the WTO aren't going to leave such naive prices and sales practices alone. And the real price at stake is not that of beer. It is bigger fish, such as tariff rates, that are at stake.

The average tariff rate that had stayed at 40 percent during the first half of the 1990s has fallen to 15 percent. In 2005, it is to be lowered to 9 percent, with IT-related products given total exemption. The economy would presumably have acquired some immunity by that time but there are dangers lurking in the changeover from protective trade to regularized free trade. The once-enjoyed trade surplus began shrinking in 1998 and now a deficit is expected to come about with China's entry into the WTO. Though foreign investment is still strong, "Get Out of China" signs are popping up regularly. Last year alone, more than a thousand foreign businesses in Shanghai packed up and left.

Agriculture is an especially weak area, totally vulnerable to the demands of the United States. China will have nothing but tariffs to protect itself in the future, with the eventual disappearance of nontariff barriers. Even now, more than 10 million Chinese farmers of crops such as wheat and cotton face losing their livelihoods. China will have to pay a high price for its lesson in the market economy. The officials of the special economic district in Shenzen have criticized those in neighboring Dongguan for trying to attract foreign investment by building new, rent-free offices for foreign firms. The administrators at the Suzhou industrial zone have protested a newer, cheaper facility. The logic here is that if I do it, it's fair and necessary; if you do it, it's cheating.

Having become a WTO member, for China these competitive practices will become survival skills. In order to stay alive, you need trial-and-error practices in real life as well as lessons in theory. The highest price will be the unemployment of 50 million people. The price for "democratization" won't be easy to pay, either.

A lukewarm match between the market economy and Communist Party control will only suffocate the market and kill the party. The cry for democracy was muffled at Tiananmen Square in 1989. Whether the authorities will rely on such "courage" and chance again remains to be seen.

Now that China's first wish is granted, the next one to look forward to is the 2008 Olympics. Take it from us, China should not believe in the myths of the economic benefits of the Olympics. Considering that China is absorbing foreign investment like a black hole and the level of competitiveness of Korean industries offers reasons for fear, we can't help but be anxious about the future. If, however, there is more to gain from a China worth $470 billion than a China worth $70 billion in 1986, we could afford to extend a congratulatory hand to China on their WTO entry while still keeping a wary eye.


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The writer is an editorial writer of the JoongAng Ilbo.

by Joseph W. Chung

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