December 11 marks the 3rd anniversary of China's WTO membership. People's Daily has an exclusive interview with Mr. Long Yongtu who was chief representative of the Chinese government in the negotiation on the country's WTO accession. Long is secretary-general of Bo'ao Asia Forum now.

Q: China has been in the World Trade Organization for 3 years. What do you think of the most significant impact of China's WTO membership on the national economy?

A: Before we make any evaluation on the actual influence of China's WTO membership, we should think of the significance of this event. When the central government made the decision to join WTO years ago, the decision was justified by two judgements. One was that it would be a strategic step for China's integration into the economic globalization. And the other was that it would mark a new era of the country's opening-up to the rest of the world.

In the sense of the two points, encouraging and positive changes and results have been in the three years since China's WTO accession. Facts have proved that the central government's decision on China's joining into WTO is absolutely wise and correct.

The three years has witnessed remarkable improvement of the external environment for China's economy. China's commitments on observation of WTO rules and opening its domestic market has built up the image of a responsible big country which has both the sincerity and the ability to fulfill its obligations.

The Chinese government has cleared up and revised a number of economic laws and regulations concerning foreign trade. It has basically honored its promise, even ahead of schedule in some cases, on reducing of tariffs of commodities trade, trimming non-tariff barriers, opening its service market and strengthening trade-related intellectual property rights protection.

The international community holds a positive attitude toward China's economy. WTO members have all given high scores to China in their two annual review of China's fulfillment of WTO commitments. Mr. Supachai, WTO Director-General, US and European Chamber of Commerce have all expressed their appreciation to China's performance in the three years.

In the mean time, China has enjoyed rights as a WTO member, which has brought a better investment and business environment for China. The US most-favored nation treatment for China is one of the most typical examples. An annual review of China��s status as a most-favored nation used to hamper the bilateral relations seriously. But when China became a WTO member, US revised its law in line with the agreement and cancelled discriminatory polices toward China. It is a permanent solution.

Q: Do you find any notable changes in China's society compared with three years ago? Has the WTO membership promoted the process of reform and opening-up?

A: In the last three years, the surge of WTO spreading throughout the whole country has sowed seeds of fundamentals and ideas of the market economy in people's mind. Take the national treatment as an example. Before the WTO accession, people paid more attention to foreign-funded enterprises on this issue. But WTO has made people think more sophisticatedly. Now they ask for equal treatment for all domestic businesses, which has brought a level play field for many private companies. It is a great progress.

Foreign investors used to complain about transparency. We have greatly improved our transparency on policies of trade, investment and other relevant ones. Local governments are building "sunlight government", or transparent government, which put good administration system and legal system in place. This in turn consolidated the confidence of partners.

China's exports and utilization of foreign capital leaped forward by 30 percent and 40 percent respectively in the last three years. Imports and exports this year doubled that three years ago and will set a historic record of 1 trillion USD. Actual overseas investment will also make a historic breakthrough by exceeding 60 billion USD. The entry of WTO is one of , if not all, the underlying reasons.

I should point out that China has been pragmatic in exercising WTO terms. Otherwise, there would have had no impact as far-reaching as there is now on the whole society. We have been trying to make WTO a social phenomena which is not confined within trade policies. Openness, we think, pushes the reform forward, which in turn promotes the development.

Q: The approach of "opening the market with courage on one hand and protecting ourselves with dexterity on the other" was most frequently mentioned in those early days of our membership. What do you think of the performance of domestic businesses in this aspect in these three years?

A: The best protection, in my opinion, is opening-up. Chinese enterprises have been more sophisticated after three years of growing pains. Most businesses did nothing but either have themselves at loss or just give up and run away. Now many of them learn to fight with rules and laws.

What's more, enterprises do not just resort to protections as they did. They begin to sharp their own competitiveness through technical innovation, better quality products and market exploration. This shows we have adapted ourselves to the new role as a WTO member and made an important step toward a mature market economy.

Q: Have people benefited from the process?

A: Sure. For instance China��s auto industry has experienced staggering development in the three years. The competition is bringing benefits to consumers on choices, quality and prices. It boasts potential of export greater than any other sector.

The agricultural subsidies in line with the WTO rules have helped farmers make better money.

China's imports is expected to top 500 billion USD this year, which will further increase year by year. A lot of the imports are consumer products.

Q: Recently some "unfavorable terms" in China's agreement on WTO accession are questioned. People are concerned about the possibility of getting the country embarrassed by these articles. What's your perception?

A: The so-called "unfavorable terms" refer to Article 15 about the status of market economy and Article 16 about special safeguard measures. There is misunderstanding about it. As a matter of fact their influence is quite limited.

According to the agreement, not all domestic enterprises are involved in the issue of the status of market economy. Only those under anti-dumping investigations on foreign markets are. Last year merely 0.5 percent of the total export value was under the anti-dumping scrutiny.

In fact, the so-called unfavorable terms have a bright side. An anti-dumping investigation, once was launched, automatically turned the company into a case of non-market economy where substitute countries were employed to decide the anti-dumping taxes. This one-cut-for-all attitude caused enormous losses. But Article 15 gives a chance to Chinese enterprises. If they are able to prove their production and marketing behaviors are all market-oriented with clean record on government subsidies, vicious competition and accounting frauds, then domestic prices or costs in China can be adopted in their cases. There have been many examples of success in this regard in the three years.

What's more, these articles have to some extent served to curb unfair competition. So the negative impacts of the two articles should not be exaggerated. We should hold a comprehensive, historical and objective attitude toward them.

Actually many issues carry more weight than those two articles. For example, the opening-up of the capital market. We firmly rejected the urge that China have its RMB convertible under the capital account, including the liberation of forex rates. If we simply had signed on the dotted line at that time, the pressure on China's reform on its economic and financial systems would have been imaginable! Our compromises on partial interests have won compromises of our foreign negotiators on more significant issues concerning the overall situation. Time will continue to prove the righteousness of this result.

Q: The transitional period for China's main industries will end as of 2005. What's your vision for the years to follow? What will be the biggest challenges?

A: One thing has to be clarified first. There are always someone who call the year 2004-2005 as the "post-transitional period" of China's WTO membership. But the truth is some sectors, such as banking and basic telecommunication, are in their transitional period for their performing of WTO commitments. For the majority of other sectors, the transitional period has come to an end.

In addition, the transitional period is just a part of the march. The end of the period does not necessarily mean that we have crossed the finishing line of the opening-up process, nor does not represent the highest openness. The country chooses to open to the rest of the world for the interest of ourselves. Honoring our promises is just one reason. At present, some sectors even still are not open as some developing peers.

So the country should be further open. And it will be more open in the next years than what is promised in the agreement.

The current situation tells us that some sensitive sectors are not bashed as hard as expected. And domestic industries have developed more teeth in the competition. However, we should bear in mind that there are massive challenges for some key factors on which depend the national economy and people's lives. The biggest challenge, I think, is their low awareness of and preparation for the truth about how long and arduous the international competition will be. There is an old saying : opening-up is not terrible, but bad preparation is.

Q: What adjustments should be made for our strategies of WTO?

A: More efforts should be made on implementing the foreign trade policy in uniformity in the whole country and protecting intellectual property rights. WTO rules should be used carefully and wisely on textile and farm produces issues. Textiles quotas, for example, will be lifted as of January 1 next year on the global market. But this does not mean there will be no barriers for Chinese exporters. We are the third largest trade partner in the world. We should take care of the interests of other developing countries and take the market capacity of importers into consideration. An impression of "all resources go to winners" will trigger even more trade disputes.

In the multilateral trade relations, WTO members generally pin high hopes on China as a bridge between the developed world and the developing world.

As a developing power which has gone through more than 20 years of reform and opening-up endeavor, 15 years of long haul of negotiation on resuming its GATT membership and WTO accession, China should seek for a win-win situation in the world trade talks with a clear understanding of the surge of economic globalization. A serious confrontation between developing nations and developed countries, if it happens, damages developing nations. So it is important to be far-sighted and adopt good tactics.

Long finally stressed that the WTO membership was an external factor and represented the advent of a new era of the reform and opening-up process. Many problems cannot be solved through the accession. The real solution, he asserted, to the development and growth lies in the persistent efforts on deepening the reform. This is true either for the last three years or for the future.

He also rebuked the doubts over the possibility of the WTO membership hindering the country��s macro-control efforts. He insisted a good command of WTO rules, together with various economic tools and effective legal system, would made the macro-control even more efficient and effective.

"I have just done what I should have done as a person responsible for carrying out the decision of the central government on joining the World Trade Organization." Long said.

By People's Daily Online