According to Pascal Lamy, “the entire economy of the planet has benefited from China’s accession to the WTO”

Pascal Lamy has witnessed closely the rise of China over the past twenty years. As European Commissioner for Trade from 1999 to 2004, he participated in the negotiations on the Asian giant’s accession to the World Trade Organization (WTO), before becoming its Director General, between 2005 and 2013. According to The entry of China into world trade has accelerated the growth of the planet, even if the results vary according to the sectors of activity and the regions.

Who are the winners and losers from China’s accession to the WTO?

Overall, the entire economy of the planet has benefited. This membership boosted global growth, China modernized its economy by importing capital goods and technology, and consumers around the world benefited from China’s low prices. China’s foreign trade surplus was 10% of gross national product fifteen years ago against 1% today. This means that over the past fifteen years Chinese imports have increased significantly more than exports.

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But the situations obviously vary according to the regions and sectors of activity and depend on the relationship between employers and unions, the role of local authorities and the State, social security or training systems.

Take the case of textiles, where European trade policy is the same for all member countries. Northern Europe resisted better than that of the South. Some companies tried to increase their productivity by automating their production lines. Others believed that they would never beat China without switching products, and so they set about making high-value fabrics for car tires or safety vests. The world comes out a winner at the macroeconomic level, but at the microeconomic level, it depends.

What have you negotiated with China?

In 2000, we negotiated in two areas. First, market access, where we obtain a significant reduction in customs duties on goods and agriculture. Let us remember that China entered the WTO with, in terms of customs duties, an average ceiling rate lower than that of Europe for agricultural products. We also wanted Beijing to commit to respecting the disciplines of the WTO, as a priority for intellectual property. It was difficult because they were asking for too long transition times. China paid dearly for its accession to the WTO, and far more than other countries in its class at the time. We obtained from it a ceiling of the average customs tariff of 10%, while it is still 30% in India or Brazil.

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