World Trade Organisation

Citation

Taylor, G. (2002), "World Trade Organisation", Journal of Fashion Marketing and Management, Vol. 6 No. 2. https://doi.org/10.1108/jfmm.2002.28406baa.001

World Trade Organisation

Gail TaylorHong Kong Polytechnic University, Hong Kong

On 17 September 2001, the terms for China's membership of the WTO were successfully finalised and, at the WTO Ministerial Conference in Doha, Qatar, these were formally adopted. The consequences of membership are still unclear: WTO and globalism mark a turning point in the history of trade, but the imminent changes suggest uncertainty in the foreseeable future.

Entry to the WTO rests on a series of negotiations, reviews of trade policies, and subsequent agreements or commitments supported by transparency. It has been observed that, if China wishes to accept the "culture" of WTO agreements, structural changes must be undertaken and a range of legal, economic, or "modernisation" issues addressed[1].

It is common knowledge that textiles is among one of the most sensitive goods where China – and other – WTO member countries are concerned. The textile trade topic was contentious in the GATT system, and has been subject to considerable change since the Uruguay Round. As a consequence, import quotas which dominated textile trade from the 1960s onwards are being phased out with a four-stage schedule of implementation[2].

In effect, "soft" and "hard" systems are now in place[3], with the result that some of the former concessions granted to China and other, major exporters may be subject to review. The EU, having honoured its commitment to the 1994 Agreement on Textiles and Clothing, may harden its stance on closed markets and expect greater reciprocation from non-EU member countries – for example, where the Most Favoured Nation ruling formerly applied. China, in observing current reciprocal agreements, must open its domestic market and prepare for keen competition in the same after the initial, three-year interim period. As for America, some degree of antagonism has reappeared since 11 September, but the long-term forecast is a better trade prospect for both economies[4].

How this will affect the potential for new trade restrictions remains to be seen: a review of the Anti-Dumping Agreement, clarification of both special and differential treatment, and a further examination of what constitutes "value" and "price" would be helpful. In this context, China appears prepared to review the subject of "distribution rights" at home, so that reciprocation may facilitate bilateral accession agreements and multilateral trading rights[5].

Market access for China will, inevitably, continue to be a cause of concern for developed and developing countries alike; the arrival of the "Asian challenge" in the three-region power triangle now characterises the global landscape, with each region defined by its political, economic and security arrangements, all of which shape market dynamics. Its role appears to be that of the workshop of the world[6] and multi-national corporations, distinguished by cross-border networks, will presumably return orders to its factories after the completion of the phase-out rounds for quota[7].

If globalism is distinguished by the arrival of the "Asian challenge" and turnkey production network services are the norm rather than the exception, why is much of the anti-globalisation invective directed at China? Intellectual property, reputation, product definition, and the exploitation of new market opportunities are more closely associated with developed countries, and the mark-up for mass-produced textile items is currently being trimmed due to supply-demand anomalies. Worse still, the irony for Southeast Asian suppliers of textile goods is that, in endeavouring to prepare for the post-2004 era, each exporting country appears to be following the same strategy, eliminating any potential competitive advantage in the process. The "textbook" solution of building core assets, gaining access to relevant solutions, design, developing and manufacturing differentiated products, thence delivering these products according to the marketing strategy of quick response appears open to all but the degree of success in the implementation stage is, as yet, unknown.

Further competitive advantages may be accrued as a consequence of fair and ethical trade initiatives distinguished by responsible behaviour, particularly in the pursuit of measures to control pollution, change technology and production processes, in addition to introducing quality initiatives. The issue of "bridging the digital divide" has already been addressed, with good results evident in the cross-border network previously referred. By taking on board the "new issues" highlighted in Quatar, the weighty topics of reform and integration may be successfully addressed, in an open trading environment characterised by cross-border flows of trade, capital, technology and ideas.

Notes

1. 1.

   In "Enforcement of WTO Agreements in China – Illusion or Reality?" (2001) Q.J. Kong traces the development of trade treaty negotiations between China and its trading partners, providing insights into the balance between domestic law and international obligations. He cites Jackson on expectations for the dispute settlement mechanism, and proposes that China would respond favourably to "a generally viable and fair quasi-judicial body", see Journal of World Trade, Vol. 35 No. 6, pp. 1181-1214.

2. 2.

   A. Greenspan, in a speech at the Institute for International Economics, cited Schumpeter on the subject of "creative destruction" and noted the importance of globalisation to both "developing" and "industrial" countries; he warned of "renewed barriers to commerce" which could be erected if globalisation failed and, in general terms, supported the concept of the level playing field for improved growth performance, see http://www.iie.com/papers/greenspan1001.htm 30 January 2002.

3. 3.

   G. Olivares (2001) distinguishes between "soft" and "hard" laws and associated systems, citing Dupuy (1991) and Weil (1972) to demonstrate the dilemma of enforcement when there are trade disputes. He refers to the soft law language of GATT and observes continuance – "inexplicably and paradoxically" – after the creation of the WTO, see "The case for giving effectiveness to GATT/WTO rules on developing countries and LDCs", Journal of World Trade, Vol. 35 No. 3, pp. 545-51.

4. 4.

   The issues surrounding trade are largely political in nature, being spurred by developments in both the Middle East and the East, respectively; on the eve of going to press, the WTO negotiations were interrupted due to disagreement over who should chair the WTO Trade Negotiations Committee and it would appear that China's representative has a "brief" to establish some form of platform for the nation's requests as early as possible. Nevertheless, Sun Zhenyu, China's first ambassador to the WTO, is quoted as follows: "In the long run, WTO membership is very positive to the opening and reform policy in China. It adds further impetus to domestic reform, and structural adjustment of enterprises. And it will be a big help to our exports, to make good use of [foreign direct investment] and for our industries to reach out to the world", see "Ambassador eager for active role", South China Morning Post, 30 January 2002, p. 4.

5. 5.

   One consequence for decentralisation and the opening of China's economy has been reform of State-owned enterprises. The initiative has accelerated "creative destruction", as cited in Note 2; it has also provided the impetus for local governments to attract foreign investment. The topic is explored by X. Zhang (2001) in "Distribution rights in China: regulatory barriers and reform in the WTO context", Journal of World Trade, Vol. 35 No. 6, pp. 1247-91.

6. 6.

   Z.L. Wang, of the Ministry of Foreign Trade and Economic Co-operation, has been quoted as saying that China is the workshop of the world, and can compete on the basis of labour costs with Southeast Asia, Eastern Europe, and Mexico. The major cities have nurtured branding strategies and launched promotions in an effort to add value to products, in line with international standards; nevertheless, this perception is reinforced by the shift of production to the "hinterland", with development being encouraged in the hitherto neglected territories. "China has become the world's biggest centre for the manufacture of primary goods and everyday industrial products, taking over the role that used to be filled by Britain, the US and Japan. With WTO entry and the reduction of import tariffs and quotas, this will intensify" (quoted in South China Morning Post, 28 January 2002, Business 2, p. 4).

7. 7.

   Insights into offshore investment by overseas Chinese are offered in "Finding a new village" (Textile Asia, December 2001, p. 9). Reference is given by the Editor-in-Chief, Mr Kayser Sung, to early investment and textile industry development as a consequence of US and EEC quota restrictions, yet, notes the author, "The new investment in Africa will be effected under the Uruguay Round Agreement on Textiles and Clothing, by which all quota restrictions will be abolished from 2005. Thus the Africa Growth and Opportunity Act (AGOA) will offer trade advantages only during the years 2002-2004". In Mexico, however, certain provisions are made for textiles, clothing and other goods whereby the country will maintain current trading terms for six, rather than three years after China's entry to the WTO.

ReferencesDupuy, P.-M. (1991), "Soft law and the international law of the environment", Michigan Journal of International Law, Vol. 12 No. 2, Winter, p. 420.Weil, P. (1972), "Le droit international economique: mythe ou realite?", in Societe francaise pour le droit international, Aspects du droit international economique, elaboration, controle, sanction (Colloque d'Orleans, 25, 26, et 27 (mai 1971), Pedone, Paris, p. 6.

Note from the Editor

It is widely recognised that the role of electronic communications and information technology systems is crucial to the evolution of efficiently functioning supply chains. There is much research on the use of electronic marketplaces, the so-called B to B market. The end product of the supply chain is enhanced consumer satisfaction and, in recognising that, we are presenting three papers on the theme of Internet apparel shopping. The paper by Park and Stoel, in the "Practitioner" section, reports the results of research aimed at developing a research tool to allow classification of Web sites according to quality, so as to facilitate future experimental research into Internet consumers. The same generic theme is present in the paper by Dr Wachter, which investigates the reliability and usefulness (again from the point of view of the consumer) of ten e-tailer sites, concluding that the major challenge to the expansion of apparel shopping via the net lies in the provision of sites which are consistently easy to use, reliable and secure. The final paper, by Johnson and Lee, explores differences between various categories of Internet users and uncovers significant differences between apparel purchasers and non-purchasers.

Richard M. Jones