|Trade Organization More Worldly|
|Subject||Production possibility frontiers, Gains from Trade|
|Key Words||World Trade Organization, tariffs, imports, subsidies, state-owned industries, regulations, investment, exports, market, producers, growth, trade, businesses, consumers, workers|
The World Trade Organization has cleared the way for China and Taiwan to join the 141-strong trade body. Membership means that China will have to reduce its tariffs on imports to 8 percent from 21 percent and will have to eliminate subsidies to farmers and state-owned industries. Worldwide regulations on copyrights will have to be respected, which means software pirating must be stopped. It will be easier for foreign countries to invest in China. They will be able to own greater shares of Chinese companies. They will be able to set up operations there.
As a result, China will be able to export more of its basic goods, such as textiles and clothing, while the U.S. will be able to export more of its advanced goods, such as electronics, and will be able to manufacture goods inside China. With fewer regulations, Chinese producers will be freer to be entrepreneurial. Greater access to the 1.3 billion Chinese consumers widens the market for producers around the world.
Taiwan, being much smaller and in its worst economic shape in three decades, will have less of an impact. Nevertheless, its membership in WTO will strengthen the region, which has been weakened by Japan's slow growth.
President Bush welcomed the decision, observing that the increase in trade and investment will bring benefits to businesses, workers, and consumers in all economies.
(Updated December 1, 2001)
|Source||John Waggoner, "Taiwan joins China in WTO," USA Today, November 12, 2001|
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