A brief history

11 December 2001 marks a key date in the calendar of world trade. On that day, the sixth-largest economy in the world, representing a population of some 1.3 billion people, and reflecting a unique political and economic system consisting of a hybridization of Marxism and free-market principles, joined the rules-based international trading system, by acceding to the World Trade Organization (WTO). Even in the shadow of the momentous events of 11 September that year, China's entry to the WTO sealed a critical moment in international trade, and indeed in international law and relations of the new millennium.

China's entry to the WTO was generally greeted with approval as an event whose time had come, and yet also with a little disbelief. A brief history will explain why. In 1948, the Bretton Woods Agreement set out to establish a tripartite international economic structure consisting of the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD or World Bank) and the International Trade Organization (ITO). The ITO subsequently failed to come into existence owing to US Congressional disapproval. China signed on as one of only twenty-three original Contracting Parties to the provisional framework agreement for trade liberalization, the General Agreement on Tariffs and Trade (GATT). However, after the defeat of the Kuomintang nationalist forces by Chinese communist forces in 1949, the nationalist government in Taiwan withdrew from the GATT. Thereafter China remained officially outside the multilateral trading system for over forty years.