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.

This book arose from a research project funded by the Australian Research Council and the Australian Department of Foreign Affairs and Trade (DFAT). The idea for the project first emerged in 1997 in discussions between Deborah Cass and Geoff Raby, former head of the Trade Negotiations Division at DFAT, and subsequently Australian ambassador to the World Trade Organization; and Graeme Thomson, formerly principal adviser in the DFAT Trade Negotiations Division, who oversaw much of Australia's role in the accession negotiations. The success of the project owes a great debt to the inspiration of Geoff Raby, and to the generosity of Graeme Thomson, who was always willing to share the wisdom of his vast experience in trade relations, and his understanding and appreciation of the unique questions arising from the Chinese accession. Invaluable advice and assistance was also received from other DFAT personnel during the project, including Toni Harmer, Ian Macintosh, Klea Maniatis, John Stroop and Antony Taubman in Canberra, Philippa Kelly in Beijing, and Rick Wells in Geneva.

The three-year project, which ran from 1998 to 2001, produced a series of results, in the form of seminars, working papers, essays, a website, a major conference and ultimately this publication. It was instrumental in bringing together, sometimes for the first time, interested parties from business, government and academia, to discuss the crucial issue of China's accession to the World Trade Organization. In March 2001 an international conference was held in Canberra, Australia, as a culmination of the project.

Introduction

I am told that the Chinese language character for crisis is the same, or similar to, the character for opportunity. This chapter suggests that China's entry to the WTO may have similarly ambiguous consequences in relation to what has been called the ‘constitutionalization’ of the international trading system. I focus on two aspects of the phenomenon, namely China's influence upon the trade constitutionalization process and its influence upon China.

I argue, first, that the constitutionalization of international trade law will be largely strengthened by China's accession. Secondly, from China's point of view, constitutionalization has the potential to affect China negatively, as well as creating favourable conditions for change. In short, both crisis and opportunity characterize the relationship between China and the constitutionalization of international trade law.

But first, what is constitutionalization? The term has been bandied about for a number of years, and in a variety of international contexts: Europe as a constitutional structure, the UN Charter as a blueprint for world order, and now the World Trade Organization agreements as some kind of incipient constitution for the legal regulation of international trade. This chapter adopts some of these various meanings in order to explore some implications of China's entry to the WTO.

The chapter is divided into two parts. In the first part I examine constitutionalization from the perspective of the international trade law system generally, namely what is likely to be the effect of China's entry to the WTO upon the constitutionalization process.