* (c) 2004, Karen Halverson, Associate Professor, John Marshall Law School; J.D., Harvard Law School (1990) (7halvers@jmls.edu). This Article grew out of a paper that was presented at a conference of the International Economic Law Group of the American Society of International Law at Georgetown University Law Center (October 2002). I thank the participants of the conference who offered comments on the paper, along with my able research assistants, Erik Johansen, Carrie Byrnes, and Xin Gu. This Article also draws on the insights of Chinese officials and scholars I have encountered at John Marshall and at the University of Illinois-Chicago, where I teach a course on China’s WTO accession.
1 China became a member of the WTO effective December 11, 2001. Taiwan’s accession became effective in January 2002. The Former Yugoslav Republic of Macedonia (FYROM) is the newest WTO member; its accession became effective in April 2003. A current list of WTO members is available at http://www.wto.org (last visited Apr. 22, 2004) [hereinafter WTO Website].
2 Of China’s thirty-one provinces, only ten reported per capita GDP above USD $1000, according to data from 2000. The province with the highest GDP was Guangdong ($11,636) and the lowest was Guizhou ($299). China Development Brief, 250 Chinese NGOs: Civil Society in the Making 127, 149 (2001) (based on data drawn from State Statistical Bureau, 2000 China Statistical Yearbook) (on file with author).
3 See, e.g., WTO Working Party on the Accession of China, Report of the Working Party on the Accession of China, WT/ACC/CHN/49 (Oct. 1, 2001), para. 171, http://www.uschina.
org/workingpartyreport.doc (addressing China’s ability to benefit from certain rules under the WTO Agreement on Subsidies and Countervailing Measures that are available to developing countries) [hereinafter Working Party Report]; see also Frederick M. Abbott, Reflection Paper on China in the World Trading System: Defining the Principles of Engagement, in China in the World Trading System: Defining the Principles of Engagement 26–28 (Frederick M. Abbott ed., 1998) (describing how, during accession negotiations with the WTO Working Party, China insisted on being considered a “developing country” member of the WTO).
4 The figure for China’s exports does not include exports from Hong Kong, which totaled $202.4 billion in 2000 (of which only $23.7 billion constituted domestic exports and $178.8 billion re-exports). Press Release, World Trade Organization, World Trade Slows Sharply in 2001 Amid the Uncertain International Situation, tbl. 1.5 (Oct. 19, 2001), at http://www.wto.org/english/news_e/pres01_e/pr249_e.htm.
5 According to the 2002 UNCTAD World Investment Report, China and Hong Kong together received an estimated $69.7 billion in FDI in 2001. The United States was the world’s largest recipient in 2001, with aggregate FDI of $124.4 billion. The FDI received by China and Hong Kong amounts to over two thirds of FDI inflows to Asia and the Pacific during the same period ($102.3 billion), and well over twice the amount of FDI invested in Central and Eastern Europe ($27.2 billion). U.N. Conference on Trade & Dev., World Investment Report 2002, at 303–06, UNCTAD/WIR/2002 & Corrigendum (2002), http://www.unctad.
org/en/docs//wir2002_en.pdf.
6 The only other Communist member of the WTO is Cuba. See infra note 83 (describing Cuba).
7 China’s 1982 Constitution formalized a departure from Soviet-style Communism that began in December 1978 when Deng Xiaoping first announced China’s “open door” policy. The 1982 Constitution emphasizes “socialist modernizations,” provides a constitutional basis for foreign investment and its protection, and allows for the development of an “individual” economy alongside the socialist economy. See Jianfu Chen, Chinese Law: Towards an Understanding of Chinese Law, Its Nature and Development 67–69 (1999).
8 The “three represents” campaign was launched several years ago by former CCP General Secretary Jiang Zemin. The basic gist of the campaign is that, in order to prosper in the new millennium, the Communist Party must represent not only the workers’ and the peasants’ interests but also the development needs of the country’s “advanced productive forces.” See, e.g., Full Text of Jiang’s Speech at CPC Anniversary Gathering, Xinhua News Agency, July 1, 2001, available at LEXIS, News Library, Xinhua File (text of Jiang Zemin’s speech, which refers to the “Three Represent’s” as the “source of strength” of the Party and the basis on which to build the Party into the new century); see also Erik Eckholm, Likely to Be a Best Seller in China: It’s No Mystery, N.Y. Times, at A3, June 1, 2000 (describing the launching of the “Three Represents” campaign).
9 Entrepreneurs who are thought to be candidates for high government or CCP positions include the chairmen of two of China’s most successful companies: the Legend Group (maker of personal computers) and the Haier Group (home appliance manufacturer). See Joseph Kahn, China’s Communist Party, ‘to Survive,’ Opens Its Doors to Capitalists, N.Y. Times, Nov. 4, 2002, at A10.
10 See Elizabeth Rosenthal, In Ceremony with No Surprises, China Formally Changes Leaders, N.Y. Times, Mar. 15, 2003 (late ed.), at A4 (reporting that Hu Jintao replaced Jiang Zemin as General Secretary of the CCP at the 16th CCP Congress in November 2002). At the annual session of the National People’s Congress in March 2003, Wen Jiabao replaced Zhu Rongji as prime minister, Wu Bangguo replaced Li Peng as Chairman of the National People’s Congress, and Hu Jintao took over Jiang Zemin’s position as state president. Jiang Zemin will retain his title as chairman of the Central Military Commission. The Survivor Takes Over, The Economist, Mar. 22, 2003, available at LEXIS, News Library, Econ File. See generally Who’s in Charge Now?, The Economist, Mar. 22, 2003, at 40.
11 See, e.g., 146 Cong. Rec. H3036 (daily ed. May 15, 2000) (statement of Rep. Nancy Pelosi) (during the debate over whether to grant China Permanent Normal Trade Relations (PNTR), questioning whether the Chinese would “begin for a change, a drastic change, to start honoring the[ir] commitments”); see also Nicholas R. Lardy, Integrating China into the Global Economy 136 (2002) (noting frequent assertions during the PNTR debate that China had systematically failed to live up to its international trade obligations); Public Citizen, Permanent Normal Trading Relations with China (PNTR), at http://www.citizen.org/trade/issues/china/index.cfm (last visited Apr. 22, 2004) (statement of Public Citizen against the granting of PNTR to China). Lardy demonstrates how, notwithstanding some delays and lapses in implementing some aspects of its commitments, the assertions of systematic noncompliance by China are not supported by the evidence. Lardy, supra, at 137–41.
12 See, e.g., U.S. Trade Representative, 2002 Report to Congress on China’s WTO Compliance 3 (2002), http://www.ustr.gov/regions/china-hk-mongolia-taiwan/2002-12-11-China_WTO_compliance_report.PDF [hereinafter Compliance Report] (concluding that, while concerns remain, China’s leadership generally made “significant progress” in effecting systemic changes and in implementing its WTO commitments during its first year as a WTO member).
13 China was granted observer status in the GATT in November 1982 and became a member of the WTO in December 2001—nineteen years and one month later. For an official account of the chronology from the Chinese side, see Ministry of Foreign Affairs of the PRC, Bilateral Agreement on China’s Entry to the WTO between China and the United States (Nov. 17, 2000) (on file with author) [hereinafter PRC Ministry of Foreign Affairs].
14 Bernard M. Hoekman & Michel M. Kostecki, The Political Economy of the World Trading System: The WTO and Beyond 65 (2001). Typically, by the time a country applies for membership, the applicant has already obtained observer status. Id. Observer governments to the WTO must commence accession negotiations within five years of becoming observers. Current observer governments include Russia, Vietnam, and Saudi Arabia, and a current list is available at the WTO Website, supra note 1.
15 The applicant must then submit to the WTO a memorandum describing any aspects of the country’s trade and economic policies that would potentially affect obligations contained in the WTO agreements. This memorandum forms the basis for negotiations between the applicant and the working party. See World Trade Organization, Membership, Alliances and Bureaucracy, at http://www.wto.org/english/thewto_e/whatis_e/tif_e/rg3_e.tm (last visited Apr. 22, 2004) [hereinafter WTO Membership].
16 Although the negotiations are bilateral, the commitments apply to all WTO members under the most-favored nation principle. Id.
17 China’s accession terms are contained in the WTO Report of the Working Party on the Accession of China, supra note 3, and in World Trade Organization, Accession of the People’s Republic of China, WT/L/432 (Nov. 10, 2001), http://www.uschina.org [hereinafter Protocol].
18 WTO Membership, supra note 15; see also Hoekman & Kostecki, supra note 14, at 65–66.
19 China was an original Contracting Party to the GATT. After the 1949 revolution and the split between the Communists and the Kuomingtan (KMT), the KMT leaders withdrew China from the GATT. Jeffrey L. Gertler, The Process of China’s Accession to the World Trade Organization, in China in the World Trading System 65–66 (Frederick M. Abbott ed., 1998)
20 PRC Ministry of Foreign Affairs, supra note 13.
21 Gertler, supra note 19, at 6.
22 According to the Chinese government, the bilateral talks were expected to be concluded by the end of the year but were interrupted when “political disturbances” took place and Western countries, led by the United States, imposed sanctions. PRC Ministry of Foreign Affairs, supra note 13.
23 The Jackson-Vanik Amendment to the 1974 Trade Act, 19 U.S.C. � 2432, prohibits the United States from granting unconditional MFN status to any nonmarket economy country that denies its citizens the freedom to emigrate. Until Congress passed legislation granting PNTR status to China in September 2000, MFN status had to be renewed annually by the President and approved by Congress. See Hoekman & Kostecki, supra note 14, at 404. Thus the granting of PNTR status for China cleared the way for the United States to extend MFN treatment to China as required under Article I of GATT. For the history of MFN status and the Jackson-Vanik Amendment, see Di Jiang Schuerger, The Most Favored Nation Trade Status and China: The Debate Should Stop Here, 31 J. Marshall L. Rev. 1321, 1324–30 (1998).
24 Other political obstacles included the Taiwan question, U.S. concern over intellectual property enforcement in China, and the U.S. tendency to link human rights issues with trade. See generally Joseph Fewsmith, China and the WTO: The Politics Behind the Agreement, NBR Analysis, Dec. 1999, at 23, available at http://www.nbr.org.
25 See supra notes 2–5 and accompanying text.
26 See Hoekman & Kostecki, supra note 14, at 403.
27 Id.
28 Id.
29 See Fewsmith, supra note 24, at 27–28 (discussing the factors that led the Chinese leadership to offer substantial concessions to the United States in order to conclude a bilateral agreement on WTO accession).
30 See Hoekman & Kostecki, supra note 14, at 67 (discussing reasons why WTO accession has become “considerably more burdensome” than it was during the GATT era).
31 For a sector-by-sector comparison of China’s commitments with those of other WTO members, see Lardy, supra note 11, at 69–79. China has not only agreed to comply with the terms of the WTO agreements, but, as discussed below, China has agreed to a number of rules that “go far beyond” the rules that bind other WTO members, including those members that joined the WTO after 1995. Id. at 80.
32 Although the magnitude of China’s commitments exceeds that of other formerly Communist countries who have acceded to the WTO, aspects of China’s terms of accession, such as the special safeguard rule and China’s designation as a “nonmarket economy” for purposes of anti-dumping determinations, have their precedent in earlier rules developed to address the special challenges of trade with Eastern Bloc communist countries. See infra notes 82–103.
China is not the first country to face discriminatory treatment in its efforts to join the world economic community. When Japan joined the GATT in 1955, fourteen member countries invoked a special “Japan article” to withhold most-favored nation treatment to Japanese products. See generally Philip H. Trezise, US-Japan Trade: The Bilateral Connection, in The Politics of Trade: US and Japanese Policymaking for the GATT Negotiations 1 n.1 (Michael Blaker ed., 1978). During the first years of Japan’s membership in the GATT, the U.S. government bypassed GATT procedures and pressured the Japanese government to impose “voluntary” export restraints on Japanese textile producers, which effectively subjected Japanese exports to quotas and price controls. Id. at 2–3. In addition, when Poland, Hungary, and Romania acceded to the GATT in the 1960–70s, the Contracting Parties required that the protocols of accession for these countries reserve the right for the Contracting Parties to take special, country-specific safeguard action in the event that the acceding state’s exports would cause “serious injury” to domestic producers. See K. Grzybowski, Socialist Countries in GATT, 28 Am. J. Comp. L. 539, 549 (1980); see also M.M. Kostecki, East-West Trade and the GATT System 107 (1978) (describing the safeguard clause). Western European countries maintained discriminatory quantitative restrictions against Polish, Hungarian, and Romanian exports, and the United States refused to extend MFN treatment to Hungary and Romania, even after these countries joined the GATT. See Kostecki, supra, at 98–99.
33 Lardy, supra note 11, at 79.
34 The extensive and detailed commitments are set forth in a fifty-five-page schedule to China’s Working Party Report. WTO Working Party, Report of the Working Party on the Accession of China, Part II—Schedule of Specific Commitments on Services, WT/ACC/ HN/49/Add.2 (Oct. 1, 2001), http://www.uschina.org/specificcommitment.doc [hereinafter Schedule of Specific Commitments].
For example, China has agreed to eliminate all “non-prudential” restrictions on the banking sector, including ownership and operation restrictions, by December 2006. If they meet the minimum asset requirements spelled out in the Schedule, foreign banks will be allowed to establish subsidiaries in China and will be able to engage in local currency transactions after three years of profitable business operation in China. Id. at 35–36; see also infra notes 75–81.
35 Under the WTO Agreement on Agriculture, members agreed to replace quantitative restrictions on agricultural goods with tariffs. Hoekman & Kostecki, supra note 14, at 217. China agreed to replace all but a few agricultural quotas with tariffs and to utilize tariff-rate quotas (i.e., a low tariff in effect until a specified quota of imports has been reached, after which time a much higher tariff becomes effective, thus functioning like a quota with fewer trade-distorting effects) for a list of ten commodities. See Frederick W. Crook, Betting the Farm: The WTO’s Impact on the Agricultural Sector, China Bus. Rev., Mar.–Apr. 2002, tbl. 1, http://www.chinabusinessreview.com.
36 China’s commitment to reduce subsidies on agricultural exports to zero can be contrasted with comparable commitments of the EU (reduced export subsidies by 36%, to $8.496 billion), the United States (same, to $594 million), and Mexico (reduced by 26%, to $553 million). International Trade Centre/Commonwealth Secretariat, Business Guide to the World Trading System 180 (2d ed. 1999).
37 Lardy, supra note 11, at 109–10. In other words, the number of agricultural workers alone that will be displaced amounts to over a third of Canada’s population.
38 Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization [hereinafter WTO Agreement], Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter SCM Agreement].
39 See infra note 71 and accompanying text.
40 Protocol, supra note 17, pt. I, para. 10(3). China’s commitments under the SCM Agreement are discussed in detail in Part I.C below.
41 See Working Party Report, supra note 3, para. 334. China’s representative to the WTO Working Party on China’s accession stated that China would make available translations “in one or more of the official languages of the WTO” (i.e., either English, French, or Spanish) all WTO-related laws, regulations, and other measures. Id.
42 See Protocol, supra note 17, pt. I, para. 2.
43 See id. pt. I, para. 18. China’s protocol provides for a “transitional review mechanism,” or a review by the WTO of the implementation by China of its commitments under the protocol and under the WTO agreements each year for eight years following accession. Id. This review is analogous to the Trade Policy Review Mechanism (TPRM) that was included in the Uruguay Round agreements. The purpose of the TPRM is to enhance transparency and understanding of WTO member countries’ trade policies and practices through regular monitoring. See World Trade Organization, Trade Policy Reviews, at http://www.wto.org/english/tratop_e/tpr_e/tpr_e.htm (last visited Mar. 19, 2004). The frequency of TPRM review for any given WTO member increases with the overall amount of that member’s trade; the largest trading country, the United States, is subject to TPRM review every two years. Smaller countries may be reviewed every six years. Id.; see also Hoekman & Kostecki, supra note 14, at 63.
China’s protocol, by subjecting China to annual reviews for eight years, exceeds the requirements of even the largest WTO members under the TPRM. China’s first transitional review was conducted at the end of 2002. See WTO Council for Trade in Goods, Report of the Council for Trade in Goods on China’s Transitional Review, G/L/596 (Dec. 3, 2002); WTO Council for Trade in Services, Transitional Review Under Section 18 of the Protocol on the Accession of the People’s Republic of China, S/C/15 (Nov. 8, 2002); WTO Council for Trade-Related Aspects of Intellectual Property Rights, Transitional Review Under Section 18 of the Protocol on the Accession of the People’s Republic of China, IP/C/26 (Dec. 3, 2002). These reports are available online at http://docsonline.wto.org.
44 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, art. 2.2, WTO Agreement, supra note 38, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter Anti-Dumping Agreement]. The anti-dumping margin of a given product is normally determined by comparing the price charged for the product in the home market of the exporting country with the price charged for the product upon export. Id. Article 2.2 of the Anti-Dumping Agreement provides that when, due to the particular domestic market situation of the exporting country, the price charged at home “do[es] not permit a proper comparison,” a constructed value may be determined. In determining constructed value, authorities calculate the home market value of the product by adding production costs to a reasonable amount for administrative costs, marketing costs, and profits. Id. Such costs and profits may be determined on the basis of actual records kept by the producer under investigation, or, where that is not possible, on the basis of: (i) actual costs and profits incurred by producers in the same domestic market of products in the same general category; (ii) a weighted average of costs and profits incurred by producers under investigation in the same domestic market of like products; or (iii) “any other reasonable method.” Id.
45 John H. Jackson, State Trading and Nonmarket Economies, 23 Int’l Lawyer 891, 905 (1989). Professor John Jackson describes the “surrogate country” method of constructing value under U.S. anti-dumping law:
In a case involving alleged dumping from a nonmarket economy, the U.S. authorities would examine the product in the nonmarket economy and establish all the various input components (parts, labor, overheads, etc.). Then the U.S. authorities would seek a “surrogate country,” which would be a market oriented country at approximately the same level of economic development as the allegedly dumping nonmarket economy. The U.S. authorities would then take the list of inputs, a sort of “shopping list,” to the surrogate country, and price each of those inputs on the market of the surrogate country. With this information it would then compile an overall constructed cost, and by adding the statutorily mandated amounts for administration and profit (the latter being 8 percent), the U.S. authorities would find the “home market price . . . .”
Id.
46 See, e.g., William P. Alford, When is China Paraguay? An Examination of the Application of the Antidumping and Countervailing Duty Laws of the United States to China and Other “Nonmarket Economy” Nations, 61 S. Cal. L. Rev. 79, 89 (1987) (criticizing the “surrogate country” approach and listing the countries—including Paraguay, Thailand, the Dominican Republic, and Pakistan—that the U.S. Commerce Department has used as China’s surrogate in calculating dumping margins).
47 See Alford, supra note 46, at 86 (describing how, in 1980, counsel for China argued during an anti-dumping investigation that the menthol industry in China operated under market conditions); China Blasts U.S. over Trade Obstacles, Kyodo News Service, Oct. 17, 1995, available at LEXIS, News Library, Jen File (describing Chinese foreign trade minister Wu Yi’s critique of U.S. anti-dumping investigations against Chinese producers, in particular its treatment of the Chinese market as a “nonmarket economy”); Bruce Stokes, Trade Moves China Off the Sidelines, The Nat’l J., May 2, 1987, at 1080, available at LEXIS, News Library, Ntljnl File (stating that the Chinese “want the opportunity to prove” to the United States that Chinese producers operate under market conditions for purposes of dumping determinations).
The argument that China is predominantly a market economy (at least for the purpose of setting prices) is supported by recent data: as of 1999, the prices of 95% of retail commodities, 86% of producer goods, and 83% of agricultural commodities in China were determined by market forces (as opposed to state-guided or state-fixed prices). Lardy, supra note 11, at 25 (relying on Chinese, IMF, and WTO data).
48 See Protocol, supra note 17, pt. I, para. 15. The protocol permits a WTO member to use a “methodology that is not based on a strict comparison with domestic prices or costs in China.” Id. In other words, the investigating agency may compare the export price of the good in question with either a “constructed price” or a “surrogate,” third-country price to approximate the Chinese home market price. Id. As Nicholas Lardy argues, this methodology disadvantages China in a number of ways—for example, by using a surrogate country that has higher labor costs than China, or by including a profit margin in constructed value calculations. See Lardy, supra note 11, at 87–88.
49 See Agreement on Safeguards, Apr. 15, 1994, WTO Agreement, supra note 38, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter Safeguards Agreement]. For example, before resorting to safeguards, a country must show “serious injury” to domestic industry, id. art. 2(1), and must apply the safeguard in a nondiscriminatory manner (with some exceptions), id. art. 2(2). The Agreement also includes a 4-year sunset clause, which can be extended to 8 years. Id. art. 7.
50 See Protocol, supra note 17, pt. I, para. 16.
51 Id. Specifically, the TPSS may be imposed upon a showing of “market disruption” to domestic industry, may target only Chinese goods, and has no sunset clause. Id. Also, in contrast with the WTO Safeguards Agreement, which allows the target country to immediately retaliate when a safeguard has been imposed in response to a relative increase in imports, see Safeguards Agreement, supra note 49, art. 8, China may not retaliate under the TPSS until the safeguard has been in place for two years. Safeguards Agreement, supra note 49, art. 8.
The language of the TPSS in some respects tracks that of Section 406 of the U.S. Trade Act of 1974, 19 U.S.C. � 2436 (1974) (“Section 406”), a special safeguard provision under U.S. law that applies only to communist countries. See also John P. Erlick, Relief from Imports from Communist Countries: The Trials and Tribulations of Section 406, 13 Law & Pol’y Int’l Bus. 617, 618–20 (1981); Jackson, supra note 45, at 902. Section 406 authorizes the President to impose quotas or tariffs on imports originating in a Communist country (defined as any country “dominated or controlled” by Communism) if, after investigation, U.S. authorities find evidence of “market disruption” to domestic industry. 19 U.S.C. � 2436(c). Section 406 defines market disruption to occur when imports “are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat thereof, to domestic industry.” 19 U.S.C. � 2436(e)(2)(A). Identical language is found in the TPSS.
As of September 2002, at least one country had invoked the TPSS. See Committee on Safeguards, Transitional Product Specific Safeguard on Imports of Industrial Sewing Machine Needles into India from the People’s Republic of China, G/SG/54 (Sept. 18, 2002).
India submitted a notification to the WTO Committee on Safeguards, requesting consultations with China under the TPSS and notifying the committee of an application for imposition of a safeguard duty on imports of industrial sewing machine needles. Id.; see also Lardy, supra note 11, at 81–86 (noting that China also agreed to a special textile safeguard but predicting that the TPSS will be utilized instead, due to the absence of a sunset clause for the TPSS and the fact that the textile safeguard only lasts 7 years as opposed to 12). The terms of the textile safeguard are set forth in the Working Party Report, supra note 3, para. 238.
52 Fewsmith, supra note 24, at 23 (noting that China’s sensitivity to foreign pressure and unequal treatment can be illustrated by an incident that occurred during the spring of 1999—an incident which, combined with the U.S. bombing of the Chinese Embassy in Belgrade, threatened to derail the WTO accession negotiations between the United States and China). Chinese Premier Zhu Rongji visited the United States in April 1999 with the expectation of reaching agreement with the United States on the terms of China’s accession. Id. at 24. On behalf of the Chinese leadership, Zhu offered numerous concessions that the United States had long been demanding as a condition to supporting China’s bid. Id. After President Clinton declined to conclude a deal, the office of the U.S. Trade Representative (USTR) made matters worse by posting details of China’s concessions on its website. Id. at 30. The Chinese reaction to the posting was immediate, vociferous, and hostile. Id. The posting not only was viewed as a heavy-handed move on the part of the United States, but once the public had access to the substance of the concessions, the public accused Zhu of “selling out the country” to the United States. Id. at 31. Although China’s leaders ultimately decided to resume negotiations, the incident permanently damaged Zhu Rongji’s status within the leadership and in the eyes of the public. Id. at 34. Articles posted on the Internet labeled Zhu a “traitor,” and Zhu’s concessions to the United States were analogized to infamous demands Japan imposed on China in 1915. Id. at 31.
53 See Di Jiang-Schuerger, The Most Favored Nation Trade Status and China: The Debate Should Stop Here, 31 J. Marshall L. Rev. 1321, 1336–37. During the late 19th and early 20th centuries, Great Britain used “opium and troops” to open the Chinese market to trade and forced China to cede the port of Hong Kong. The United States and France, along with Britain, signed “unequal” treaties with China that allowed foreign law to apply in areas of China and imposed other discriminatory trade terms. Id. For example, China’s trade treaties with the United States and Britain obligated China to grant MFN treatment without receiving MFN treatment in return. Id. at 1336 n.93.
54 See Fewsmith, supra note 24, at 39.
55 Lloyd Gruber, Ruling the World: Power Politics and the Rise of Supranational Institutions 4 (2000). Political scientist Lloyd Gruber argues that international cooperation through participation in institutions such as the WTO may make certain countries worse off, not only relative to other member countries, but in an absolute sense—that is, relative to the status quo prior to joining. Id. The “loser” countries may nonetheless participate in light of the fact that exclusion from the institution would be even worse than participating, given the power of the remaining countries to “go it alone.” Id. at 7. According to this theory, China may have had little choice but to agree to the onerous terms of accession imposed by the WTO Working Party, since the alternative (exclusion from the international trading regime) was simply not a viable option. Id.
56 Comment based on personal conversations.
57 See, e.g., China, US Sign Landmark Pact, China Daily, Nov. 16, 1999, available at LEXIS, News Library, Chidly File (stating that the commencement of the Seattle Round was “widely seen as the deadline” for China to join the WTO); EU’s Lamy Expected to Meet China’s Shi in Seattle, Asian Political News, Nov. 29, 1999, available at LEXIS, News Library, Iacnws File; William McMahon, Even As China’s WTO Bid Grows Dim, Backdoor Maneuvers Still Possible, ChinaOnline, Oct. 21, 1999, available at LEXIS, News Library, Chinao File. China concluded its bilateral agreement with the United States, which set forth the most significant terms relating to China’s WTO accession, on November 16, 1999, just two weeks prior to the Seattle meetings. The scheduled round of negotiations at Seattle was thwarted by widespread protests and was effectively postponed until the Doha Ministerial meeting in December 2001.
58 See Lardy, supra note 11, at 16.
59 See id. at 13–15.
60 See Supachai Panitchpakdi & Mark L. Clifford, China and the WTO: Changing China, Changing World Trade 140–41(2002) (describing the decision by China’s leaders to join the WTO as a “risky and courageous choice” that “reflects a belief that domestic reform needs the external pressure of WTO entry”). Dr. Supachai is currently Director-General of the WTO.
61 Frieder Roessler, The Constitutional Function of the Multilateral Trade Order, in Essays on the Legal Structure, Functions & Limits of the World Trade Order 109 (Meinhard Hilf & Ernst-Ulrich eds., 2000) (emphasis added).
62 Hoekman & Kostecki, supra note 14, at 29 (citing Frieder Roessler, The Scope, Limits and Function of the GATT Legal System, 8 World Econ. 289–98 (1985)).
63 See Jeffrey D. Sachs, Strengthening IMF Programs in Highly Indebted Countries, in Pulling Together: The International Monetary Fund in a Multipolar World 111 (Catherine Gwin & Richard E. Feinberg eds., 1989). Although IMF conditionality is a lever that pressures sovereign debtors, the IMF could be utilized to pressure creditors as well. Id. In an article published at the height of the Latin American debt crisis, Jeffrey Sachs argued in favor of IMF-mandated rules to force creditors to accept debt reduction (creditor agreements to reduce interest or principal payments on outstanding debt issued by deeply indebted sovereign borrowers). He reasoned that mandatory rules imposed by an international institution would actually work to the benefit of international banks, by shielding management from “disgruntled” shareholders. Id. Sachs suggested that creditors “want debt reduction to appear unavoidable” and privately reject the feasibility of a voluntary approach. Id. Although the IMF has not adopted such an approach to date, the IMF and the World Bank are currently exploring a proposal to adopt a mandatory, bankruptcy-like approach to sovereign debt problems. See Edmund L. Andrews, World Financial Officials Back New World Debt Framework, N.Y. Times, Sept. 28, 2002, at A6. Professor Sachs’s argument regarding the IMF’s potential role is analogous to the role that the WTO may play to provide leverage for economic reform in China.
64 China’s reform of its state-owned sector bears some resemblance to that of certain Eastern European countries (such as Hungary and Yugoslavia) that underwent privatization in the late 1980s. As discussed below, Hungarian enterprises during the 1980s operated under a “soft budget constraint.” See infra note 102.
In China’s case, a source of the “soft budget constraint” on inefficient enterprises is generous credit terms from the state-owned banking system. See Lardy, supra note 11, at 128–30. As Lardy describes, even after China opens up its market to foreign competition, money-losing firms in China may continue to finance their losses by borrowing from state banks. Lardy argues that the cost to China of continuing to “policy [lend]” to inefficient firms is very high, both in terms of increasing the financial burden on the banks as well as inhibiting the flow of funds to more efficient uses. Id.
65 See Banking on Growth, The Economist, Jan. 18, 2003, at 67. Goldman Sachs recently estimated that $500–600 billion, or roughly half of all loans by Chinese banks, are unlikely to be repaid in full. Official figures put the level of nonperforming loans at just over 25%. Id.; see also Nicholas Lardy, China’s Unfinished Economic Revolution 115–22 (1998) (explaining why Chinese financial reporting underestimates the magnitude of the problems that the banks face and suggesting that, collectively, China’s four major banks have a negative net worth); Keith Bradsher, Another Asian Nation Battling a Crisis in Its Banking System, N.Y. Times, Oct. 26, 2002, at B1 (citing an economist’s estimate that the debt burden could cost China enough to retard its annual growth rate by as much as 2% in the next few years) [hereinafter Bradsher, Another Asian Nation]; Keith Bradsher, New Challenge for China’s Shaky Banks, N.Y. Times, Sept. 17, 2002, at C1 (close to two-thirds of senior CCP officials recently surveyed believe that a financial crisis poses the “greatest danger” to China in the near future) [hereinafter Bradsher, New Challenge].
In 1999, the Chinese government set up four Asset Management Companies (AMCs)—each linked with one of China’s four main state-owned banks—in an effort to take some of the banks’ nonperforming loans off of their books. See Li Ying & Li Xin, Establishment of Financial Asset Management Companies and Related Impacts, at http://www.ahk-china.org/china-economy/berichte-analysen-financial-asset.htm (Mar. 10, 2004). The AMCs may then swap the debt for equity in the borrower company or find a buyer for the debt. Id. By June 2002, the AMCs had cleared 210.3 billion yuan (about $25 billion USD) of nonperforming loans from the banks’ balance sheets. Id. Due in part to the lack of a developed capital market in China and the limitations of China’s bankruptcy law, the work of the AMCs in disposing of the debt has proceeded very slowly. Id. As of October 2002, the AMCs had sold off only eleven percent of their loan portfolios and received on average twenty-one cents for each dollar of face value of assets sold. See Bradsher, Another Asian Nation, supra note 65, at 27.
66 SCM Agreement, supra note 38. Commitments to reduce and/or eliminate subsidies are contained in two WTO agreements: industrial subsidies are covered in the SCM Agreement, and agricultural subsidies are covered in the WTO Agreement on Agriculture, Apr. 15, 1994, WTO Agreement, supra note 38, Annex 1A, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1125 (1994).
67 SCM Agreement, supra note 38, art. 1. The SCM Agreement defines a “subsidy” to include a “financial contribution” by a government that confers a “benefit” on the recipient producer. Id.; see also WTO Appellate Body Report on Canada—Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R (Aug. 20, 1999), para. 157 (explaining that a “benefit” may be found to have been conferred where “the recipient has received a ‘financial contribution’ on terms more favorable than those available to the recipient in the market”).
68 See SCM Agreement, supra note 38, arts. 2, 15. Countervailing duties are compensatory tariffs that a country may levy on imports that the government determines to have “unfairly” benefited from subsidies. The SCM Agreement authorizes a country to levy countervailing duties on subsidized products of an exporting country if the subsidy is “specific” (i.e., targeted to a particular industry), and the use of such subsidy can be shown to have caused “material injury” to the importing country’s domestic industry. Id.
69 Id. art. 3.1.
70 For example, developing country WTO members were exempt from the SCM Agreement’s prohibition of certain subsidies for a transitional period of up to eight years after the Agreement went into effect (i.e., until 2003). See SCM Agreement, supra note 38, arts. 27.2, 27.3. In addition, certain benefits conferred pursuant to the privatization program of a developing country WTO member are not actionable through the imposition of countervailing duties. Id. art. 27.13. China agreed not to reserve the right to benefit from these and a number of other benefits extended to developing countries under the SCM Agreement. See Working Party Report, supra note 3, para. 169.
71 Protocol, supra note 17, pt. I, para. 10. The SCM Agreement used to define a category of “non-actionable” subsidies, such as certain research and development-related subsidies. SCM Agreement, supra note 38, art. 8. These provisions expired, however, and have not been renewed.
72 See Working Party Report, supra note 3, para. 170. The possibility that preferential loans from state-owned banks might amount to an actionable subsidy was raised by the WTO Working Party during China’s accession negotiations. Id. China’s representative responded by noting that a loan that does not confer a benefit (i.e., a loan on market terms) would not amount to a subsidy, stating that “China’s objective was that state-owned enterprises, including banks, should be run on a commercial basis and be responsible for their own profits and losses.” Id.
73 See SCM Agreement, supra note 38, arts. 15–21. The SCM Agreement allows a member that has been injured by another member’s subsidy policies to respond either by imposing countervailing duties (which the Agreement permits if the subsidy has caused “material injury” to domestic industry of the importing country), id. art. 19, or by resorting to WTO dispute settlement, id. arts. 4, 7.
The U.S. government’s review of China’s subsidy practices is still ongoing and appears to be focused on the elimination of prohibited subsidies (i.e., subsidies that are conditioned upon export or import-substitution). See Compliance Report, supra note 12, at 22–23. While the USTR has concerns regarding the sufficiency of China’s WTO notification regarding prohibited subsidies, the USTR has offered technical assistance to the Chinese authorities to improve notification in this area. See id.
74 See Hoekman & Kostecki, supra note 14, at 250–51 (explaining the four modes of supply covered under GATS). Market access and national treatment commitments under the GATS operate through a “positive list” approach—that is, WTO members are only obligated to extend national treatment or provide market access with respect to service sectors and modes of supply listed in that member’s GATS schedule. Id. at 254 n.4. Even where a given service sector is listed, such obligations apply only to the extent that exemptions are not otherwise specified in the schedule. Id.
75 See Schedule of Specific Commitments, supra note 34, at 34–36 (agreeing to eliminate restrictions within five years after accession).
76 Id. Banks must have total assets of more than US $10 billion (in the case of a subsidiary) or $20 billion (in the case of a branch) at the end of the year prior to filing the application. Id.
77 Id.; see Compliance Report, supra note 12, at 41. Since accession China has generally complied with its GATS commitments in the banking sector. Although the U.S. government has complained that regulations enacted by the Bank of China on foreign banking operations impose prudential rules (such as minimum capital requirements) that “far exceed international norms,” it also concedes that these measures have “kept pace” with China’s WTO commitments. See id.
78 See Lardy, supra note 11, at 114 (citing a study by a Chinese Central Bank researcher that predicts that foreign banks will capture 15% of China’s domestic currency market by 2007); Bradsher, New Challenge, supra note 65 (citing “pessimists” who warn of a possible collapse of China’s domestic banking system if it loses deposits and borrowers continue to default).
79 See Lardy, supra note 11, at 119. Nicholas Lardy notes that as of 2000, the percentage of financial assets in China owned by foreign financial institutions was only 1.5%. Id. at 115. He predicts that even after 2007, when China has agreed to eliminate all “non-prudential” restrictions on foreign banks, foreign banks operating in China will continue to be limited by two constraints: first, the prudential and regulatory requirements imposed on Chinese banks; and second, the availability of creditworthy Chinese borrowers. Id. at 118–19. Lardy concludes that, with the introduction of foreign banks into the Chinese market, “Chinese banks are likely to face serious competitive pressure, even if foreign banks do not drain off a large-enough share of deposits to endanger the liquidity of domestic banks.” Id. at 119.
80 See Bradsher, New Challenge, supra note 65.
81 Id. Bradsher indicates that the entry of foreign banking in China has caused Chinese banks to offer new products, such as mortgages and credit cards with revolving lines of credit. Foreign competition has also forced Chinese banks to expand into loan syndication and accounts-receivable financing, areas that Chinese banks had ignored in the past. See Karby Legett, Citibank Stirs Fear in China by Buying Pile of Unpaid bills, Wall St. J., Aug. 27, 2002. Chinese banks are learning from Citibank’s example how to develop more sophisticated techniques for servicing corporate clients, such as offering “their own, vastly improved cash-management products.” Id.
82 See WTO Website, supra note 1. There are a number of post-Communist countries that have acceded to the WTO. Id. Mongolia became a member of the WTO in 1997 and Albania in 2000. Id. Similar examples include Slovenia (1995), Moldova (2001), Georgia (2000), Estonia (1999), Latvia (1999), Lithuania (2001), and Armenia (2003). Id. Russia is currently in the process of negotiating the terms of its accession. Id.
83 See U.S. Department of State, Background Notes, http://www.state.gov/r/pa/ei/bgn/ (last visited Apr. 22, 2004) (containing general information for each country of the world). At present, only five countries in the world are still Communist: North Korea, Laos, Vietnam, Cuba, and China. Id. Of these, the only other WTO member is Cuba, an original signatory to the GATT but a tiny member whose involvement in the organization became severely limited after Fidel Castro came to power. See Grzybowski, supra note 32, at 547.
84 See Kostecki, supra note 32, at xv, 25. Although Czechoslovakia was an original contracting party to the GATT, its status as a GATT member was irrelevant in practice, as it was treated by the West similarly to other non-GATT-member, Eastern European countries. Id.
Both politically and economically, Yugoslavia was a special case. Yugoslavia gained admission to the GATT in 1966, as a country with some state trading but whose foreign trade was based on a tariff system. Id. at 25–27. Eighteen years earlier, in 1948, the Tito regime broke with Stalinism, decentralized its economic system on the basis of “workers’ self-management,” and established itself politically as a nonaligned country. See id. at 25; Karen Halverson, Privatization in the Yugoslav Republics, 25 J. World Trade 43, 46–47 (1991) (describing workers’ self-management). After 1965, Yugoslavia underwent a major program of economic reforms, which among other things facilitated the registration of new trading enterprises, liberalized foreign investment, loosened import controls, eliminated the licensing of exports, and allowed Yugoslav banks to borrow from abroad. See Harriet Matejka, Foreign Trade Systems, in The New Economic Systems of Eastern Europe 443, 468–69 (Hans-Hermann H�hmann et al. eds., 1975) [hereinafter New Economic Systems]. Although Yugoslavia’s 1965 economic reform program roughly coincided with GATT accession and may have been motivated in part by a desire to gain accession to the GATT, it appears that Yugoslavia’s ability to adapt to the GATT system was due to its unique political and economic approach—in other words, Yugoslavia’s economic and political reform provided the preconditions and momentum for eventual GATT membership, instead of the other way around. Id.
85 Kostecki, supra note 32, at 6; see also Grzybowski, supra note 32, at 552–53 (quoting a Soviet author who recognized the importance of economic cooperation as a means of acquiring Western machinery, equipment, and technology).
86 See Kostecki, supra note 32, at 31; Grzybowski, supra note 32, at 549. Although Hungary decentralized its foreign trade operations and shifted from a target-based to a tariff-based system, this does not necessarily mean that foreign trade in Hungary was determined by market forces. See Kostecki, supra note 32, at 31; Grzybowski, supra note 32, at 549. Its economy remained fundamentally socialist in nature, and therefore was ultimately controlled not by the market, but by the state. See, e.g., G�bor R�v�sz, Hungary, in New Economic Systems, supra note 84, at 155, 165 (describing Hungary’s 1968 economic reforms as “[t]he new mechanism of the Hungarian socialist planned economy”).
Consider the following observation of an East-West trade scholar, who emphasizes the central difference between foreign trade in market versus planned economies as relating to the degree of government control over trade:
Tariffs in socialist economies have little influence on the volume of imports . . . . Tariffs are a non-essential part of the import control system. More efficient methods to regulate the flow of imports are licensing and foreign currency controls. They are practiced in Hungary as well as in other socialist countries. Indeed they are an indispensable instrument in realizing the goals and targets of the economic plan. However unrestrained and competitive Hungarian trade agencies may be in the selection of their trading partners and of the assortment of imported goods, they still need to obtain import licenses and foreign currency allocations . . . .
Grzybowski, supra note 32, at 551. The implication of Professor Grzybowski’s observation is that any tariff concessions contained in Hungary’s GATT schedule would be ineffective if the government restricted access to imports by withholding licenses or access to foreign currency. See id.
87 Kostecki, supra note 32, at 27. Like Hungary, Poland experimented with a program of decentralization during the early 1970s and again during the 1980s. See Perestroika Survey, The Economist, Apr. 28, 1990, at 10.
88 Poland agreed to “increase the total value of its imports from the territories of the contracting parties by not less than 7 per cent per annum.” Kostecki, supra note 32, at 94 (quoting GATT B.I.S.D. (15th Supp.) at 52 (1968)). As a developing country with greater balance of payments constraints, Romania sought a more flexible formula. Id. at 96. Therefore, Romania’s terms of accession stated that it “firmly intends” to increase the value of its imports from GATT members “at a rate not smaller than the growth of total Romanian imports provided for in its Five-Year Plan.” Id. at 96 (quoting GATT B.I.S.D. (19th Supp.) at 10 (1972)).
89 Poland agreed to annual consultations whereas Romania and Hungary agreed to consultations every other year. See Kostecki, supra note 32, at 108.
90 See id. at 104–06. The fact that trade within the CMEA was based on economic planning complicated any attempt to compare the terms of trade with GATT versus CMEA trading partners. Id. Even Hungary, which as noted above modified foreign trading to a tariff-based system for GATT purposes, continued to trade with CMEA countries on the basis of long-term agreements controlled by the requirements of economic planning. See Grzybowski, supra note 32, at 551.
91 See id. at 552 (stating that the primary significance of the socialist countries’ GATT accession was as a “reaffirmation that these four countries, traditionally a part of Western spiritual and economic reality, are finding their way into the old pattern of coexistence”).
92 See Kostecki, supra note 32, at 127–28. GATT accession did not result in the elimination of politically motivated restrictions imposed by Western countries on East European imports. Id. at 98–99. Even after the accession of Hungary, Poland, and Romania to the GATT, a number of Western European countries maintained discriminatory quantitative restrictions on Eastern European imports, and the United States refused to grant MFN status to Hungary or Romania. Id. Nor was the GATT ultimately effective in shifting the trade of these countries away from the CMEA. Id. By 1987, Poland’s exports amounted to only 11.2% of GDP, and CMEA countries still accounted for over 40% of Poland’s exports. See Jaroslaw Pietras, The Role of the WTO for Economies in Transition, in The WTO as an International Organization 353, 354 (Anne O. Krueger ed., 1998).
93 See Kostecki, supra note 32, at 118. Professor Kostecki observes that the increase of imports from the West into Poland, Hungary, and Romania during this period was not due to GATT concessions, which he describes as “either meaningless or of a limited value,” but rather due to grants of “sizeable Western credits” to importers. Id. One consequence of increased trade with the West on generous credit terms was the accumulation of external debt burdens that ultimately led to high inflation rates in these economies in the late 1980s. See Halverson, supra note 84, at 47.
94 Kostecki, supra note 32, at 122–23 (observing that the eventual relaxation of discriminatory restrictions maintained by countries such as Austria, Denmark, Italy, and Sweden against Polish imports was achieved through bilateral agreement and not through GATT action).
95 Id. at 137–38.
96 See Business in Eastern Europe Survey, The Economist, Sept. 21, 1991, at 10. In contrast with the United States, whose state-owned sector accounted for 1% of value-added in the mid-1980s, the corresponding percentages for Eastern Europe include Hungary (86%), Poland (82%), Yugoslavia (87%), and Czechoslovakia (97%). Id.
97 See J�nos Kornai, The Hungarian Reform Process: Visions, Hopes and Reality, in Remaking the Economic Institutions of Socialism: China and Eastern Europe 44–46 (Victor Nee & David Stark eds., 1989) (discussing “soft budget constraints” and the arbitrariness of prices set in decentralized socialist enterprises). Hungarian enterprises had little incentive to cut costs or otherwise compete, since they had access to subsidies, tax breaks, or other bail-outs from the state. Id. Hungarian economist J�nos Kornai coined the phrase “soft budget constraint” to describe this phenomenon. Id.
98 See Hoekman & Kostecki, supra note 14, at 41. The adoption of the Uruguay Round agreements in 1995 led to more stringent rules in areas such as agriculture, subsidies, and safeguards. In addition, the scope of the WTO agreements expanded into previously uncharted areas, including trade in services and trade-related aspects of intellectual property. Finally, the fact that countries were obligated to sign on to the Uruguay Round agreements as part of a “single undertaking” expanded the scope of obligation for developing countries that previously opted out of certain of the GATT agreements. Id. at 49.
99 See supra note 43 for a discussion of the WTO Trade Policy Review Mechanism (TPRM).
100 Among other things, the WTO Dispute Settlement Understanding formalizes the dispute settlement process by allowing the right of appeal of WTO panel decisions to a permanent Appellate Body (art. 17) and providing for the automatic adoption of Appellate Body decisions unless the WTO decides by consensus not to adopt the report (art. 17.14). Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15, 1994, art. 17, WTO Agreement, supra note 38, Annex 2, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1226 (1994).
101 For a discussion of how the WTO facilitated the economic transition of Poland, the Czech Republic, Romania, and Hungary, see Pietras, supra note 92, at 355–59. Pietras describes the economic situation of these countries prior to the late 1980s as characterized by “relative autarky” vis-�-vis the industrialized countries. Id. at 354.
102 See Kornai, supra note 97, at 44–46 (using the term “soft budget constraint” to describe the problems that Hungarian state-owned enterprises faced as the country pursued economic reform throughout the 1980s.); see also Halverson, supra note 84, at 46–48 (describing similar problems in Yugoslavia).
103 See infra notes 172–74 and accompanying text (discussing corruption/moral crisis in China).
104 See Protocol, supra note 17, pt. I, para. 2. This Article uses the term “transparency-related rules” in referencing the publication, uniform administration, and independent review rules contained in China’s protocol and in the WTO agreements. Of course, there are other mechanisms in the WTO agreements that promote transparency, in particular, the Trade Policy Review Mechanism. See supra notes 41–43 and accompanying text (describing China’s transparency commitment). China’s protocol goes beyond the requirements of other WTO members by subjecting China’s legal and economic system to review under the TPRM every year for the first eight years after China’s accession. See Protocol, supra note 17, pt. I, para. 18.
105 General Agreement on Tariffs and Trade, Oct. 30, 1947, art. X, 61 Stat. A-11, T.I.A.S. 1700, 55 U.N.T.S. 194.
106 Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, arts. 41–63, WTO Agreement, supra note 38, Annex 1C, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1197 (1994). Specifically, the TRIPS Agreement requires the availability to intellectual property right-holders of “civil judicial procedures” for intellectual property enforcement, id. art. 42, and that laws, regulations, and rulings pertaining to intellectual property protection and enforcement be published and available upon the request of another member, id. art. 63.
The SCM and Anti-Dumping Agreements also contain transparency-related requirements. See SCM Agreement, supra note 38, arts. 12, 13; Anti-Dumping Agreement, supra note 44, arts. 22, 23 (requiring public notice of anti-dumping and countervailing duty investigations, written explanation of the basis on which determinations are made, and the availability of judicial, arbitral, or administrative review of final determinations).
107 General Agreement on Trade in Services, Apr. 15, 1994, art. III.4, WTO Agreement, supra note 38, Annex 1B, Legal Instruments—Results of the Uruguay Round, 33 I.L.M. 1168 (1994).
108 See generally China’s Legal Reforms (Stanley Lubman ed., 1996) (containing papers by various authors); The Limits of the Rule of Law in China (Karen G. Turner et al. eds., 2000) (containing papers by various authors addressing rule of law related issues in China); Stanley B. Lubman, Bird in a Cage: Legal Reform in China After Mao (1999); Pitman Potter, The Chinese Legal System: Globalization and Local Legal Culture (2001); Randall Peerenboom, Globalization, Path Dependency and the Limits of the Law: Administrative Law Reform and Rule of Law in the People’s Republic of China, 19 Berkeley J. Int’l L. 1 (2001).
109 See Lubman, supra note 108, at 100–01. Although the Cultural Revolution swept away all legal institutions in China, these institutions had already been rendered practically irrelevant under Communist rule. Id.
110 See Chen, supra note 7, at 97. In 1993, the National People’s Congress (NPC) and its Standing Committee adopted an average of one law every eighteen days. Id. at 97 n.1. In addition to building a practicing bar and judiciary, throughout the reform era China promulgated literally thousands of laws and regulations. By 1998, the NPC and its Standing Committee had enacted 328 statutes and decisions, the State Council had issued over 700 regulations, and regional bodies had adopted over 5000 local rules. Id.
111 Lubman, supra note 108, at 126 (quoting the daughter of a Chinese high government official).
112 Id. at 154 (citing “Provisional Regulations on Lawyers,” passed on Aug. 26, 1980). The Provisional Regulations are translated in 1 China L. Rep. 217, 217–21, by Tao-tai Hsia and Charlotte Hambley. The more recent 1997 law on lawyers defines the lawyer’s role as a professional and provides for the accreditation of lawyers and the regulation of their activity. See Lubman, supra note 108, at 155–56; Sarah Biddulph, Through a Glass Darkly: China, Transparency and the WTO, 3 Aust. J. Asian L. 59, 82 (2001) (citing the Lawyers Law, Zhonghua Renmin Gongheguo Lushi Fa, 1997).
113 Lubman, supra note 108, at 155.
114 See Minxin Pei, Is China Democratizing?, Foreign Affairs, Jan.–Feb. 1998, at 76 [hereinafter Pei, Is China Democratizing?]. However weak and evolving judicial institutions may be, data shows that Chinese people are utilizing the courts to protect individual rights. Between 1986 and 1996, lawsuits against the government by Chinese citizens increased 12,483 percent. See id. In a 1993 poll of over five thousand Chinese, seventy-eight percent of those questioned agreed with the statement “Private property is sacred and must not be violated.” Id.
115 Cf. Lubman, supra note 108, at 155. The Ministry of Justice at first did not require passing a bar examination to practice law; all that was required was a college education and some work experience. Id. at 154. The bar examination began to be administered on an annual basis only in 1993. Id. at 155. As of 1996, almost thirty percent of Chinese lawyers had no formal education beyond high school. Id.
116 Id. at 253.
117 See id. People’s Liberation Army (PLA) officers were considered to be particularly good candidates, due to their experience in “enforcing proletarian dictatorship” and their “appropriate ideological outlook.” Id.
118 Id.
119 See id. at 256–58 (discussing the degree to which judges are still “soldiers of the state” in terms of the government’s criteria for advancement and recognition of judicial excellence).
120 See Lubman, supra note 108, at 254–56. The Judges Law requires that judges obtain a college-level or graduate degree, with a specialization in law, or “professional legal knowledge” plus two years of work experience. Id. at 255. The Judges Law provides for the use of exams as a basis for promotion, annual performance reviews, and the dismissal of any judge who has been rated “incompetent” for two years in a row. Id. at 255–56. An amendment to the Judges Law recently raised the minimum educational requirement to a “university degree.” Shao Zongwei, Reforms to Improve Quality of Judges, China Daily, July 8, 2002, at 1.
121 China Sets Up Judicial Exam for Judges, Prosecutors and Lawyers, Agence France Presse, Feb. 7, 2002, available at LEXIS, News Library, Afp File.
122 See id. Although at least 360,000 people registered for the examination, the Chinese government reported that only seven percent of those who took the examination passed. Id.; Feng Qihua, More Qualified Judges Needed, China Daily, July 23, 2002, at 4.
123 Shao, supra note 120, at 1.
124 Protocol, supra note 17, pt. I, para. 2(C)(1). As for the consultation requirement, although China does not have in place a universal system for receiving public input on draft legislation, when drafting legislation, Chinese officials often consult with foreign experts and take into account the content of foreign laws. See Biddulph, supra note 112, at 72–73.
125 Protocol, supra note 17, pt. I, para. 2(C)(2). The publication requirement applies specifically to all “laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPs or the control of foreign exchange.” Id. The WTO Working Party Report, supra note 3, para. 334, also states that China agreed to make available translations of these laws “in one or more of the official languages of the WTO.”
126 Protocol, supra note 17, para. 2(C)(3). There is an exception to the publication obligation for laws involving national security, foreign exchange or monetary policy, or other measures, “the publication of which would impede law enforcement.” Id.
127 Biddulph, supra note 112, at 64 n.11, 67 (citing the PRC Legislation Law, Zhonghua Renmin Gongheguo Lifa Fa, effective Jul. 1, 2000 [hereinafter Legislation Law]).
128 See Chen, supra note 7, at 101–03. The National People’s Congress (NPC) is China’s legislature. Id. at 101. China’s Constitution vests exclusive power to enact “basic law” in the NPC. Id. The Standing Committee, a part of the NPC, is vested with authority to enact other laws. Id. at 102. Thus the laws enacted by the NPC and its Standing Committee enjoy the highest status in the hierarchy of Chinese law, subordinate only to the Constitution. Id. at 101–03.
129 See Chen, supra note 7, at 118–19; Biddulph, supra note 112, at 64–65 (discussing the ambiguous status of government rules and normative documents); Peerenboom, supra note 108, at 216 (providing a helpful description of the legislative hierarchy and observing that the distinction between rules and normative documents is often difficult to make).
130 Lubman, supra note 108, at 197. Prior to 1979, “many if not most” laws and regulations were for internal circulation only. Id. at 146. Professor Lubman observes that the practice of issuing internal regulations is not only a feature of Communist systems, but mirrors traditional Chinese conceptions about law. Id. at 146–47. Such rules, which Westerners regard as “legal,” were not intended to provide notice to the public but rather served the purpose of guiding bureaucrats in the execution of their work. Id.
131 See infra Part II.B.3.
132 The statute supercedes earlier Chinese law, which did not impose a comprehensive publication requirement. Biddulph, supra note 112, at 67 (discussing the Legislation Law).
133 See infra note 163 (discussion of normative documents under the ALL).
134 See Protocol, supra note 17, pt. I, para. 2.
135 See China Establishes WTO-Related Organizations, Xinhua News Agency, Oct. 31, 2001, available at LEXIS, News Library, Xinhua File (announcing the establishment of the China WTO Notification and Enquiry Center). Information regarding the WTO Notification Center can be found on the Chinese government’s new website on the WTO. See infra note 138.
136 Biddulph, supra note 112, at 68.
137 Working Party Report, supra note 3, para. 325. These official sources include, in addition to the “MOFTEC Gazette,” the “Gazette of the People’s Republic of China State Council,” and the “Collection of the Laws and Regulations of the People’s Republic of China.” A recent article in China Daily suggests that the Chinese government views the publication requirement as requiring publication in “an” official journal (as opposed to “the” official journal). See Meng Yan, Legislative Efforts Benefit WTO Accession, China Daily, Jan. 7, 2002, available at LEXIS, News Library, Chidly File (quoting a government official who pledged that all WTO-related laws and regulations involving intellectual property “will be published in an official journal”).
138 See China to Open Official WTO Website, Xinhua News Agency, Sept. 12, 2002, available at LEXIS, News Library, Xinhua File. MOFTEC launched the official website on September 13, 2002. See id. The website, which at present is only available in Chinese, includes basic knowledge about the WTO, current announcements, documents relating to China’s accession, Chinese laws and regulations relating to foreign trade and the economy, and links to other Chinese websites that contain trade-related statistics and regulations. See id. According to government reports, the website can also accommodate questions from those who visit it. See id. The website can be accessed at http://www.chinawto.gov.cn (last visited Mar. 12, 2003). Id.
139 Protocol, supra note 17, pt. I, para. 2(A)(2).
140 See supra notes 137–38.
141 See Lubman, supra note 108, at 147 (describing the techniques that characterize Chinese legislative drafting, including “the use of general principles, vagueness and ambiguity, undefined terms, broadly worded discretion, omissions and general catch-all phrases”).
142 See Chen, supra note 7, at 106. According to one Chinese legal scholar, without interpretation by legislative, judicial, and administrative bodies, Chinese law would be “unusable, if not meaningless.” Id.
143 See, e.g., Chen, supra note 7, at 115–17 (discussing the lack of clarity regarding the scope of authority and relative power among three of China’s primary lawmaking bodies: the NPC, the NPC Standing Committee, and the State Council). Similarly, it is difficult to define the boundaries of power between central and local government bodies. Id. at 117. Professor Chen provides the example of a “provisional regulation” issued in Fujian province, which purports to prescribe crime and punishment even though the Constitution reserves these matters to the exclusive legislative authority of the NPC. Id. Although in theory the NPC could annul the contradictory legislation, such power has never been exercised. Id. at 117.
144 See infra notes 161–87 and accompanying text.
145 Chen, supra note 7, at 40. One illustration of the importance that the Party attaches to legal reform is its launching of successive five-year campaigns for the popularization of legal knowledge. See Shao Zongwei, Knowledge of Law a Must for Official Promotion, China Daily, June 4, 2002, at 2. The most recent five-year campaign, for the years 2000–2005, features particular emphasis on “rule of law” as opposed to administrative regulation, including the laws relating to economic regulation, criminal prohibitions against corruption, and the rules of the WTO. See id. The study of such law is a precondition for promotion of government officials. See id.
146 China’s official press is replete with examples of officials announcing the importance of transparency and rule of law in light of the country’s WTO obligations. See, e.g., Timetable Set for China’s Entry to WTO, Xinhua News Agency, Nov. 3, 2001 (trade minister quoted as saying that the “most important” change resulting from China’s WTO entry will be improving transparency of laws); Meng Yan, Legislative Efforts Benefit WTO Accession, China Daily, Jan. 7, 2002 (NPC representative observes that “transparency and public participation” have recently been emphasized during the NPC’s legislative process after China’s WTO entry); Shao Zongwei, Judicial Rules to Comply with WTO, China Daily, Feb. 26, 2002 (senior prosecutor pledges that China’s procuracy will incorporate WTO principles of “openness, integrity and transparency”).
The government’s commitment to transparency in WTO matters extends beyond public expressions of support, however. See Working Party Report, supra note 3, para. 75. During China’s accession negotiations, China’s representative confirmed that, to promote the uniform application of WTO-related rules in China, any instance of non-uniform application of China’s trade regime could be brought to the attention of central government authorities, who would contact the responsible government agency to promptly address the situation, “taking into consideration China’s international obligations and the need to provide a meaningful remedy.” Id.
147 See Protocol, supra note 17, pt. I, para. 2(D)(1).
148 Id. pt. I, para. 2(D)(2). The Protocol also requires that the relevant tribunal provide written notice of the decision on appeal, including the reasons for such decision. Id.; see also Working Party Report, supra note 3, para. 78 (requiring that the tribunals responsible for judicial review be “impartial and independent of the agency entrusted with administrative enforcement” and have no “substantial” interest in the outcome).
149 See supra notes 134–35.
150 See generally PRC Administrative Reconsideration Law (Xingzheng fuyi fa, 1999); PRC Administrative Supervision Law (Xingzheng jiancha fa, 1997); PRC Administrative Penalties Law (Xingzheng chufa fa, 1996) [hereinafter APL]; PRC State Compensation Law (Guojia peichang fa, 1994); PRC Administrative Litigation Law (Xingzheng sugong fa, 1989) [hereinafter ALL]. These laws are cited in Peerenboom, supra note 108, at 210–11 nn.248–52. See also Chen, supra note 7, at 141–65; Biddulph, supra note 112, at 75–80.
151 Chen, supra note 7, at 149, 152. One example of agency review is “administrative reconsideration,” a type of review typically involving supervision by the next highest administrative entity internal to the agency that rendered the challenged decision. Id. at 149. Because it is essentially controlled by the bureaucracy, administrative reconsideration has been “jealously guarded” by China’s bureaucrats as a defense against an expansion of judicial review of administrative acts. Id.
Another, less frequently utilized type of review is “administrative supervision,” which may be carried out by CCP officials and other bodies (such as the Ministry of Supervision and the Party Discipline Inspection Commission) vested with authority to monitor unlawful behavior by administrative officials. See id. at 152. The process tends to operate like a disciplinary enforcement mechanism rather than an impartial review. Id. at 154. Either administrative reconsideration or administrative supervision may be initiated upon the petition of a citizen, legal person, or other entity. See Peter Howard Corne, Creation and Application of Law in the PRC, 50 Am. J. Comp. L. 369, 427, 435 (2002). For a detailed treatment of these two methods, see Corne, supra, at 426–27; Peerenboom, supra note 108, at 229–33.
152 See, e.g., Chen, supra note 7, at 149, 154. But cf. Corne, supra note 151, at 433 (suggesting that although “unpredictable” and depending on the government conducting the review, administrative reconsideration can be reasonably professional and impartial).
153 See Peerenboom, supra note 108, at 192. A more comprehensive Administrative Procedures Law is being drafted but has not yet passed. Id.
154 See APL, supra note 150; Chen, supra note 7, at 142–43.
155 See Chen, supra note 7, at 144–47. The right to hearing applies when “serious” penalties are at stake. Id. In addition, the APL provides that (i) penalties may only be imposed and enforced by authorities that are specifically authorized to do so (art. 15), (ii) a penalty may not be based on rules contained in internal, or unpublished, documents (art. 4), and (iv) no administrative body may impose fines for the same offense twice (art. 24). See id.
156 See Chen, supra note 7, at 147 (stating that under the statute, “personal freedoms may be restricted up to four years” and noting the APL’s resemblance to a criminal statute).
157 See generally Lubman, supra note 108, at 295 (stating that “[t]he extent of hierarchical review of judicial decisions, within and between courts . . . suggests that Chinese judicial decision-making is more of an administrative process than a judicial one”); Biddulph, supra note 112, at 80–81 (referring to the lower status of judges vis-�-vis administrators); Peerenboom, supra note 108, at 214–18 (describing factors that weaken China’s judiciary).
158 See Chen, supra note 7, at 155. The ALL is based on a provision in China’s 1982 Constitution, which refers to the rights of citizens to compensation for the infringement of civil rights by the state. See id.
159 Id. at 156 (quoting Wang Hanbin, Explanation of the (Draft) Administrative Litigation Law of the PRC, Delivered at the 2nd Session of the Seventh NPC (Mar. 28, 1989), translated in 3 Chinese Law and Government 35, 35–36 (1991)).
160 Id. at 157 (citing ALL art. 5). “Concrete” acts (as opposed to “abstract” acts) involve specific applications of a rule to a particular case, as opposed to rulemaking. For definitions, see Lubman, supra note 108, at 206.
161 See Biddulph, supra note 112, at 83. But see Corne, supra note 151, at 428–29 (suggesting that in practice, a court deciding whether to apply a given administrative rule amounts to a de facto judgment relating to that rule’s validity).
162 Chen, supra note 7, at 157 (citing ALL art. 5).
163 See Peerenboom, supra note 108, at 236–37. The distinction between rules and normative documents under Chinese law is addressed at supra notes 127–32 and accompanying text.
Normative documents are not even mentioned in the ALL, which suggests that they lack binding effect. See Peerenboom, supra note 108, at 236. This is a good thing from the perspective of WTO transparency since normative documents are not subject to the publication requirements of the Litigation Law. See supra notes 159–60 (discussing Litigation Law).
Although, formally, normative documents may not carry weight under the ALL, judges are likely to continue to consult them as a practical matter. See Biddulph, supra note 112, at 65 (“such a well-entrenched mechanism for the internal management of decision-making cannot be abolished overnight”); Peerenboom, supra note 108, at 236–37 (commenting that in practice, courts may continue to give weight to normative documents, particularly if there is no other legislation on point). In a recent survey of 280 Chinese judges, only 12.5% of those questioned stated that they would “never refer to” unpublished, normative documents when considering a case. Corne, supra note 151, at 417.
164 See Peerenboom, supra note 108, at 234. Professor Peerenboom reports that the overall success rate for Chinese plaintiffs under the ALL is forty percent, which is significantly higher than in the United States. Id.
165 See id. at 234. While still “amazingly few” relative to the total, the number of specific administrative acts that were challenged under the ALL increased by 48% between 1995–96, and again by 13% between 1996–97. Id. at 224. In contrast, the number of administrative acts that were referred to administrative reconsideration decreased each year between 1991 and 1996. Id. at 232; see also Corne, supra note 151, at 432–34 (analyzing the relative advantages and disadvantages of administrative reconsideration versus judicial review under the ALL and applying each method to hypothetical scenarios).
166 Peerenboom, supra note 108, at 215; see China’s Legal Reforms, supra note 108, at 26.
167 Potter, supra note 108, at 30; Biddulph, supra note 112, at 80, 83.
168 See Lubman, supra note 108, at 264–65; see also Corne, supra note 151, at 434 (observing that “where government interests are potentially at stake, courts often are little more than agents of the local people’s government to which the relevant court is associated”).
169 Lubman, supra note 108, at 265; Peerenboom, supra note 108, at 214–15. This manifests itself, for example, in judges tending to dismiss a case on overly narrow technical grounds in order to avoid issuing a ruling against a local entity with strong government backing. See Biddulph, supra note 112, at 83; Peerenboom, supra note 108, at 216–17.
170 There has been much written on the Chinese tendency to value personal relationships and the tension between such cultural values and Western notions of legality. See, e.g., Lubman, supra note 108, at 17, 19–21, 24–25; Potter, supra note 108, at 12–13, 30–31.
171 One of the unfortunate byproducts of China’s rapid move to a market is increased corruption. As Professor Lubman puts it, the reforms have “created many institutional settings in which government officials can use their power to affect economic outcomes,” which in turn creates the expectation for bribes. Lubman, supra note 108, at 120. The government has made corruption in the judiciary a high-profile issue. See Dian Tai, Judges Told to Improve in Quality, China Daily, July 6, 2002, at 2 (reporting a government crackdown against Chinese judges that abuse their powers for personal gain).
For a discussion of the problem of corruption in China’s legal system, see, for example, Lubman, supra note 108, at 120–21; Panitchpakdi & Clifford, supra note 60, at 160 (observing that “all too often, there is an unhealthy symbiotic relationship between businesses and government officials”); Potter, supra note 108, at 31; Peerenboom, supra note 108, at 227 n.369.
172 See Lubman, supra note 108, at 119–21; Peerenboom, supra note 108, at 225–27.
173 See Erik Eckholm, Corruption Protest in China Leads to Charges, Top and Bottom, N.Y. Times, Sept. 13, 2002, at A5 (providing one recent example where, in March 2002, tens of thousands of demonstrators took to the streets to protest pervasive corruption among government officials in Liaoning Province).
174 Minxin Pei, Future Shock: The WTO and Political Change in China 5 (Carnegie Endowment for Int’l Peace, Pol’y Brief Vol. 1, No. 3, 2001) [hereinafter Pei, Future Shock]. He estimates the aggregate cost of corruption at four to eight percent of China’s GDP and argues that, if allowed to continue unchecked, corruption ultimately may lead to the occurrence of an Indonesian-style collapse of government in China. Id.
The NPC is considering proposed legislation that could curb one source of corruption among Chinese bureaucrats. The law would strictly limit the right of administrative departments to decide which activities need administrative licenses. The law would limit this rulemaking authority to the highest levels of government—the NPC, the NPC Standing Committee, and the State Council. See Meng Yan, Admin License Under Scrutiny, China Daily, Aug. 29, 2002, at 2. This draft law is also discussed in Peerenboom, supra note 108, at 248.
175 Chen, supra note 7, at 108.
176 See Susan Finder, The Supreme People’s Court of the People’s Republic of China, 7 J. Chinese L. 145, 145 (1993).
177 Id. at 147.
178 Lubman, supra note 108, at 283. For example, the SPC recently issued an interpretation that should enhance transparency in proceedings under the ALL. See Meng Yan, Evidence Move Aims to Help Individuals, China Daily, July 26, 2002, at 1. The interpretation requires that, in litigation challenging administrative decisions, the administrative body defending the decision must disclose all evidence and documents utilized in making a decision. Id. According to SPC Justice Li Guoguang, this was the first “systematic” judicial interpretation concerning evidentiary rules in administrative litigation cases. Id.
179 See Lubman, supra note 108, at 284–85. The editor of the SPC Gazette, Liang Huixing, publicly commented on the significance of the SPC’s publication of judicial decisions, particularly in the context of China’s civil law system. See id. at 285. Professor Lubman describes Liang Huixing’s remarks:
Chinese law . . . was undergoing the same kind of evolution that the civil law systems of Europe had experienced. As European society became more complex . . . judges began to create “important legal principles . . . despite the fact that the civil law system still did not admit the validity of precedent.” The [SPC], by deciding to publish decisions in the Gazette, “has moved [China’s] legal system from nineteenth-century traditional legal theory into modern legal theory.”
Id. at 285 (quoting Liang Huixing, Minfa de fazhan yu minfa de fangfalun [The Development and Methodology of Civil Law], Lecture at the Fourth Meeting of Correspondents of the Supreme People’s Court Gazette (1995), at 3). The comparison with the European legal system suggests that the SPC is seeking to introduce Western notions of judicial review, albeit in a civil law context. See id.
180 See Shao, supra note 120, at 1.
181 Fu Jing, New Role for Legal System in Trade, China Daily, Aug. 30, 2002, at 1.
182 Provisions of the Supreme People’s Court on Certain Questions Concerning the Hearing and Handling of International Trade Administrative Cases (effective Oct. 1, 2002) (Judicial Interpretation, Supreme People’s Court, P.R.C.) (Fa Shi [2002] No. 27), available at http://www.isinolaw.com (Isinolaw Reference ID: JI–0–15626–0–360) [hereinafter Trade Regulation].
183 Id. The scope of the Trade Regulation encompasses any administrative case concerning international trade, including specifically: (i) trade of goods; (ii) trade in services; and (iii) protection of intellectual property rights. Id.
184 Id. art. 3. Thus the Regulation does not confer authority on the courts to review the rulemaking authority of Chinese administrative authorities. Id. The Trade Regulation also clarifies the aspects of judicial review that a court is authorized to undertake. Id. art. 6. Specifically, the court may consider: the truth and sufficiency of the evidence, the accuracy of the law applied, the legality of the procedure followed, whether the agency acted within its authority, whether there was an abuse of authority, whether the penalties applied were “patently unjust,” and the existence of any refusals or delay in performing the agency’s statutory duties. Id.
185 Trade Regulation, supra note 182, art. 9.
186 Fu Jing, New Role for Legal System in Trade, China Daily, Aug. 30, 2002, at 1.
187 See generally Meng Yan, Evidence Move Aims to Help Individuals, China Daily, July 26, 2002, at 1 (observing that the judicial provisions of the SPC regarding evidence in administrative cases “reflect the requirements of the World Trade Organization”); Dian Tai, Judges Told to Improve Quality, China Daily, July 6–7, 2002, at 2 (describing government efforts to reduce corruption in the judiciary, the “new challenge” of dealing with increasing numbers of foreign litigants in light of China’s entry to the WTO); sources cited in supra note 146 (government quotations on WTO transparency).
188 See Lubman, supra note 108, at 139 (discussing the “supreme authority” of the CCP in China, citing the 1982 Constitution). The Preamble to China’s Constitution refers to the so-called “Four Fundamental Principles,” one of which is upholding the leadership of the CCP. See Chen, supra note 7, at 70 (citing the 1982 Constitution).
189 See Lubman, supra note 108, at 145, 283. Under Chinese law, the sole source of legal rules is legislation. Id. at 145. As a formal matter, the power of the SPC to interpret legislation is limited to “the interpretation of problems of the concrete application of laws or regulations.” Id. (citing the Organic Law of the People’s Courts, art. 83). In practice, the SPC has been expansive in its interpretations of law, at times creating new rules or even contradicting NPC legislation. See id. at 283.
190 See, e.g., Richard Fallon, “The Rule of Law” as a Concept in Constitutional Discourse, 97 Colum. L. Rev. 1, 7–9 (1997) (listing the elements of rule of law in the United States on which there is some scholarly agreement, including the “supremacy of legal authority” over both officials and citizens, and the existence of a fair and impartial court system to enforce the law).
191 Lubman, supra note 108, at 297. The metaphor was first used during the early days of reform, when a senior Chinese economist suggested that the private sector of the economy be kept like a “bird in a cage.” Id.
192 See Zhang Yong, New Court System to Handle Foreign Cases, China Daily, Feb. 5, 2002, (quoting Li Ke, president of the Beijing No. 2 Intermediate People’s Court) (on file with author). According to the China Daily, a special team of judges in Beijing has been designated to handle cases involving international business and trade. Id. The special bench, which was set up to provide a “transparent, just and efficient” forum to resolve international cases, plans on sending judges abroad to gain legal experience. Anecdotal evidence also suggests that courts in Beijing, Shanghai, Shenzhen, and Guangzhou are increasingly willing to rule in favor of foreign parties. See Beijing Eyes Fairer Legal, Tax Systems, Nikkei Weekly, Sept. 9, 2002, available at LEXIS, News Library, Nikkei File.
193 See supra Part II.
194 See, e.g., Pei, Is China Democratizing?, supra note 114, at 68–69 (observing that in 1978, when Deng Xiaoping first took power, the Chinese political system that he inherited “resembled a Hobbesian world,” with a seriously weakened bureaucracy, nonexistent legal system, and complete lack of institutions of political participation). Pei argues that, in addition to economic reform, China’s leadership under Deng has allowed limited institutional changes that could have a dramatic impact in the future on the division of power in China—in particular, strengthening the NPC and making extensive reforms to the legal system. Id. at 75–77.
195 See Full Text of Jiang’s Speech at CPC Anniversary Gathering, Xinhua News Agency, July 1, 2001, available at LEXIS, News Library, Zinhua File (urging China to “resist the impact of Western political models such as the multi-party system or separation of powers among the executive, legislative and judicial branches”). Thus, CCP pronouncements continue to reject Western political models even as the Party pursues economic reform. Id.
196 See Pei, Future Shock, supra note 174, at 4–5.
197 Seeds of Change?, The Economist, June 15, 2002.
198 Id. Normally, an “indirect” election method is utilized, whereby the only candidate elected by the township people’s congress is the one chosen by the Party. Id.
199 Id. The elected candidates were then submitted to the township people’s congress for approval. Id.
200 See infra note 218 (discussing The Fourth Generation and noting that powerful CCP officials who have been said to advocate experimenting with limited political reforms include Li Ruihuan, recently retired chairman of the Chinese People’s Political Consultative Conference; and Zeng Qinghong, recently elected Vice President and head of the CCP Secretariat).
201 See Pei, Is China Democratizing?, supra note 114, at 80. The decline of the Party’s control in rural parts of China dates back to the early years of reform, when Deng Xiaoping dismantled the collective farms. As market reform has progressed, and constraints on movement of people have been lifted, most young, capable CCP members have left the villages for better jobs in the cities. Id.
202 Joseph Kahn, China Toughens Obstacles to Internet Searches, N.Y. Times, Sept. 12, 2002, at A3 (describing how, in September 2002, Chinese Internet users attempting to access Google’s search engine were routed either to the Chinese search engine GlobePage, or to Shanghai Hotline, a webpage run by China Telecom).
203 E.g., Falun Dafa Clearwisdom.net, Exposing the Crimes of Jiang Zemin, at http://www.clearwisdom.net/emh/special_column/expoevil.html (last visited Sept. 22, 2002). Google is of particular interest to Chinese Internet users, as it allows for searches using simplified Chinese characters. But Google, unlike other search engine companies such as Yahoo!, does not have a physical presence in China and therefore has not agreed to government controls limiting users’ access to information. See Kahn, China Toughens Obstacles, supra note 202.
204 Clinton’s Words on China: Trade is the Smart Thing, N.Y. Times, Mar. 9, 2000, at A10.
205 Stop Your Searching, The Economist, Sept. 7, 2002, at 42.
206 See Schedule of Specific Commitments, supra note 34, at 17 (allowing foreign suppliers of telecommunications services, incl