14. Explosion of Trade Disputes?

For the last half century, international trade has been an important contributor to the growth of the world economy. Similarly, over the past twenty years, after China’s decision to pursue a market opening policy, the growth of the Chinese economy has been led by the rapid growth of its exports and imports. However this growth in international trade has been accompanied by an increase in the number of trade conflicts both bilaterally and multilaterally. Trade disputes between China and its major trade partners have been escalating too. Since the establishment of the World Trade Organization (WTO) in 1995, trade disputes between its country members have escalated sharply. An increasing number of developing countries have become involved in trade disputes, while more conflicts have arisen between the developed countries. In addition more of these disputes have been related to non-tariff barriers and as such, have been more difficult to settle under the WTO than under its predecessor, the GATT. These developments have caused public concern about the consequences of the WTO and this has led to calls for more serious research attention. At this critical time China is at the doorstep of WTO membership after completing its successful accession negotiations with its major trade partners. China is expected to become a member of the trade club in 2001. The swelling conflicts within WTO member countries raise a new dimension of concern for China and for the multinationals that have business interests in China on whether China will be overwhelmed by trade disputes right after its accession. This paper is intended to address this issue. It first examines the dispute settlement procedure and the pattern and causes of trade disputes between WTO member countries for the period 1995-2000. It then analyzes the complementary nature of China’s export and import structures and China’s trade disputes with the US, its major trade partner over the past few years, to illuminate the major issues confronting China in its international trade relations and the likelihood that it will be involved in trade disputes