These negotiations resulted in China’s  commitments to open and liberalize its economy and offer a more  predictable environment for trade and foreign investment in accordance  with WTO rules. The United States and other WTO members have stated  that China’s membership in the WTO provides increased opportunities for  foreign companies seeking access to China’s market. Scope and Complexity of China’s WTO Commitments Present Challenges for Ensuring Compliance

China’s accession agreement is the most comprehensive of any WTO  member’s to date, and, as such, verifying China’s WTO compliance is a  challenging undertaking for two main reasons. The first reason is the  scope of the agreement: The more than 800-page document spans eight  broad areas and sets forth hundreds of individual commitments on how  China’s trade regime will adhere to the organization’s agreements,  principles, and rules and allow greater market access for foreign goods  and services. The second reason is the complexity of the agreement:  Interrelated parts of the agreement will be phased in at different times,  and some commitments are so general in nature that it will not be  immediately clear whether China has fully complied with its obligations in  some cases. 1.) Sustained Effort from Key Players Required to Ensure China’s Compliance, but First- year Experience Demonstrates Challenges

Because China is such an important trading partner, ensuring China’s  compliance with it s commitments is essential and requires a sustained  effort on the part of the executive branch, Congress, the private sector,  and the WTO and its other members. 2.) However, the U.S.’s first-year experience  showed that it takes time to organize these structures to effectively carry  out their functions and that progress on the issues can be slow. In addition  to the executive branch’s efforts, Congress has enacted legislation,  provided resources, and established new entities to increase oversight of  China’s compliance. The private sector also has undertaken a wide range  of efforts that provide on-the-ground information on the status of China’s  compliance efforts and input to the executive branch and to Congress on  priorities for compliance efforts. Finally, the WTO has existing  mechanisms as well as a new, China-specific mechanism created as a  means for WTO members to annually review China’s implementation of its  commitments. Private Sector Plays Key Role in Monitoring China’s Compliance

U.S. businesses operating in China provide valuable assistance in  monitoring the status of China’s implementation of its WTO commitments,  and, as such, effective coordination between the U.S. government and the  private sector is essential.
Why GAO Did This Study

China's accession to the World Trade Organization (WTO) in December 2001 created substantial opportunities for U.S. companies seeking to expand into China's market. In joining the WTO, China agreed to liberalize its trade regime and open its markets to foreign goods and services. However, the U.S. government has become concerned about ensuring that China honors its commitments to offer a more predictable environment for trade. GAO was asked to describe (1) the monitoring of compliance challenges associated with the scope and complexity of China's WTO commitments and (2) the efforts to date of the key players involved in ensuring China's compliance: the executive branch, Congress, the private sector, the WTO and its other members. GAO's observations are based on its prior analysis of China's WTO commitments, its previous survey of and interviews with private sector representatives, and its examination of first-year efforts to ensure China's WTO compliance.

What GAO Found

The scope and complexity of China's WTO commitments present two main challenges to verifying China's compliance with its WTO accession agreement. First, the agreement is very broad: It encompasses more than 800 pages, spans eight broad areas, and sets forth hundreds of individual commitments on how China's trade regime will adhere to the WTO's agreements, principles, and rules and allow greater market access. Second, the agreement is complicated: Interrelated parts will be phased in at different times, and some commitments are so general in nature that it may not be immediately clear whether China has fully complied with its obligations. Each of the key players involved in ensuring China's compliance--the executive branch, Congress, the private sector, and the WTO and its members--has made efforts to ensure China's compliance. However, the first-year experience in this regard has demonstrated that these efforts will need to be sustained over a long period. The executive branch has applied additional resources and new intra-agency teams to these efforts, but it takes time to organize these activities. Congress has enacted legislation and established new entities to increase oversight of China's compliance. The private sector also has provided information to the executive branch and to Congress on the status of China's compliance efforts. And, within the WTO, a China-specific mechanism was established as a means for WTO members to annually review China's implementation of its commitments. Nonetheless, GAO's analysis indicates that a sustained approach is needed to ensure China's compliance.