Principle of Transparence in the WTO and China's Obligations
-----Oscar Chen

The principle of transparence is one of the most important principles of the WTO legal system. The aim is to promote predictability, stability, safety and equality among nations in matters involving international trade.

With China's accession to the WTO, the implementation of principles such as Transparence will have a secondary effect that goes beyond matters of international trade. Being required to make use of such a principle can positively promote the development of democracy and the rule of law in China, especially in catalyzing China's legislative reform and promoting uniformity and impartiality in the enforcement of law. China will have to undergo a stage of spontaneous development of the rule of law, until it eventually attains the standard that the WTO requires. This would mean that China's development to world standards would move from mere advancement at the trade, technology and personnel levels toward overall advancement including the legal system.

In order to evaluate economic gains and losses with respect to China's accession to the WTO, the State authorities carried out an analysis on the economic effects of China's entry into WTO, based on the economic model. Their basic conclusion is that China's accession to the WTO could accommodate China's industrial development in the long run, which would help to exert China's comparative advantage. From a legal standpoint, we believe that China's entry into WTO is in line with the global trend toward democracy and the rule of law, and their respective development in China could be carried out more orderly and smoothly. Although there are many WTO rules that will cause changes in China, for this essay I'd like to discuss the transparence principle and its possible direct effects on China's legal reform.

Ⅰ. WTO Rules Concerning Transparence

In WTO legal texts, there are some provisions that directly or indirectly reflects the principle of transparence. In summary, Article 10 of GATT, Article 3 of TRIMS and Article 63 of TRIPS have formulated the provisions in relation to the principle of transparence. The title of Article 10 of GATT is " Publication and Administration of Trade Regulations", four of its main points are as follows:

1. Laws, regulations, judicial decisions and administrative rulings related to trade shall be published promptly and in such a manner as to enable governments and entities to become acquainted with them.

2. No measure of general application taken by any contracting party related to trade shall be implemented and enforced before such measure has been officially published.

3. Each contracting party shall implement all its laws, regulations, decisions and rulings in a uniform, impartial and reasonable manner.

4. Each contracting party shall maintain, or institute as soon as practicable, judicial, arbitral or administrative tribunals or procedures for the purpose, of the prompt review and correction of administrative action.

Ⅱ. China's Promise to the WTO Regarding the Transparence Principle

During the process of negotiation for China's entry into WTO, some members of the Working Party expressed concern about the lack of transparency regarding the laws, regulations and other measures that applied to matters covered in the WTO Agreement. In particular, some members noted the difficulty in finding and obtaining copies of regulations and other measures undertaken by various ministries as well as those taken by provincial and other local authorities. Transparency of regulations and other measures, particularly of sub-national authorities, was essential since these authorities often provided the details on how the more general laws, regulations and other measures of the central government would be implemented and often differed among various jurisdictions.

Those members noted the development of the Internet and other means to ensure that information from all government bodies at all levels could be assembled in one place and made readily available. The creation and maintenance of a single, authoritative journal and enquiry point would greatly facilitate dissemination of information and help promote compliance.

The same members of the Working Party also stated that China should ensure that the import purchasing practices and procedures of state trading enterprises were fully transparent, and in compliance with the requirements of the WTO Agreement. They considered that China should also refrain from taking any measures to influence or direct state trading enterprises as to the quantity, value, or country of origin of goods purchased or sold, except in accordance with the requirements of the WTO Agreement.

China's representative at these negotiations pointed out that China has already established several publications to periodically publish laws and regulations. Those publications are "Announcement of NPC Standing Committee", "Announcement of State Counsel", "Announcement of Chinese Ministry of Foreign Trade & Economic Cooperation" etc. China also promised to obey the transparence principle in the following areas:

1. China undertakes that only those laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange that are published and readily available to other WTO Members, individuals and enterprises, shall be enforced. In addition, China shall make available to WTO Members, upon request, all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange before such measures are implemented or enforced. In emergency situations, laws, regulations and other measures shall be made available at the latest when they are implemented or enforced.

2. China shall establish or designate an official journal dedicated to the publication of all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange and, after publication of its laws, regulations or other measures in such journal, shall provide a reasonable period for comment to the appropriate authorities before such measures are implemented, except for those laws, regulations and other measures involving national security, specific measures setting foreign exchange rates or monetary policy and other measures the publication of which would impede law enforcement.

3. China's representative confirmed that publication of all laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange would include the effective date of those measures. It would also include the products and services affected by a particular measure, identified by appropriate tariff line and CPC classification. The representative of China also confirmed that China would publish in the official journal, by appropriate classification and by service where applicable, a list of all organizations, including those organizations delegated such authority from the national authorities, that were responsible for authorizing, approving or regulating service activities whether through grant of license or other approval. Procedures and the conditions for obtaining such licenses or approval would also be published.

4. The representative of China further confirmed that China would establish or designate one or more enquiry points where all information relating to the laws, regulations and other measures pertaining to or affecting trade in goods, services, TRIPS or the control of foreign exchange, as well as the published texts, could be obtained and would notify the WTO of any enquiry point and its responsibility. The information would include the names of national or sub-national authorities (including contact points) responsible for implementing a particular measure.

5. China shall apply and administer in a uniform and reasonable manner all its laws, regulations and other measures of the central government as well as local regulations, rules and other measures issued or applied at the sub-national level pertaining to or affecting trade in goods, services, trade-related aspects of intellectual property rights ("TRIPS") or the control of foreign exchange.

6. China's local regulations, rules and other measures of local governments at the sub-national level shall conform to the obligations undertaken in the WTO Agreement and this Protocol.

7. China shall establish a mechanism under which individuals and enterprises can bring to the attention of the national authorities cases of non-uniform application of the trade regime.

8. China shall establish, or designate, and maintain tribunals, contact points and procedures for the prompt review of all administrative actions relating to the implementation of laws, regulations, judicial decisions and administrative rulings of general application referred to in Article X of the GATTS 1994, Article VI of the GATTS and the relevant provisions of the TRIPS Agreement. Such tribunals shall be impartial and independent of the agency entrusted with administrative enforcement and shall not have any substantial interest in the outcome of the matter.

9. The representative of China indicated that China's state trading enterprises had full management autonomy and responsibility for their own profits and losses and that China had undertaken broad and significant commitments to improve the transparency of state trading enterprises' operation and the measures relating to such operation.

Ⅲ. Impact of the Principle of Transparency on the Chinese Legislative and Judicial Systems

China's accession to WTO has brought a historical opportunity of deepening Chinese economic reform and development, as well as legislative and judicial reform. The implementation of the transparency principle will facilitate the reform of China's legislative and judicial systems, promote China's international status and image, and create an investment-friendly environment to attract foreign capital. Further, along with the global implementation of the principle of transparency, it would also enable China to have a better understanding of international markets and the legal systems of various other countries. This can aid domestic enterprises in implementing the strategy of "going abroad" to explore international markets. Most of all, the principle of transparency will facilitate the legislative and judicial reform of China, improve the administration of government, and facilitate the conversion of Chinese society into a society ruled by law.

1) Certain impacts of the principle of transparency on Chinese legislation. The principle of transparency requests of participating country members that all domestic regulations, rules or measures relating to trade in goods and services, trade-related aspects of intellectual property rights or restrictions on foreign exchange shall be published and be easily accessible by other WTO members or individual enterprises before going into effect.

According to Article 13 of the Convention on the Establishment of World Trade Organization, every member country's domestic laws and regulations and administrative procedures shall be consistent with the WTO rules. Therefore, before implementing the detailed requirements of the principle of transparency, every member country normally needs to compile, modify or abolish its current domestic laws and regulations, and formulate new laws and regulations in accordance with the requirements of the WTO. Per the provisions of Article 67 of the Report of Working Party on the Accession of China, " The WTO Agreement would be implemented by China in an effective and uniform manner through revising its existing domestic laws and enacting new ones fully in compliance with the WTO Agreement." According to the information published by PRC governmental departments, the central government and local governments have carried this out, compiling, formulating and promulgating laws and regulations, and abolishing or modifying many laws and regulations that were not consistent with the WTO rules and published accordingly. To a certain extent, this reflects the impact of the principle of transparency and other WTO rules on the Chinese legislation.

2) The principle of transparency will have a positive impact on the reform of Chinese judicial system. The principle of transparency requests that the undertaking of the governments of members that all regulations, rules or measures concerning major basic obligations shall be implemented upon publication. It further requires that members' governments guarantee individual enterprises that are affected by administrative conduct an opportunity of judicial review on the precondition of non-punishment. In addition, in order to ensure the implementation of the principle of transparency, according to the WTO Trade Policy Review Mechanism, the domestic trade policies of member countries shall be subject to periodical review by the WTO Trade Policy Review Body. It is due to this significance that WTO rules have been called by overseas scholars as the international administrative code. Under the transparency requirement, the Chinese judicial reform will start from those department laws and governmental departments that reformed firstly in compliance with WTO rules. Through amending and implementing these department laws, judicial reform will expand to other department laws and governmental departments in step by step fashion, thus advancing the dissemination of the principle of the "rule of law" throughout Chinese society.

On August 27, 2002, pursuant to the WTO rules, the Supreme People's Court of PRC formulated and promulgated the Regulations on Various Issues Arising From the Hearing of International Trade Administrative Cases, thus formally establishing the judicial review mechanism that complies with the principle of transparency. This ruling confirmed people's courts' judicial review of administrative cases related to trade in goods, services and intellectual property, and perhaps more importantly, represented one of the many changes that the PRC judicial system is now undertaking.

3) To a certain extent, the implementation of the principle of transparency will facilitate the conversion of the functions of the Chinese government from a large and all-powerful government to a smaller government with more limited power. The requirement of the principle of transparency for publicity and fair implementation of law and judicial review will advance the reform of the administrative system of the government. This will include the administrative method, administrative examination and approval, and the publicity of civil procedures. This will improve the transparency of the government functions, decrease local protectionism, promote the authority of the central government, reduce the high cost of governmental services, and provide a foreseeable and stable governmental policy platform for the development of social economy. It will also decrease the uncertainty of the governmental administration and decision-making, lessen the impact on social and economic activities, and ultimately decrease the operational costs of economic entities and the cost of transactions.

Through legislative and judicial reforms, simplifying the administrative examination and approval procedures, reducing governmental intervention, and converting more governmental functions into social intermediary ones, the government will convert from an all-powerful government that controls all social activities and resources into an administrator of public affairs and supplier of public facilities, and become a slightly more limited government.