Transcript INTRODUCTION

The Legal Aspects of CentralLocal Relations in China’s WTO
Accession and Afterward
Dr. James V. Feinerman
Associate Dean
Georgetown University Law Center
E-mail: [email protected]
INTRODUCTION
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International Commitments at WTO
Level
Made by Central Government on
National Basis
Implementation and Compliance at
Local Level
History of Central-Local
Relations
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Lack of Stable Rules to Define Relations
1950s Abolition of Six Administrative
Regions
1970s Transfer of 2400 SOEs to Local
Control
Post-1978 Grants of Local Power: FDI,
Trade, Tax, Personnel, Infrastructure
1994 Central-Local Tax Agreement
China’s WTO Commitments
(1 0f 2)
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Para. 69 Working Party Report:
Administrative regulations,
departmental rules and
other…measures to be promulgated
in timely manner.
***
Central government will in timely
manner revise or annul regulations
and rules inconsistent with China’s
obligations
China’s WTO Commitments
(2 of 2)
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Para. 73 of Working Party Report:
Confirmed that the provisions of the
WTO Agreement would be applied uniformly
throughout its customs territory, including
the SEZs and other areas with special
regimes for tariffs, taxes and regulations
were established and at all levels of
government.
PROCEDURAL ISSUES (1 of 4)
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Standardization of Legislative
Procedures
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Two sets of State Council regulations
for new administrative rules:
Pre-promulgation publication with
notice and comment period
Effective date of newly promulgated
laws must allow 30-day period before
enforcement
PROCEDURAL ISSUES (2 of 4)
Judicial Consistency
Xinhua Internal Report:
 Uniform Enforcement a “grave challenge”
 Judicial fragmentation
 Localization of adjudication
 “rule of Man”
 Local protectionism
 Local governments control appointments of
judges and allocation of budgets for local
courts
PROCEDURAL ISSUES (3 of 4)
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MOFTEC (now MOC) and Other
Departments
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Leading Group to Coordinate WTO issues
SETC Bureau for Investigating Injuries to Domestic
Enterprises (anti-dumping, countervailing duty and
safeguards measures)
SAIC Special Bureau, under Enterprise Registration
Bureau, to facilitate registration of foreign-invested
enterprises
PROCEDURAL ISSUES (4 of 4)
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Provincial Compliance Problems
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In late 2001, Hunan Province identified 1,800
government policies and rules at both provincial
and county levels that had to be scrapped
Edicts Delivered to Lower-level Governments
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Mayor of Changsha: “We have been issued with
the clean-up regulation”
Mayor of Shanghai: “Revised more than 60 local
laws and regulations incompatible with WTO
rules”
People’s Bank of China: “Abolish a number of
financial rules and regulations issued between
1999 and 2001”!
CONSTITUTIONAL LAW
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“Federalism” with Chinese
Characteristics
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Central Governments Powers
Provincial and Local Government Powers
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Central-Local Relations
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Due Process
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Procedural Due Process – Judicial Review
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Substantive Due Process - Fairness
New Institutions
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Courts
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Newly established courts at Intermediate
Level to Handle WTO-Related Matters
Beijing No. 2 People’s Intermediate Court “to
stick to principles of market accession,
transparency and national treatment”
Governmental Entities
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Beijing Municipal Complaint Center for FIEs
Shanghai Municipal Economic and Trade
Commission
State Council drafted list of 20 “Don’ts” for
local governments
Legislation of New Rules
China’s Own Reasons for Reform
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Regional protectionism has been
growing rapidly, even as import barriers
are falling
Breaking down local protectionism and
setting up a unified, fair and orderly
national market are urgent and
important tasks facing the government
Harms of Local Protectionism
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Local protectionism is apt to trigger retaliatory
actions from counterparts; China’s auto market is
one of the best examples.
Besides trade wars, local protectionism will definitely
hurt the future development of local enterprises. In a
market economy, the survival of an enterprise
depends on its competitive edge.
Without being able to benefit from economies of
scale or standardization, production costs are higher
than normal.
The result is that China is not really one market but
rather a collection of markets, each with its own
unique trade and investment barriers.
Necessary Next Steps
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1. Anti-trust laws, laws against unfair
competition and new bank law needed; in
addition to legislation, the judicial system
should be improved.
2. Strengthen law enforcement to cut down
on local protectionism; improve the regional
tax collection system (division of State and
local tax collection often results in local
governments protecting local enterprises).
3. Restructure monopolistic industries such as
power, the railways, civil aviation, telecom
and public services to form a unified, open
and transparent market
Why It Won’t Be Easy
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Local authorities are obsessed with economic
growth
Local GDP growth rates continue to be the
leading criteria for evaluating cadre
performance
Local authorities are accustomed to make
made full use of their administrative rights to
assist and protect local enterprises
“Heaven is high, and the Emperor is far
away”