商务谈判（英文版.第五版）案例与分析（英文）

CasesandanalysisInternationalBusinessNegotiationChapterOneNegotiationMotivesandKeyTerminologyI.CaseforclassdiscussionMr.Zhang’sDilemmaMr.Zhangandhiswifeareallteachinginamiddleschool.Theyhaveasonwhohasjustgraduatedfromauniversityandishopingtopursuehispostgraduatestudyinaforeignuniversity.Mr.Zhangisnotrich.Thewholefamilylivesinanoldsmalltwo-roomhouse.Mrs.Zhang,likeallotherwives,islongingtomoveintoanewapartmentoftheirowntoenjoyarealcitylife.Forthispurpose,thecouplehasvisitedafewrealestateagentsandfoundoutthatthepriceforatwo-bedroomapartmentisover300,000yuan.Thefamilynowhasadepositof120,000yuan,whichisonlyenoughforthedownpayment.Ofcourse,thefamilycangetaloanfromthebank,sobeforetheygetretiredtheycanreturnalltheborrowing.However,Mr.Zhangismuchlessinterestedinmovingintoanewapartment.Heiswellcontentwiththeirpresenthousebecauseheisusedtotheconvenienceandgoodneighborhoodenvironment.Moreimportantly,hehashisownplanforhowtospendthe120,000yuan.Asatravelinglover,hehasdreamedofcoveringeverycornerofthecountryevenfromhischildhoodtime.Hisdreamcancometrueifheownsacar,whichhecannowaffordwithevenhalfoftheirdeposit.Hepreparestopersuadehiswifetogiveupbuyinganewapartmentalthoughheisnotconfidentofhimself.Beforehehasfoundachancetotalktohiswife,hissonreturnstellinghimthathehasreceivedanentranceadmissionfromaBritishuniversity,whichoffersawonderfulone-yearcoursesformasterdegree,butthecurriculumfeeandlivingexpendituresarearound200,000yuan.Mr.Zhangisnowinarealdilemma.Heisawarethatafamilymeetingisquitenecessary.Instructionsforthecase:1.CaseanalysisDiscussthequestionsfirst.Thereshouldbenocorrectanswertothequestionsbecauseresourcesarelimitedandhumandemandisunlimited.Thiscaseisusedasanintroductioncasewiththepurposeofcallingstudents’attentiontothescarcityofresources,andthustheconflictandtheapproachesofsettlingtheconflicts,thatisnegotiation.2.EnlightenmentofthecaseTwootherthingscanbelearnedfromthiscase,oneisthatnegotiationsarecommonphenomenon;second,fromthestudents’answertothequestionthatwhoshouldusethemoneyfirst,letstudentsseetheculturaldifferencewiththewesternculture,becausemostofthestudentsagreethatthesonshouldusethemoneyfirst.II.casestudy1.China-USTradeWar—USNegotiationFrameworkOntheMay3rdand4th2018,inthemidstofmountingChina-UStradedisputes,ahigh-leveltradedelegationfromtheUnitedStatesarrivedinBeijingtoholdtalkswithChineseofficialsontradeissues.TheU.S.teamincludesCommerceSecretaryWilburRoss,U.S.TradeRepresentativeRobertLighthizer,TreasurySecretarySteveMnuchin,AssistanttothePresidentforTradeandManufacturingPolicyPeterNavarro,AmbassadoroftheUStoChinaTerryBranstad,andDeputyassistanttothePresidentforInternationalEconomicAffairsEverettEissenstat.TheChinesesideisledbyVicePremierLiuHe,thetopeconomicadvisertothePresident.Thenegotiationsareexpectedtodealwithwaystoresolvethesetradedisputes.OntheMay4th,theWallStreetJournalreleasedthenegotiationframeworkofAmericandelegation.ThedisclaimerassertsthattheU.S.delegationisprovidingthebelowdraftframeworksolelytohelpfacilitatecandidandconstructiveexchangesbetweenthetwosides.Thecurrenttextisnotaproposedinternationalagreementandremainssubjecttoongoingreview.Intheinterestoftimeandoutofrespectfortheseriousnessoftheissuesthatthetwosideswilldiscuss,thisdocumentisbeingprovidedinadvanceofthevisitandwhilethisreviewisongoing.TheU.S.delegationlooksforwardtodiscussingthisdraftandrelatedissueslaterthisweekinBeijing.BALANCINGTHETRADERELATIONSHIPBETWEENTHEUNITEDSTATESOFAMERICAANDTHEPEOPLE’SREPUBLICOFCHINA“ThereisanimmediateneedfortheUnitedStatesandChinatoreducetheU.S.tradedeficitwithChinabyensuringthatChina’smarketisopentoUnitedStatestradersandinvestorsonafairandnon-discriminatorybasis.”SECTION1TRADEDEFICITREDUCTIONChinacommitstoworkwithChineseimporterstoengageintradetransactionstoachievetargetstowhichthePartiesagree.ThesetransactionsarespecificallydesignedtoreducetheUnitedStates-Chinatradedeficitby$100billioninthetwelve(12)monthsbeginningJune1,2018,andanadditional$100billioninthetwelve(12)monthsbeginningJune1,2019,suchthattheU.S.tradedeficitwithChinawillhavedecreasedcomparedto2018byatleast$200billionbytheendof2020.China’spurchaseofU.S.goodswillrepresentatleast75%ofChina’scommitmenttoa$100billionincreaseinpurchasesofU.S.exportsforthetwelvemonthsbeginningJune1,2018,andatleast50%ofChina’scommitmenttoanadditional$100billionincreaseinpurchasesofU.S.exportsinthetwelve(12)monthsbeginningJune1,2019.SECTION2PROTECTIONOFAMERICANTECHNOLOGYANDINTELLECTUALPROPERTY(a)Chinaimmediatelywillceaseprovidingmarket-distortingsubsidiesandothertypesofgovernmentsupportthatcancontributetothecreationormaintenanceofexcesscapacityintheindustriestargetedbytheMadeinChina2025industrialplan;(b)ByJanuary1,2019,Chinawilleliminatespecifiedpoliciesandpracticeswithrespecttotechnologytransfer;(c)Chinawilltakeimmediate,verifiablestepstoensurethecessationofChinesegovernmentconducted,Chinesegovernment-sponsored,andChinesegovernment-toleratedcyberintrusionsintoU.S.commercialnetworksandcyber-enabledthefttargetingintellectualproperty,tradesecretsandconfidentialbusinessinformationheldbyU.S.companies;(d)Chinawillstrengthenspecifiedintellectualpropertyrightsprotectionandenforcement;(e)ByJanuary1,2019,ChinawilleliminatetheprovisionsoftheRegulationsontheAdministrationoftheImportandExportofTechnologiesandtheRegulationsontheImplementationoftheLawonChinese-ForeignEquityJointVenturesidentifiedintheU.S.requestforWTOconsultationsinChina–CertainMeasuresConcerningtheProtectionofIntellectualPropertyRights(DS542);(f)ByJuly1,2018,ChinawillwithdrawitsrequestforWTOconsultationsinUnitedStates–TariffMeasuresonCertainGoodsfromChina(DS543)andwilltakenofurtheractionrelatedtothismatterundertheWTOUnderstandingonRulesandProceduresGoverningtheSettlementofDisputes(“DSU”).Inaddition,Chinawillnottakeanyretaliatoryaction,whetherintheformoftariffsonimportsofU.S.productsorinanyotherform,includingunwarrantedsanitaryandphytosanitary(“SPS”)measures,unwarrantedtechnicalbarrierstotrade(“TBT”)measures,antidumpingandcountervailingduties,anddiscriminatoryinspection,quarantineandtestingpracticesdirectedatimportsofU.S.agriculturalproducts,inresponsetoactionstakenortobetakenbytheUnitedStates,includinganynewU.S.restrictionsoninvestmentsorimports.Chinaimmediatelywillceaseallretaliatoryactionscurrentlybeingpursued.ChinaagreestoimmediatelyceasethetargetingofAmericantechnologyandintellectualpropertythroughcyberoperations,economicespionage,counterfeiting,andpiracy.ChinaalsoagreestoabidebyU.S.exportcontrollaws.SECTION3RESTRICTIONSONINVESTMENTINSENSITIVETECHNOLOGYInlightofChina’sprevailinginvestmentrestrictionsandstate-directedinvestmentinsensitiveU.S.technologysectors,includingindustrialplanssuchasMadeinChina2025,Chinaconfirmsthatitwillnotoppose,challenge,orotherwiseretaliateagainsttheUnitedStates’impositionofrestrictionsoninvestmentsfromChinainsensitiveU.S.technologysectorsorsectorscriticaltoU.S.nationalsecuritySECTION4UNITEDSTATESINVESTMENTINCHINAChinarecognizesthatChinashouldnotdistorttradethroughinvestmentrestrictions,andthatanyinvestmentrestrictionsorconditionsimposedbyChinamustbenarrowandtransparent.U.S.investorsinChinamustbeaffordedfair,effectiveandnon-discriminatorymarketaccessandtreatment,includingremovaloftheapplicationofforeigninvestmentrestrictionsandforeignownership/shareholdingrequirements.Infurtheranceoftheseprinciples,ChinawillissueanimprovednationwidenegativelistforforeigninvestmentbyJuly1,2018.Withinninety(90)daysofthedateonwhichChinaissuesthisnegativelist,theUnitedStateswillidentifyexistinginvestmentrestrictionsthatdenyU.S.investorsfair,effectiveandnon-discriminatorymarketaccessandtreatment.FollowingreceiptoftheU.S.listofidentifiedrestrictions,ChinaistoactexpeditiouslytoremoveallidentifiedinvestmentrestrictionsonatimetabletobedecidedbytheUnitedStatesandChina.SECTION5TARIFFANDNON-TARIFFBARRIERSChina’stariffsandnon-tariffbarriersaresignificantlyhigherthanthoseoftheUnitedStatesformosttradablegoods.ChinacommitstoaddressU.S.concernsrelatingtotariffsandnon-tariffbarriersasfollows:(a)byJuly1,2020,Chinawillreduceitstariffsonallproductsinnon-criticalsectorstolevelsthatarenohigherthanthelevelsoftheUnitedStates’correspondingtariffs;and(b)Chinawillremovespecifiednon-tariffbarriers.ChinaalsorecognizesthattheUnitedStatesmayimposeimportrestrictionsandtariffsonproductsincriticalsectors,includingsectorsidentifiedintheMadeinChina2025industrialplan.SECTION6UNITEDSTATESSERVICESANDSERVICESSUPPLIERSInordertoachievefairtreatmentwithrespecttoU.S.servicesandservicessuppliers,Chinacommitstoimproveaccesstoitsmarketinspecifiedways.SECTION7UNITEDSTATESAGRICULTURALPRODUCTSInordertoachievefairtreatmentwithrespecttoU.S.agriculturalproducts,Chinacommitstoimproveaccesstoitsmarketinspecifiedways.SECTION8IMPLEMENTATIONChinaandtheUnitedStateswillmeetquarterlytoreviewprogressinmeetingagreedtargetsandreforms.IntheeventthattheUnitedStatesconsidersthatChinafailstocomplywithanyofChina’scommitmentsinthisFramework,includingdeficittargets,ChinaacknowledgesthelikelihoodthattheUnitedStateswillimposeadditionaltariffsorotherimportrestrictionsonChineseproducts,oronthesupplyofservicesorinvestment,tosuchextentastheUnitedStatesdeemsappropriate.Chinaalsounderstandsthatitwillnotoppose,challengeortakeanyformofactionagainsttheUnitedStates’impositionofadditionaltariffsorrestrictionspursuanttothisparagraph,includingactionpursuanttotheDSU.ChinawillwithdrawitsWTOcomplaintsregardingdesignationsofChinaasanon-marketeconomybytheUnitedStatesandEuropeanUnion(UnitedStates–MeasuresRelatedtoPriceComparisonMethodologies(DS515),EuropeanUnion–MeasuresRelatedtoPriceComparisonMethodologies(DS516))andwillrefrainfromchallengingthetreatmentofChinaasanon-marketeconomyundertheDSUinthefuture.Additionally,within15daysofreceivingwrittennoticeofaprohibitedproductthatmayhavebeentransshippedthroughoneormorecountries,withorwithoutmodification,Chinawillprovidefulldetailsofeverysuchshipmenttothesuspecteddestinationordestinations.IfChinafailstodoso,ortheinformationrevealsthattransshippingisoccurring,theUnitedStateswillimposetariffsequaltotheamountofsuspectedtrans-shipments.ChinaunderstandsthatifitfailstoupholdanycommitmentunderthisFrameworkforDiscussion,itislikelythattheUnitedStateswillimposetariffsonimportsfromChina,and,whereappropriateinthecaseofChina’scommitmentsundersubsection(c)ofSection2orthelastparagraphinSection2,U.S.CustomsandBorderProtectionwillconfiscatecounterfeitandpiratedgoodsorlevytariffstocompensatetheUnitedStatesforitslosttechnologiesandintellectualproperty.ChinacommitstonottakeanyretaliatoryactioninresponsetotheimpositionoftariffsorconfiscationsbytheUnitedStatespursuanttothisSectionInstructionsforthecasestudy1BackgroundoftheCaseThebackgroundofthecaseistheChina-UStradewar.Theconditionsanddemandsinthe8sectionsoftheframeworkshowsclearlyUShegemonyintheworldaffairs.ThiscasenotonlystipulatestheAmericandemandsfrom,butalsoshowshowthegovernmentrepresentedbyTrumpdealswithothercountries.CaseanalysisAmerican’sinterests,firstly,istoforceChinatomakecommitmentthatChinaincreasetheimportationfromUSsignificantly;secondly,ChinacannotcompelAmericaninvestorstotransfertheirintellectualpropertyrights.Here,studentsshouldknowthatAmericaninvestmentinChinaisoutofthereownwill,notbyforce.Inreality,AmericaninvestorsrarelysellsitsmostupdatetechnologytotheirChinesepartners,butratherthosestandardandobsoletetechnology.ByinvestingthesekindsoftechnologyintoChina,theysustainthelifecycleoftheirtechnology,takeashareinthejointventureandearnprofitopportunityforlongtime.OtherinterestsshownfromthiscaseistheAmerican’sintentiontosetobstacletoChina’stechnologicaladvancementandtheimplementationofChina’s2025plan.III.casestudy2.ChryslerMissedtheBestOpportunityEnteringChinaAutomobileMarketInthemiddleof1980s,AmericanChryslerCorporationcouldhavetappedintoChinaautomobilemarket,onewithlargestpopulationbutlowestcaroccupationrate.ItsmistakeintheintensifiedinternationalcompetitionincarfieldhelpedGermanVolkswagentomarchintothisprofitablemarket.Inthemiddleof1980s,Chinesecarmanufacturingindustrywasstillinitsinfantstage.Internationalcarproducinggiantsdidnotvaluemuchofthisnewmarket.WhattheywereinterestedwassellingcarstoChina,butnotproducingcarsjointlywithChina.ItwasagainstsuchbackgroundwhenthemanagementofChineseautomobileindustrywasconsideringpurchasingadisposedcarassemblylineofDodge600.Whenthenewswasleakedout,ChryslerfeltconfidentthatChinahadnootherchoicesbuttocooperatewithit.SoChryslersuddenlyraisedthepriceoftheoldassemblylineupto$18millionwhennegotiationstarted.Chineserepresentativesmadeacounterofferofonly$1million,pointingoutstraightlythat“itisforourbenefitifwebuyit,butyougainmorebecausethisdisposedlineisworthpennilessifitisnotsold,soitisimpossibleforustobuyanexpensivedisposedline”.ChineserepresentativesindicatedChryslerthattheyalsoshoppedroundandstartedcontactingwithVolkswagen.However,itwasapitythatChryslercarelesslymissedthemessage.WhenChryslerfinallyrealizedthatChinawouldchooseVolkswagenasitsfuturecooperator,itdroppeditsofferofDodge600downtoincrediblylow,1USdollar!Obviously,itwastoolate.ThecooperationproposalsigningceremonybetweenFAWandVolkswagenwouldbeheldafewdayslater.ItwasnodoubtthatVolkswagenwouldhavearichreturnfromitscooperationwithChinaandthecarsjointlyproducedbyChinaandGermanhadasignificantshareattheChinesecarmarket.Instructionsforthecasestudy2BackgroundofthecaseIntheeighty’s,Chinawantedtodevelopitsautomobileindustrybyintroducingforeigntechnologyandinvestment.ThemajorproducersinthewordarefromUS,JapanandEuropeancountries.ThiscaseisaneffortbytheChinesegovernmenttonegotiatewiththefamousAmericanproducer,Chrysler.CaseanalysisChryslermadeawrongestimationaboutthedevelopmentoftheChineseautomobilemarketandthedevelopmentofChineseautomobileindustry.Chrysler’sinterestinsellingjustaprocessinglineisastrategicblunder.ItsopportunitycostismissingthechanceofenteringtheChineseautomobilemarket,themostlucrativeandpotentialone.ChapterTwoNegotiationProcedureandStructureSimulationcaseAnEconomicRecession1.IntroductionAEuropeancompanywithamediumlevelofprofitisinanareawhereaneconomicrecessionisdevelopingwithahighunemploymentrateof10%andlowCPIof-0.5%.Themanagementofthecompanyhasdecidedtomakechangestotideovertherecessionandavoidlosses.Duringnegotiationswiththelaborrepresentatives,themanagementdeclaredtocutthewageofbothwhite-collarandblue-collaremployeesby7%,orlayoffblue-collarworkersby5%andcutwhite-collarworkers’wageby3%.InstructionforthesimulationCaseAnalysis:Atthetimeofeconomicrecession,whendemanddropsandpricesfalls,producerscommonlycutproductionanddismissemployeesinordertolowercost.SoComparingthetwooptions,thefirstoneisbetterchoiceforthelaborrepresentatives,sinceatleastbothwhite-and-bluecollarworkers’jobsarekept.SuggestionforthesimulationTheinterestsoftheemployeesaretokeepthepresentjob,whichisalsothebottomlineoftheemployees,andatthesametimetrytonegotiateasmallercutintheirwages.Whileforthemanagementtotideovertherecessionandavoidlossesarethemostimportant.IICasestudy1ThePrincipleofComplementaryConcessionAlargeinternationallyfamousretaileroffastfoodsapproachedapotentialsupplierofpotatochipswithaninvitationtosubmitaproposalforthesupplyofproduct.Thesupplierwasinterestedinthebusinessbecauseofthefavorableimpactitwouldhaveonitsprofits.Butbeforesittingdowntonegotiate,thebuyerestablishedprecondition.Itinsistedonobtaininganauditedcopyoftheseller’scoststructure.Thesellernowfacedadilemma.Ontheonehand,therewasconsiderablereluctancetoprovidethebuyerwithsuchsensitivecorporateinformation;ontheotherhand,itwaskeentogetthebusiness.Asanopeninggambit,thesellerinsistedthattheinformationwasconfidentialandcouldnotbeprovidedtothebuyer.Butthebuyerinsisted,inturn,thatitwasapreconditionandthatwithoutitthetransactionwasoff.Atthispoint,thesellerrecessedtoconsideritsposition.Althoughtheseller’sinclinationwastomaintainitsstancethattheinformationwasofaproprietarynature,itrealizedthatthiswouldmerelyleadtothebreakingdownofthenegotiation.Analternativeapproachwasconsideredwhichwastotiethepresentationofcoststoaconcession,suchasanexclusivesupplyagreement.Butwhenthepartiesreconvened,itwasclearthatthepreconditionstillstood.Animpassehadbeenreached.Againarecesswassought.Thesellingteamthoughtthroughitspositionanddecidedtomakeuseofthe“principleofcomplimentaryconcession”.Itwentbacktothebuyerandsaid,ineffect,“We’llshowyouourcostsifyoushowusyours.”Surprisingly,thebuyeragreed.Thisimmediatelyrelaxedtheclimateandeffectivetradingbegan.Finally,thelastissuetobenegotiatedwastheprofitmarginthatthebuyerwouldgranttotheseller.Again,variousoptionswerediscussed.Ultimately,itwasdecidedthattheretailer’sprofitmargin(basedonitssellingpricetotheconsumer)wouldbedividedequallybetweenbothparties.Instructionsforthecasestudy1.CaseanalysisStudentsshouldknowwhythesellerasksthebuyertoprovidetheircost.Here,thebuyerisobviouslynotanend-consumer,andthepotatochipsareapartoftheirinputtheirproducts.Thecoststructureofthebuyermayincludesprocessingfeesforthepotatochips,salescost,marketingcost,rentfees,management,andsoon.Whenthecoststructuresofthebothsidesareopen,thesolutiontothefinalagreementisallnatural,“theretailer’sprofitmarginwouldbedividedequallybetweenbothparties”.2.EnlightenmentofthecaseThecostofproducerisproprietaryinformation.Thenegotiationwouldhavefailedifthesellerinsistedonnotgivingtheinformation.Thesellerhereshowsflexibilitybyprovidinganalternativesolutionthatsavesthenegotiation.Thiscaseshowstheprincipleofmutualgivingandtakingfornegotiationbecausetheselleralsoasksthebuyertogivetheirretailingsalescostandthebuyeragrees,whichisapracticeofgivingandtaking.III.Casestudy2Sino-USNegotiationsonIntellectualPropertyRightProtectionAdaptedfromBaiYuan,China-US-JapanTradeRelations,1996.OnFebruary26,1995,Sino-USnegotiationsonintellectualpropertyrightprotection,whichlastedforabout20months,finallyreachedaccord.Sino-USintellectualpropertyrightdisputeisatypicalcaseofeconomicdisputebetweenChinaandUSsince1990s.Thus,thefinalagreementofintellectualpropertyrightnegotiationistheresultofafewimportantcasesworkingjointly.IssuesRelatedtoIntellectualPropertyRightNegotiation1.China’sEffortsinJoiningGATT/WTOChinawasanoriginalcontractingpartytotheGeneralAgreementofTradeandTariff(GATT).In1950,GuomingdanggovernmentrepresentingChinaatGATTwithdrewfromtheorganization.Insubsequentyears,thegovernmentofthePeople’sRepublicofChinaassumedChina’sseatincertainmajorinternationalorganizations,includingtheUnitedNationsandtheInternationalMonetaryFund(IMF).In1982,ChinareceivedobserverstatustoGATTandmadeitsofficialapplicationfortheresumptionofGATTContractingPartystatusonJuly10,1986.Sincethen,aGATTWorkingGroupwasestablishedtoconsiderChina’sstatusasacontractingparty.Bytheendof1994,theGrouphadmeteighteentimestodiscusstheissue,andreachedquiteadvancedstage.OnNovember28,1994,theChineserepresentativessuggestedtotheGeneralSecretarythatnegotiationsonChina’sentryintoGATTbeaccomplishedbytheendof1994.IfChinafailedtobeadmittedintoGATTbythedeadline,Chinawouldnotofferanynewbidonmarketaccessandinitiateanybilateraltalks,andnorwouldChinasuggestanymoreworkingmeetingwiththeChinaWorkingGroup.OnDecember20,1994,China’seightyearefforttojoinGATTbytheendof1994failed.China’ssetbackinjoiningtheGATT/WTOproducedakindofshockingeffectontheChinesepeople,becausetheChinesegovernmenthaddonealottopreparethewholecountryonceChinabecameamemberofGATT/WTO.Whatismoresignificant,forthepurposeofre-entryintoGATTandjoiningWTO,Chinahastakenradicalmeasurestoreformitseconomicandlegalsystems.From1979to1994,“morethanfivehundredlawsandregulationswerepromulgated,withamajoritybeingeconomiclawsandlawsconcerningtheintroductionofforeigncapitalandtechnologyfromforeigncountries”.AttheeighteenmeetingsheldbyChinaWorkingGroup,Chinamadehundredsofsignificantpromisesonforeigntradeplanning,foreignexchangesystem,pricesystem,domestictaxes,tariffandnon-tariff,agriculturalandnon-agriculturalproducts,serviceandtrade,policyconsistencyandtransparency,themajorityofwhichhadbeenaccomplishedaheadofschedule.WhydidChinafailinjoiningGATT/WTOattheendof1994?ThechiefvillainfromtheChineseperspectiveistheUnitedStates,althoughJapanandtheEuropeanUnionhavesupportedWashington’sdemandsforwideraccesstoChina’smarketsforgoodsandservices,greatertransparencyineconomicdecisionmaking,andmoreprotectionforintellectualpropertyrights.ChinahasbeeninsistedonbeingadmittedintoWTOfirstasanoriginalcontractingpartyandsecondasadevelopingcountry.ChinamaintainsthatChina,asapoordevelopingcountryof1.2billionpeople,isentitledtoprotectingitsinfantindustriesandtoclaimingexemptionfromthemoreburdensomeGATTrequirementsregardingforeigntrade.Asadevelopingcountry,theGATTContractingPartystatuswillentitleChinatotheGeneralizedSystemofPreferences(GSP),whichprovidesdevelopingcountrieswithsuperiornon-reciprocaltariffbenefitsforcertainexportextendedbydevelopedcountries.UnderWTOrulesdevelopingcountriesareallowedtomaintainexistingtarifflevelsandotherimport-restrictiverequirementsforaninitialperiodofthreeyears,afterwhichtimeextensionsmustbenegotiated.TheseexemptionsaresignificantinthattheywouldallowChinatoprotectsuchinfantindustriesasmotorvehicles,electronics,chemicalsandaviation.Itmaybeabletotakemeasurestomaintainthebalanceofitsinternationalcurrentaccountandprotectitsinfantindustries.Chinawillalsobeabletoimposerestrictionsontheimportofforeignpublicationsorothermaterialsthatmaythreatenthenationalsecurity.AsanoriginalContractingParty,Chinawillbeentitledtomost-favoured-nation(MFN)treatmentonanon-discriminatorybasis.ThisisofgreatsignificanceparticularlyatpresentsincetheUSfrequentlymakesuseofChina’sMFNstatusasaleverageforadvancingitspoliticalpurposes.ByhavingitsContractingPartystatusconfirmed,Chinawillpotentiallynolongerhavetodealwithsuchannualreviews.However,theUSofficialshavereportedlyquestionedwhetherChinashouldbetreatedasadevelopingcountryatall.WashingtontakesthepositionthatChinashouldbetreatedasadevelopedcountry.TobolsterthisclaimClintonadministrationofficialsciteChina’sgrowingexportsandlargeforeignreserveholdings.AmericathereforedeniedChina’sdevelopingnationstatus,refusedtograntChinathosefavourabletreatmentsdesignedfordevelopingcountriesinGATTregulationsandintheagreementsofagriculturalproductsandtariffsontradingoftechnologiesofUruguayRound,andrejectedChina’srightinenjoyingtheregulationofgrantingdevelopingcountrieslongerperiodoftimeforphasingouttariffsandprotectivetraderestrictionsafterjoiningWTO.AtthismomentthefocusoftheargumentsrestsonwhetherChinaisadevelopingcountry.Chinaisnowtheworld’s10thlargesttradingnation.ItsGDPin1995isrankingthethirdintheWorld,anditsaverageGDPgrowthratefrom1979to1994is9percent.However,highgrowthratedoesnotequaltohighlevelofindustrializationandhighlivingstandard.GivenChina’sextremelypooreconomicfoundationand1.2billionpopulationwhichisincreasingatarateof100millionevery7years,itispracticallyimpossibletogetridofpovertyinamatteroflessthantwodecades.Accordingto1994WorldBankpublication,WorldDevelopmentReport,China’sGNPpercapitaranks105,whichisamongpoorandlowincomecountries.UnitedNation’spublication,WorldCountryReport,distinctlyputChinaamongthoseof