ABSTRACT

WLRQHPSKDVL]LQJFKDQJHVPDGHLQWKHOHDGXSWRDQGÀQDODJUHHPHQWIRU&KLQD·V :72HQWU\LQODWH7KHLQVWLWXWLRQDODQGSROLWLFDOIRXQGDWLRQVIRUWKHWUDQVIRUPDWLRQRI WKHVWDWH·V WUDGHSROLF\² LQHVVHQFHWKHGRPHVWLFSROLWLFVRI WUDGH OLEHUDOL]DWLRQ²DUHGLVFXVVHGLQWKHVHFRQGVHFWLRQ7KHWKLUGVHFWLRQOD\VRXWWKH LQWHUQDWLRQDO SUHVVXUHV IRU OLEHUDOL]DWLRQ DQG H[SORUHV KRZ WKHVH LQWHUDFWZLWK LQWHUQDOFDXVHV)LQDOO\WKHODVWVHFWLRQRIWKHFKDSWHUVSHFXODWHVRQWKHHYROXWLRQ RI&KLQD·VSRVW:72WUDGHSDWWHUQDVLWFRQFHUQVWKUHHVLJQLÀFDQWLVVXHVUDLVHGE\ WKHHGLWRUVRIWKLVYROXPHFRQVWLWXHQWVFRPSHQVDWLRQDQGFRPPLWPHQW

%HIRUHPRYLQJRQVHYHUDOREVHUYDWLRQVFDQEHRIIHUHGWKDWKHOSIUDPH&KLQD·V trade OLEHUDOL]DWLRQVWDWLVWLFDOO\KLVWRULFDOO\DQGFRPSDUDWLYHO\1XPHURXVDJJUHJDWH VWDWLVWLFV WHOO RI WKH EUHDWKWDNLQJ FKDQJH LQ&KLQD·V WUDGH V\VWHP IURP DQ DOPRVWWRWDOO\FORVHGHFRQRP\LQWKHPLGVWRDWWKHHQGRIWKHWKLUG ODUJHVW WUDGLQJ QDWLRQ LQ WKHZRUOG EHKLQG WKH8QLWHG 6WDWHV DQG*HUPDQ\ - =KDQJ,QGROODUWHUPV&KLQD·VWRWDOWUDGHURVHIURPDSSUR[LPDWHO\86 ELOOLRQDWWKHLQLWLDWLRQRIWKH´RSHQµSROLF\LQWR86WULOOLRQLQ YDVWO\RXWVWULSSLQJ WKH UDWHRIJURZWK LQZRUOG WUDGH -=KDQJ'XULQJ WKHV&KLQD·VVKDUHRIWKHZRUOGH[SRUWPDUNHWJUHZE\URXJKO\SHUFHQW SHU\HDUFRQWUDVWLQJZLWK-DSDQ·VGHFOLQHRISHUFHQWSHU\HDU/DUG\ :KHUHDVSULRUWRRIÀFLDO35&HVWLPDWHVVHW&KLQD·VWUDGHYROXPHDVD SHUFHQWDJHRI*'3DWQRWPRUHWKDQSHUFHQWE\H[SRUWVDORQHJRRGVDQG VHUYLFHVKDGUHDFKHGSHUFHQWRI*'3

/RRNLQJEH\RQGDJJUHJDWHÀJXUHVLWLVLQVWUXFWLYHWRGUDZVRPHEURDGFRPSDULVRQV WR -DSDQ·V PRUH OLPLWHG WUDGH OLEHUDOL]DWLRQ SULRU WR :KHUHDV &KLQD IDLOHG WRSDUWLFLSDWH LQ WKH UDSLGJURZWKRIZRUOG WUDGHDIWHU:RUOG:DU II-DSDQHQWHUHGWKH*HQHUDO$JUHHPHQWRQ7DULIIVDQG7UDGH*$77LQ -DSDQ·VDFFHVVLRQRFFXUUHGLQDVXEVWDQWLDOO\GLIIHUHQWGRPHVWLFDQGLQWHUQDWLRQDO HQYLURQPHQWWKDQ&KLQDIDFHGLQWKHV-DSDQ·V*$77LQWHJUDWLRQRFFXUUHGDW DWLPHRIJOREDOSRVWZDULQVHFXULW\DERXWWKHGDPDJLQJQDWLRQDOLPSDFWRIOLEHUDO WUDGH5HÁHFWLQJWKLVFRQWH[W*$77ZDVDUHODWLYHO\ZHDNLQVWLWXWLRQDQGSODFHG PXFKOHVVVWULQJHQWUHVWULFWLRQVRQ-DSDQ$VDUHVXOWDQGSURWHFWHGE\LWVVWURQJ SROLWLFDODQGVHFXULW\WLHVWRWKH8QLWHG6WDWHV-DSDQZDVDEOHWRPDLQWDLQKLJK WDULII DQGQRQWDULII EDUULHUV ,GHRORJLFDO DFFHSWDQFHRI D IUHH WUDGHSKLORVRSK\ ZDVVORZWRHPHUJHLQ-DSDQPRUHRYHUGHVSLWHWKHIDFWWKDWWKHVSURYLGHG DKLJKO\IDYRUDEOHLQWHUQDWLRQDOHQYLURQPHQWIRUWKHH[SDQVLRQRI-DSDQHVHWUDGH JURZWK.RPL\DDQG,WRK

,QFRQWUDVW&KLQDXQGHUWRRNJOREDOHFRQRPLFLQWHJUDWLRQDWDWLPHZKHQWKH PRGHORIIUHHWUDGHZDVDUJXDEO\PRUHGRPLQDQWWKDQLWKDGHYHUEHHQ0RUHRYHU WKH:72E\LWVYHU\QDWXUHUHTXLUHVRI&KLQDVLJQLÀFDQWO\GHHSHUFXWVWKDQKDG EHHQUHTXLUHGRI-DSDQDQGDGGUHVVHVP\ULDGIRUPVRIWUDGHSURWHFWLRQLVP7KH $VLDQÀQDQFLDOFULVLVRIPRUHIXOO\FDWDSXOWHG&KLQDLQWRWKHJOREDOHFRQRP\ DQGVWUHQJWKHQHGLQWHJUDWLRQLVWLGHRORJ\DPRQJ&KLQD·VUHIRUPHUVLQFRQWUDVWWR RWKHU$VLDQQDWLRQVVXFKDV0DOD\VLD

,QWKHFRPSRVLWLRQRIWUDGH&KLQDKDVKDGVXEVWDQWLDOVXFFHVVLQPRYLQJXSWKH YDOXHFKDLQIURPEHLQJDODERULQWHQVLYHSURFHVVRURIORZYDOXHDGGHGSURGXFWV VWDUWLQJ LQ WKHPLGV WR EHLQJ LQFUHDVLQJO\ D SURGXFHU RIPDQXIDFWXUHG

JRRGVVXFKDVWHOHYLVLRQVDQGIXUWKHUWREHFRPHDPHPEHURIHOHFWURQLFVSURGXFWLRQQHWZRUNV VXFKDVQRWHERRNFRPSXWHUV ,QVKRUW&KLQDEHJDQH[SRUWLQJ DFFRUGLQJ WR LWV FRPSDUDWLYH DGYDQWDJH DQG DV LWV FRPSDUDWLYH DGYDQWDJH KDVEHJXQ WRPLJUDWH WRKLJKHUYDOXHDGGHGJRRGV WUDGHÁRZVKDYH IROORZHG 7KLVKDVRFFXUUHGLQ&KLQDWKLUW\\HDUVDIWHU-DSDQHQJDJHGLQWKHVDPHSURFHVV .RPL\DDQG,WRK²

7LPLQJDQGFRQWH[WKDYHEHHQLPSRUWDQWIDFWRUVLQ&KLQD·V´ODWHWUDGHOLEHUDOL]DWLRQµ&KLQD·VVXFFHVVKDVEHHQJUHDWO\LQÁXHQFHGE\DIDYRUDEOHSRVLWLRQLQWKH LQWHUQDWLRQDOHFRQRP\WKHUHZDVVWURQJGHPDQGHVSHFLDOO\LQWKH8QLWHG6WDWHV IRUORZFRVWODERULQWHQVLYHJRRGVQRWDEO\WH[WLOHVDQGDSSDUHOWKDWKDYHEHHQ WKHFRUHRI&KLQD·VFRPSDUDWLYHDGYDQWDJH&KLQDKDVEHHQSRVLWLRQHGWRGLVSODFH SURGXFWLRQ RI H[SRUWV IURPRWKHU GHYHORSLQJ QDWLRQV SDUWLFXODUO\ LQ6RXWKHDVW $VLD0RUHRYHU WUDGH KDV EHQHÀWHG IURP WKH SURGXFWLYLW\ WKDW ZDV XQOHDVKHG WKURXJK WKH UDGLFDO UHRUJDQL]DWLRQRIGRPHVWLFSURGXFWLRQ²HVSHFLDOO\ UHIRUPV WKDWUHOHDVHGODERUIURPWKHODQG²WKDWZDVDWWKHKHDUWRI&KLQD·VGRPHVWLFHFRQRPLFUHIRUPV

7KHUHKDYHEHHQFOHDUGLVDGYDQWDJHVWRODWHOLEHUDOL]DWLRQLQWUDGHKRZHYHU &KLQDZDVKHPPHGLQWRDOLEHUDOVWUDWHJ\LILWZDVWRXVHWUDGHDVDVLJQLÀFDQWWRRO IRUJURZWKWKHUHZDVQRDOWHUQDWLYHWRDFFHSWLQJWKHHUD·VHVWDEOLVKHGLQWHUQDWLRQDO WUDGHUXOHV7KLVGLVDGYDQWDJHSOD\HGRXWFRQFUHWHO\LQ&KLQD·V:72DJUHHPHQW LQZKLFKLWIRUPDOO\FRQFHGHGPDQ\SRWHQWLDO´ &KLQHVHFKDUDFWHULVWLFVµWRLWVWUDGH V\VWHP0RUHRYHUWKHIDFWWKDW&KLQDZDVQRWDIRXQGLQJPHPEHURIWKH:72 PHDQWWKDWWKHEDUIRU&KLQD·VHQWU\ZDVJUHDWO\UDLVHGDQGUHTXLUHPHQWVIRULWV DGPLVVLRQZHUHPXFKPRUHVWULQJHQWWKDQIRUDQ\FRXQWU\EHIRUH,QWHUHVWLQJO\ WKHQHJDWLYHH[DPSOHWKDWPRVWSUHVVHG86WUDGHQHJRWLDWRUVWRH[WUDFWVWULQJHQW FRQGLWLRQVIURP&KLQDZDV-DSDQ

7KLVEURDGFKDUDFWHUL]DWLRQRI&KLQD·VWUDGHOLEHUDOL]DWLRQDVUDSLGDQGGHHS PXVW EH WHPSHUHG LQ WZR VHQVHV)LUVW DOWKRXJK LQ FRPSDUDWLYH WHUPV&KLQD·V WUDGH OLEHUDOL]DWLRQ ZDV TXLFN DQG WRSGRZQ WKLV VKRXOG QRW VXJJHVW WKDW WKH &KLQHVHVWDWHFDUULHGRXWD´ELJEDQJµWUDGHOLEHUDOL]DWLRQRUWKDWLWEHJDQZLWKD PDVWHUSODQ,QDPDQQHUTXLWHFRQVLVWHQWZLWK&KLQD·VRYHUDOOHFRQRPLFUHIRUP WUDGHOLEHUDOL]DWLRQZDVFDUULHGRXWLQSLHFHPHDOLQFUHPHQWDOIDVKLRQ1DXJKWRQ 7KHWUDGLWLRQDOPRGHRULJLQDWLQJZLWK0DRRIH[SHULPHQWLQJZLWKDQLGHD RU SROLF\ LQ D JHRJUDSKLFDOO\ RU VHFWRUDOO\ OLPLWHG DUHDZDV IROORZHG LQ WUDGH 2EVHUYHUVZLWQHVVLQJWKHSURFHVVRIWUDGHUHIRUPDWÀUVWKDQGZHUHRIWHQNHHQO\ DZDUHRILWVLQFUHPHQWDOLVP,WLVRQO\LQKLQGVLJKWWKDWWKHUDSLGLW\RIVFRSHKDV EHFRPHPRUHDSSDUHQW

6HFRQGWKHUHPXVWEHUHFRJQLWLRQRIWKHOLPLWVWROLEHUDOL]DWLRQDV&KLQDEHJDQ LWV PHPEHUVKLS LQ :72 VXEVWDQWLDO WUDGH EDUULHUV DQG GLVWULEXWLYH SUREOHPV UHPDLQHG &RQFHUQ WKDW LPSOHPHQWDWLRQ RI &KLQD·V:72 FRPPLWPHQWVZRXOG SURFHHGPRUHVORZO\WKDQFDOOHGIRULQWKHDJUHHGXSRQWLPHWDEOHVLVGLVFXVVHG EHORZ ,W LVDOVR LPSRUWDQW WRXQGHUVWDQG WKDW WKH LPSDFWRI WUDGH OLEHUDOL]DWLRQ WKXV IDUKDVEHHQ VNHZHG WRZDUGFHUWDLQ VHFWRUV DQG UHJLRQV/LEHUDOL]DWLRQRI WUDGHSROLF\KDVEHHQPRVWSURQRXQFHG LQ WKHH[SRUWVHFWRU DVRSSRVHG WR WKH LPSRUWVHFWRU0RUHRYHUIRUHLJQLQYHVWHGHQWHUSULVHV),(VDQGH[SRUWSURFHVV-

LQJÀUPVKDYHFRQGXFWHGWKHEXONRIWUDGH,QGHHGE\H[SRUWVIURP&KLQD·V ),(VDFFRXQWHGIRUDERXWKDOIRIWRWDOH[SRUWVZKHUHDVWKHVHÀUPVSURGXFHGRQO\ RQHHLJKWKRIDOOPDQXIDFWXULQJRXWSXW/DUG\²'RPHVWLFÀUPVWKDW SURGXFHH[SRUWVRIWHQUHO\RQGXW\IUHHLPSRUWHGPDWHULDOVOLPLWLQJWKHGHPDQG IRULQSXWVIURPGRPHVWLFÀUPV/RFDOYDOXHDGGHGDYHUDJHVSHUFHQWEXWRIWHQ LVDVORZDVSHUFHQW0RUHRYHU),(VDORQHKDYHEHHQUHVSRQVLEOHIRUPRUH WKDQKDOIRIDOO&KLQHVHLPSRUWVVLQFH7KXVWKHLPSDFWRIWKHJURZWKLQWUDGH DQGLWVSUHVXPHGEHQHÀWVKDVQRWEHHQVSUHDGHYHQO\WKURXJKRXWWKHGRPHVWLF HFRQRP\:KLOHLWLVQRWDFFXUDWHWRWHUP&KLQD·VWUDGHSDWWHUQDV´HQFODYHWUDGHµ WKHXQHYHQGLVWULEXWLRQFDQQRWEHLJQRUHG

The content of China’s trade liberalization :KDWVSHFLÀFDOO\KDYH&KLQD·VUHIRUPHUVGRQHWROLEHUDOL]HWUDGH"&KDQJHVIDOO LQWR WZR EURDG FDWHJRULHV WUDGH SROLF\ LQVWUXPHQWV GLVFXVVHG LQ WKLV VHFWLRQ DQGSROLWLFDODQGLQVWLWXWLRQDOEDVHVRIWUDGHGLVFXVVHGLQWKHIROORZLQJVHFWLRQ ,QERWKFDWHJRULHV&KLQD·VOLEHUDOL]LQJSDWWHUQVHQKDQFHLWVVLPLODULWLHVWRRWKHU DGYDQFHGLQGXVWULDOFRXQWULHVDQGDUHFRQVLVWHQWZLWKWKHPDUNHUVRIOLEHUDOL]DWLRQ SUHVHQWHGLQ7DEOHLQWKHLQWURGXFWRU\FKDSWHURIWKLVYROXPH

,WLVWHPSWLQJWRVHH:72DVWKHZDWHUVKHGIRUWKHUHIRUPRI&KLQD·VH[WHUQDOHFRQRPLFDFWLYLW\DQGLQPDQ\ZD\VWKLVLVDFFXUDWH+RZHYHUWKH&KLQHVH JRYHUQPHQWFDUULHGRXWVXEVWDQWLDOUHIRUPWRLWVWUDGHV\VWHPSULRUWR:72HQWU\ 0DQ\ UHIRUPV HVSHFLDOO\ WKRVH PDGH DIWHU ZHUH SDUW RI D QHJRWLDWLQJ VWUDWHJ\WRPDNH&KLQDVHHPPRUHDWWUDFWLYHWR:72PHPEHUQDWLRQV(TXDOO\ LPSRUWDQWLVWKHIDFWWKDWPXFKRIWKHLPSHWXVIRUWKHVHFKDQJHVZDVGRPHVWLFDQG DQHIIRUWWRVWUHQJWKHQWKHRYHUDOOHFRQRP\$VVXFK&KLQD·V:72FRPPLWPHQWV SDUWLFXODUO\LQWKHDUHDRIWUDGHFDQEHLQWHUSUHWHGDVSDUWRIDORQJHUHYROXWLRQRI WUDGHSRVLWLYHFKDQJHVWKDWEHJDQLQHDUQHVWLQ7KLVVHFWLRQGLVFXVVHVWKH PRVWVLJQLÀFDQWWUDGHUHODWHGSROLF\FKDQJHVDQGFRPPLWPHQWVOHDGLQJXSWRDQG SXUVXDQWWR&KLQD·VYHU\FRPSOH[:72DFFHVVLRQ

,QWKH0DRLVWHUDLQWHUQDWLRQDOWUDGHZDVFDUULHGRXWDFFRUGLQJWRDV\VWHPRI GLUHFWPDWHULDOSODQQLQJDGPLQLVWHUHGE\EXUHDXFUDWLFDXWKRULWLHV7HQWRVL[WHHQ IRUHLJQWUDGHFRUSRUDWLRQV)7&VGRPLQDWHGWUDGHHDFKDWWDFKHGWRDSURGXFWLRQ PLQLVWU\DQGHDFKRIZKLFKKHOGHIIHFWLYHPRQRSROLHVLQLWVVSHFLÀHGVHFWRU7KH 6WDWH3ODQQLQJ&RPPLVVLRQGHWHUPLQHGTXDQWLWLHVRI LPSRUWVQHHGHG WRÀOO WKH SURMHFWHGJDSEHWZHHQGRPHVWLFVXSSO\DQGGHPDQGIRUKLJKSULRULW\JRRGVVXFK DVHTXLSPHQWDQGLQGXVWULDOUDZPDWHULDOV([SRUWVZHUHVHWDWWKHOHYHOQHHGHGWR SD\IRUSODQQHGLPSRUWVZKLOHWKHFRPSRVLWLRQRIH[SRUWVZDVGHWHUPLQHGODUJHO\ E\DQ\XQH[SHFWHGRYHUSURGXFWLRQRIJRRGV,QVKRUWSK\VLFDOTXDQWLWLHVVHWE\ SODQQHUVDQGQRWUHODWLYHSULFHVGHWHUPLQHGWKHYROXPHDQGFRPSRVLWLRQRIWUDGH 7KLVV\VWHPZDVFULWLFL]HG LQ WKH:HVWDVVTXHOFKLQJ LQIRUPDWLRQDERXWVXSSO\ DQGGHPDQGDQGFUHDWLQJHQRUPRXVLQHIÀFLHQFLHV:RUOG%DQN

7KH SROLWLFDO GHFLVLRQ LQ WR ´RSHQ WR WKH RXWVLGHZRUOGµ OHG WKH 35& JRYHUQPHQWWREHJLQUHSODFLQJPDWHULDOVEDVHGSODQQLQJZLWKLQGLUHFWSULFHEDVHG WRROVWRPDQDJHWUDGHÁRZV7KHÀUVWWUDGHUHIRUPVRIWKHHDUO\VHVWDEOLVKHG

DV\VWHPRIWDULIIVDVZHOODVTXRWDVDQGOLFHQVHV:KLOHWKHQHZWRROVZHUHDOVR EDUULHUVWRWUDGHWKHLUXVHZDVDVLJQRIOLEHUDOL]DWLRQDQGFRQYHUJHQFHZLWKWKH VWDQGDUGLQVWUXPHQWVRIWUDGHPDQDJHPHQW7KHVFRSHRIWKHVHLQVWUXPHQWVZDV JUDGXDOO\UHLQHGLQRYHUWKHVHFRQGKDOIRIWKHVDQGWKHVLQSDUWDVD UHVXOWRI:72DFFHVVLRQ7DULIIOHYHOVZHUHUHGXFHGDVZDVWKHQXPEHURIJRRGV VXEMHFWWROLFHQVLQJTXRWDVDQGVRIRUWK

7KXV LQ WKH LPSRUW UHJLPH WKH WDULII OHYHO IHOO LQ D IDLUO\ UHJXODU VHULHV RI UHGXFWLRQVZLWKSDUWLFXODUO\VKDUSFXWVRFFXUULQJ LQDV&KLQDQHJRWLDWHG WR HQWHU*$77 DQG ² DV&KLQD IRFXVHG RQ:72 HQWU\$V RIVRRQDIWHUWKHWDULIIV\VWHPZDVLQWURGXFHGWKHDYHUDJHVWDWXWRU\WDULII UDWHZDVKLJKSHUFHQW%\²DQGWKXVEHIRUH&KLQDHQWHUHG:72²WKLV UDWHZDVRQO\SHUFHQW UHGXFHG WRRQHTXDUWHU RI WKHRULJLQDO OHYHO)URPD FRPSDUDWLYHSHUVSHFWLYH&KLQD·VWDULII OHYHOZDVDERXWKDOIWKDWRI,QGLD DQGRQDSDUZLWKWKHUDWHVRI0H[LFRDQG%UD]LO/DUG\%\WKHEHJLQQLQJRIRYHUDOODYHUDJHWDULIIVKDGGHFOLQHGIURPSHUFHQWWRSHUFHQW DQGZLWK D IHZH[FHSWLRQV DOO LPSRUWHGJRRGV UHDFKHG WKHLUÀQDO ERXQGGXW\ UDWHRQ-DQXDU\0RUHRYHUDVLQGLFDWHGSUHYLRXVO\UDZPDWHULDOVDQG LQWHUPHGLDWHJRRGVXVHGWRDVVHPEOHSURGXFWVWKDWZHUHVXEVHTXHQWO\H[SRUWHG DQG FDSLWDO JRRGV XVHG LQ ),(VZHUH RIWHQ H[HPSW IURPany VWDWXWRU\ WDULIIV SULYLOHJLQJWKHVHLQWHUQDWLRQDOO\RULHQWHGVHFWRUVRIWKHHFRQRP\

1RQWDULIIEDUULHUVWRLPSRUWV17%V²SDUWLFXODUO\TXRWDVOLFHQVHVUHJLVWUDWLRQUHTXLUHPHQWVLPSRUWVXEVWLWXWLRQOLVWVUHVWULFWHGWUDGLQJULJKWVVWDWHWUDGLQJ DQGWHQGHULQJUHTXLUHPHQWV²UHPDLQHGDELJJHUKLQGUDQFHWRWUDGH/HVVWUDQVSDUHQWWKDQWDULIIVWKHVHEDUULHUVDUHPRUHGLIÀFXOWWRWUDFN1HYHUWKHOHVVRYHUWKH FRXUVHRIWKHVDQGLQSDUWDUHVXOWRIPDUNHWDFFHVVDJUHHPHQWVZLWK WKH86JRYHUQPHQWWKHQXPEHURIWDULIIOLQHVVXEMHFWWRTXRWDVDQGOLFHQVHVIHOO GUDPDWLFDOO\%\17%VFRYHUHGOHVVWKDQSHUFHQWRIWRWDOWDULIIOLQHVDQG WKHVKDUHRILPSRUWHGJRRGVIRUZKLFKWUDGLQJULJKWVUHVWULFWHGWUDGHGHFOLQHGIURP SHUFHQWLQWRSHUFHQWLQ,DQFKRYLFKLQDDQG0DUWLQ

$VZLWKLPSRUWV&KLQD·VH[SRUWUHJLPHZDVVXEVWDQWLDOO\OLEHUDOL]HGRYHUWKH FRXUVHRIWKHVDQGVLQFRQMXQFWLRQZLWKWKHHQGRISK\VLFDOSODQQLQJDQG HYROXWLRQWRÀUVWDQH[SDQVLYHDQGODWHUPXFKFRQWUDFWHGV\VWHPRIH[SRUWTXRWDV DQGOLFHQVHV$OVRLPSRUWDQWZDVWKHSDVVLQJIURPIDYRURIWKHDVVXPSWLRQWKDW H[SRUWVZHUHLPSRUWDQWVROHO\IRUHDUQLQJIRUHLJQFXUUHQF\7KHFOHDUHVWPHDVXUH RIH[SRUWUHJLPHOLEHUDOL]DWLRQZDVWKHUHGXFWLRQLQWKHQXPEHURIFRPPRGLWLHV VXEMHFWWRH[SRUWOLFHQVLQJDQGTXRWDVIURPDSHDNRILQWRÀIW\SURGXFWV LQ /DUG\²6HYHUDOFRUROODU\SROLF\ UHIRUPVVXSSRUWHG WKH OLEHUDOL]DWLRQRIWKHH[SRUWUHJLPH.H\DPRQJWKHPZHUHWKHGHFHQWUDOL]DWLRQRI H[SRUWDXWKRULW\GLVFXVVHGEHORZDQGUHIRUPRIWKHFXUUHQF\H[FKDQJHV\VWHP 'HYDOXDWLRQRIWKHFXUUHQF\UHGXFHGWKHGLIIHUHQWLDOEHWZHHQGRPHVWLFDQGLQWHUQDWLRQDOSULFHVWKHUHE\PDNLQJH[SRUWLQJPRUHDWWUDFWLYHWRGRPHVWLFSURGXFHUV $GGLWLRQDO IRUHLJQ FXUUHQF\ UHIRUPV DOORZHG H[SRUWLQJ ÀUPV WR UHWDLQ D VKDUH RIWKHLUIRUHLJQH[FKDQJHUHYHQXHV)LQDOO\WD[SROLF\ZDVFKDQJHGWRUHEDWHD SRUWLRQRI WKHYDOXHDGGHGWD[HVSDLGE\H[SRUWHUVDQGWRUHEDWH LPSRUW WDULIIV IRUJRRGVXVHGLQH[SRUWSURFHVVLQJ7KHVHWD[LQFHQWLYHVKDYHKHOSHGSURPRWH

&KLQD·VLQWHJUDWLRQLQWRJOREDOSURGXFWLRQQHWZRUNVQRWDEO\IRUFRPSXWHUVDQG FRPSXWHUFRPSRQHQWV$VDUHVXOWRI&KLQD·V:72HQWU\JRYHUQPHQWEXGJHWDU\ FRQVLGHUDWLRQVDQGSUHVVXUHIURPIRUHLJQJRYHUQPHQWVWKHVHUHEDWHVZHUHVFDOHG EDFNLQ0XLDQG/HH

$PDMRUWKUXVWRI&KLQD·V:72FRPPLWPHQWVDVWKH\UHODWHWRWUDGHKDVEHHQ WRPRYH&KLQD HYHQ IXUWKHU WRZDUGD WDULIIEDVHG WUDGH UHJLPHE\SKDVLQJRXW OLFHQVHVTXRWDVDQGRWKHUQRQWDULIITXDQWLWDWLYHUHVWULFWLRQVE\$VQRWHG WDULIIVRQDOOSURGXFWVZHUHUHGXFHGIXUWKHUIURPOHYHOVWRUDWHVZHOOEHORZ WKRVHRI,QGLDDQG,QGRQHVLDIRUH[DPSOH0RUHRYHU&KLQDDJUHHGWRELQGall WDULIIVDWWKHQHZORZUDWHVDVWKH\ZHUHSKDVHGLQVRPHWKLQJYHU\IHZFRXQWULHV KDYHGRQH7UDGLQJULJKWV²WKHOHJDOULJKWJUDQWHGWRÀUPVWRPDNHLQGHSHQGHQW H[SRUWDQGLPSRUWGHFLVLRQV²ZHUHH[WHQGHGWRDOOGRPHVWLFÀUPVE\WKRXJK VRPHVWDWH WUDGLQJZDVDOORZHG WR UHPDLQSDUWLFXODUO\ IRUDJULFXOWXUDODQGRLO SHWUROHXPSURGXFWV$UHYLVHG)RUHLJQ7UDGH/DZSDVVHGLQ$SULOH[WHQGHG WUDGLQJULJKWVIRUERWKLPSRUWVDQGH[SRUWVWRLQGLYLGXDOVDQGVPDOOÀUPVIXUWKHU UHPRYLQJWUDGHIURPJRYHUQPHQWFRQWURO=KDR7KLVGUDPDWLFH[SDQVLRQRI WUDGLQJULJKWVJUHDWO\H[SDQGHGGRPHVWLFÀUPV·DFFHVVWRLQWHUQDWLRQDOPDUNHWV

7KHFRPPLWPHQWVLQDJULFXOWXUHDQGLQWH[WLOHVDQGDSSDUHOPHULWVSHFLÀFFRPPHQW$JULFXOWXUDO LPSRUWVDUHH[WUHPHO\VHQVLWLYHLQ&KLQDEHFDXVHRIZRUULHV ERWKDERXWIRRGVHFXULW\DQGDERXWUXUDOLQVWDELOLW\7KHGHSWKRI&KLQD·V:72 FRPPLWPHQWVRQDJULFXOWXUHLVTXLWHVXUSULVLQJJLYHQWKLVFRQWH[W6RPHDQDO\VWV DUJXH WKDW WKHEDVHOLQHFRPSDUDWLYHDGYDQWDJH LQDJULFXOWXUH LVPRYLQJDJDLQVW &KLQD,DQFKRYLFKLQDDQG0DUWLQVHHDOVR5RVHQet al7KHUHIRUH LQFUHDVHG WUDGH LQ DJULFXOWXUDO FRPPRGLWLHV ² HQFRXUDJHG E\ ORZHU WDULIIV RQ DJULFXOWXUDOLPSRUWV²PDNHVVHQVHHFRQRPLFDOO\LI&KLQDLVWRDYRLGWKHKLJKO\ SURWHFWLRQLVWLQHIÀFLHQWDQGKLJKFRVWPRGHRIDJULFXOWXUHDVIRXQGLQ-DSDQ7R WKLV HQG&KLQD KDV DJUHHG WR ELQGLQJ DJULFXOWXUDO WDULIIV WKDW DUH YHU\ ORZ E\ (DVW$VLDQ VWDQGDUGV(YHQPRUH LPSRUWDQW LV&KLQD·V DGRSWLRQRI D WDULII UDWH TXRWD 754V\VWHPXQGHUZKLFKDFHUWDLQPLQLPXPYROXPHRI LPSRUWVPXVW EHVXEMHFWWRORZWDULIIUDWHV)RUPDQ\DJULFXOWXUDOSURGXFWVHJZKHDWFRUQ ULFHDQGFRWWRQWKHORZWDULIIUDWHDSSOLHVWRWKHZKROHDPRXQWWKDWKLVWRULFDOO\ KDVEHHQ LPSRUWHG/DUG\²VHHDOVR7DEOH ,QDGGLWLRQZKLOH QRWDJUHHLQJWRORZHUGRPHVWLFDJULFXOWXUDOVXSSRUWVWRWKHOHYHOGHVLUHGE\WKH 8QLWHG6WDWHVSHUFHQWWKH35&GLGOLPLWDJJUHJDWHVXSSRUWWRDJULFXOWXUHWR SHUFHQWRI WKHYDOXHRIDJULFXOWXUDORXWSXW SOXV IRUDQ\ LQGLYLGXDOFURSD OLPLWRISHUFHQWRIWKHYDOXHRIWKDWFURS)LQDOO\&KLQDDJUHHGWRHOLPLQDWH DOORI LWV VXEVWDQWLDO DJULFXOWXUDO H[SRUW VXEVLGLHVXSRQDFFHVVLRQ²DQH[WUHPH FRPPLWPHQWSDUWLFXODUO\FRPSDUHGZLWKWKHIDLOXUHRIWKH8QLWHG6WDWHVRU(8WR HOLPLQDWHVXFKVXEVLGLHV/DUG\²&KLQDKDVQRWLPSOHPHQWHGWKHVH FRPPLWPHQWV WR WKH FRPSOHWH VDWLVIDFWLRQ RI IRUHLJQ JUDLQ H[SRUWHUV \HW KDV PRYHGVWHDGLO\LQWKDWGLUHFWLRQ

7KHNHHQVHQVLWLYLW\LQWKHDUHDRIDJULFXOWXUHLVDUHVXOWRISHUFHLYHGWKUHDWVWR &KLQHVHSURGXFHUVIURPIRUHLJQFRPSHWLWLRQ,QFRQWUDVWWKHLVVXHRIWH[WLOHVDQG DSSDUHOLVLPSRUWDQWEHFDXVHLWFRQFHUQV&KLQD·VPRVWLPSRUWDQWH[SRUWPDUNHW 7H[WLOHVDQGDSSDUHOH[SRUWVIURP&KLQDKDYHORQJEHHQUHVWULFWHGE\TXRWDVVHW

E\WKHPXOWLODWHUDO0XOWLÀEHU$UUDQJHPHQW0)$WRSUHYHQWDQ\RQHFRXQWU\·V GRPLQDQFH$VSHUKDSVWKHFOHDUHVWH[DPSOHRIDELJEDQJHIIRUWDWJOREDOOLEHUDOL]DWLRQPXOWLODWHUDOWUDGHQHJRWLDWLRQVFRQFOXGHGSULRUWR&KLQD·V:72HQWU\ DJUHHGWRHQGWKH0)$TXRWDV\VWHPDVRI-DQXDU\7KLVJDYHDKXJHERRVW WRDQDOUHDG\VWURQJ&KLQHVHH[SRUWLQGXVWU\GHVSLWHWKHRSWLRQSURYLGHGLPSRUWHUV WR HUHFW VSHFLDO WH[WLOH VDIHJXDUGV RQ&KLQD XQWLO WKH HQGRI &KLQD·V H[SRUWVLQWH[WLOHDQGDSSDUHOZHUHH[SHFWHGWRVXUJHLQWKHQHDUWHUPDVVRRQDV WKH0)$ZDVOLIWHGRQHPRGHOSUHGLFWVWKDWWKHUHVXOWVRI:72DFFHVVLRQZLOO EHWRUDLVH&KLQD·VVKDUHRIH[SRUWVLQDSSDUHOE\SHUFHQWLQFUHDVLQJ&KLQD·V VKDUHRIZRUOGDSSDUHOH[SRUWVWRRYHUSHUFHQWE\XSIURPSHUFHQW LQ7KHWH[WLOHDQGDSSDUHOH[DPSOHLVWRXWHGDVDFOHDUH[DPSOHRIKRZ &KLQHVHLQGXVWU\FDQJDLQIURPWUDGHOLEHUDOL]DWLRQ

:KLOH&KLQD·VFRPPLWPHQWWRWDULIIUHGXFWLRQVDQGRWKHUOLEHUDOL]LQJPHDVXUHV VXEVHTXHQWWR:72HQWU\KDVEHHQH[FHOOHQWFRQFHUQVDERXWQRQWDULIIEDUULHUV UHPDLQ&KLQHVHLQGXVWULHVKDYHEHHQTXLWHDGHSWDWÀQGLQJQHZZD\VWRKLQGHU IRUHLJQFRPSHWLWLRQ17%VUHPDLQLQVHYHUDOIRUPVPRVWQRWDEO\WKHXVHRIVWDQGDUGVFHUWLÀFDWLRQDQGSURGXFWW\SHWHVWLQJ7RROVVXFKDVUHTXLULQJWHVWLQJWRPHHW &KLQHVHVWDQGDUGVIRUKHDOWKDQGVDIHW\KDYHEHHQXVHGLQ LQFUHDVLQJQXPEHUV 7KHVHDUHEDUULHUVQRWMXVWEHFDXVHWKH\SURYLGHMXVWLÀ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· DQWLGXPSLQJDFWLRQV SDUWLFXODUO\ WKH8QLWHG6WDWHV DQG(8FRXQWULHV86²&KLQD%XVLQHVV&RXQFLO17%VSDUWLFXODUO\ WKH XVHRIGXPSLQJFKDUJHVDUHOLNHO\WREHWKHIRFXVRIPRVWWUDGHUHODWHGGLVSXWHV LQYROYLQJ&KLQDLQWKHQHDUIXWXUH

7KLVEDUHERQHVUHQGLWLRQRI&KLQD·VWUDGHOLEHUDOL]DWLRQLQGLFDWHVKRZPXFK &KLQDKDVDFFRPSOLVKHGVLQFHWKHHDUO\V8QGRXEWHGO\WKHUHZLOOFRQWLQXH WREHGLIÀFXOW\LPSOHPHQWLQJLWV:72FRPPLWPHQWV\HWWKDWVKRXOGQRWGLPLQLVK UHFRJQLWLRQRIWKHLUGHSWK(TXDOO\QRWHZRUWK\WRWKHFKDQJHVLQWUDGHSROLF\DUH WKHLQVWLWXWLRQDODQGSROLWLFDOFKDQJHVWKDWDFFRPSDQLHGWKHP7KHVHFKDQJHVDUH WKHVXEMHFWRIWKHIROORZLQJVHFWLRQ

The landscape evolves: institutional and political foundations of liberalization $FHQWUDO WKHPHRI WKLV YROXPH LV WKH H[SORUDWLRQRI LQVWLWXWLRQDO DQGSROLWLFDO EDVHVIRUWKHOLEHUDOL]LQJSROLWLFDOHFRQRPLHVRI&KLQDDQG-DSDQ:KDWZHFDQ FRQFOXGHDERXW LQVWLWXWLRQDODQGSROLWLFDOFDXVHVRI&KLQHVH WUDGH OLEHUDOL]DWLRQ LVIURPDFRPSDUDWLYHSRLQWRIYLHZERWKVXUSULVLQJDQGXQVXUSULVLQJ:KDWLV

VXUSULVLQJDV LOOXVWUDWHGE\WKHSUHYLRXVGHVFULSWLRQRI WUDGHSROLF\FKDQJHV LV WKHSDFHDQGGHJUHHRILQVWLWXWLRQDODQGSROLWLFDOFKDQJHERWKLQJRYHUQPHQWDQG LQ WKH HFRQRP\ LWVHOI:KDW LV XQVXUSULVLQJ EXW SHUKDSVPRUH LQWHUHVWLQJ LV WKDW WKHGRPHVWLFSROLWLFDOHFRQRP\RI&KLQHVHIRUHLJQWUDGHKDVFRPHWR ORRN LQFUHDVLQJO\OLNHWKDWRIDGYDQFHGLQGXVWULDOL]HGFRXQWULHV7KHUHKDVEHHQDVWURQJ WUHQG WRZDUGSOXUDOL]DWLRQRIGRPHVWLF LQÁXHQFHVRQ WUDGHSROLF\3OXUDOL]DWLRQ DSSHDUVLQWZRIRUPV7KHÀUVWLVWKHH[SDQVLRQRIWKHQXPEHUDQGFKDUDFWHURI institutionalRUJDQVWKDWHQJDJHLQWUDGHLQ&KLQD6HFRQGLVpoliticalSOXUDOL]DWLRQ DOEHLWZLWKLQWKHVWDWHDFWRUVZKRZHUHRULJLQDOO\TXLWHPDUJLQDOWRWUDGHSROLF\ PDNLQJKDYHJDLQHGDQLQÁXHQWLDODQGKLJKO\SROLWLFL]HGUROH7KXVDOWKRXJKZH FDQQRWFODLPFRQYHUJHQFH&KLQD·VWUDGHSROLWLFVQRZORRNPXFKPRUHIDPLOLDUWR RXWVLGHREVHUYHUV

Institutional foundations of trade liberalization 7KHXVXDOFDVWRILQVWLWXWLRQDOVXVSHFWVKDVEHHQGHHSO\LQYROYHGLQ&KLQD·VWUDGH SROLF\OLEHUDOL]DWLRQ)URPWKHVXQWLOWKHFHQWUDOJRYHUQPHQWDORUJDQ UHVSRQVLEOHIRUWUDGH²WKH0LQLVWU\RI)RUHLJQ7UDGHDQG(FRQRPLF&RRSHUDWLRQ 02)7(&DQGHVSHFLDOO\LWV:72GLYLVLRQ²WRRNWKHOHDGRQWUDGHUHODWHG LVVXHV,QSDUWLFXODULWZDVUHVSRQVLEOHIRUWKHQHJRWLDWLRQVZLWKWKH86JRYHUQPHQW DQGWKH:72:RUNLQJ3DUW\RQ&KLQD·V:72DFFHVVLRQDJUHHPHQWDQGRYHUVDZ HDUO\LPSOHPHQWDWLRQRI&KLQD·V:72FRPPLWPHQWV<HWDVLVVWDQGDUGLQ&KLQHVH SROLF\PDNLQJWKHPLQLVWU\OHYHORUJDQVHUYHVOHVVDVDSROLF\PDNHUWKDQDVDQ LPSOHPHQWHURIGHFLVLRQVPDGHIURPDERYH/RFDWHGEHWZHHQWKH02)7(&DQG WKHWRSOHDGHUVKLSGXULQJWKH:72DFFHVVLRQQHJRWLDWLRQVZDVWKH:72/HDGLQJ 6PDOO*URXSZKLFKSOD\HGDQLPSRUWDQWUROHLQUHVROYLQJLQWHUQDOGLVSXWHVDERXW :72QHJRWLDWLQJSRVLWLRQV$WNH\GHFLVLRQSRLQWVWKHWRSOHDGHUVUHVSRQVLEOHIRU WUDGHDQGXOWLPDWHO\WKHGHFLVLRQWRVLJQDPDMRUWUHDW\²WKH3ROLWEXUR6WDQGLQJ &RPPLWWHHRIWKH&&3²KDGWRJLYHDVVHQW

6LPXOWDQHRXVO\ WKH LQVWLWXWLRQDO ODQGVFDSH IRU WUDGH SROLF\ HYROYHG VLJQLÀFDQWO\DV&KLQDZDVQHJRWLDWLQJHQWU\WRWKH:722QHNH\FKDQJHKDVEHHQWKH GUDVWLFDOO\LQFUHDVHGQXPEHURIDFWRUVLQYROYHGLQWUDGH)LUVWFDPHWKHEUHDNXS RIWKHPRQRSRO\RI&KLQD·V)7&V5HFDOOWKDWXQGHUWKHSUHUHIRUPWUDGHV\VWHP &KLQHVHÀUPVRUHYHQJRYHUQPHQWEXUHDXVH[FHSWIRU)7&VZHUHQRWSHUPLWWHGWRGLUHFWO\H[SRUWRULPSRUW3URJUHVVLYHO\RYHUWKHFRXUVHRIWKHVDQG VWKHQXPEHURI)7&VZDVH[SDQGHGLQFOXGLQJWRWKHORFDOOHYHOEHFRPLQJ OHJDOO\LQGHSHQGHQWHQWLWLHVRSHUDWLQJZLWKWKHJRDORIFRPPHUFLDOYLDELOLW\UDWKHU WKDQSROLWLFDOFORXW7KHVH)7&VHYROYHGLQWRDQGVXEVHTXHQWO\KDYHEHHQPDGH PDUJLQDOE\WKHIXUWKHUH[SDQVLRQRIWUDGLQJULJKWVDVGLVFXVVHGDERYHÀUVW WR ODUJHVWDWHRZQHGÀUPVDQG6LQRIRUHLJQMRLQWYHQWXUHVDVZHOODVÀUPVORFDWHG LQ&KLQD·VVSHFLDOHFRQRPLF]RQHVDQGWKHQDVRIWRSULYDWHWUDGLQJFRPSDQLHV,QFUHDVLQJO\WKHQWUDGHZDVWREHFRPHDYLDEOHSDUWRI&KLQD·VSULYDWH VHFWRU%\ WKHQXPEHURIGRPHVWLFHQWLWLHVDXWKRUL]HG WRFRQGXFW IRUHLJQ WUDGHKDGJURZQIURPWZHOYHDOO)7&VWRPRVWO\ÀUPV7KHFDSVWRQH

RIWKLVSURFHVVZDVWKHJUDQWLQJRIWUDGLQJULJKWVWRDOOGRPHVWLFÀUPVZLWKLQWKUHH \HDUV RI:72DFFHVVLRQ7KXV WUDGHGJRRGVZHUH LQFUHDVLQJO\ UHPRYHG IURP SODQQLQJFRQWUROVDQGHIIHFWLYHJRYHUQPHQWRYHUVLJKWDQGWKHLQVWLWXWLRQDOEDVLV IRUH[WHQVLYHWUDGHE\GRPHVWLFÀUPVKDGEHHQODLG

,QVWLWXWLRQDOFKDQJHKDVDOVRRFFXUUHGLQWKHIRUPRIOHJDOL]DWLRQDQGFRGLÀFDWLRQRIUXOHV&KLQDLVLQDQHDUOLHUVWDJHWKDQ-DSDQLQLWV´MXGLFLDOL]DWLRQDWWKH EHKHVWRI:72µGHVSLWHPXFKSURJUHVV&KLQDLVLQWKHLQLWLDOVWDJHVRISURPXOJDWLRQDQGUHYLVLRQRIODZV$FRPSUHKHQVLYHGLVFXVVLRQRIWKHSURPXOJDWLRQRI ODZVLVQRWSRVVLEOHLQWKLVFKDSWHUDVWKHWRSLFLVODUJHDQGFRPSOH[+RZHYHULW LVLPSRUWDQWWRQRWHWKDWDVSDUWRILWV:72DFFHVVLRQSDFNDJH&KLQDDJUHHGWR UHZULWHDORQJOLVWRIODZVDQGUHJXODWLRQVLQRUGHUWRPDNHWKHP:72FRPSOLDQW FRQWLQXLQJDSURFHVVWKDWKDGEHHQRQJRLQJVLQFHWKHEHJLQQLQJRIWKHHFRQRPLF UHIRUPV,QWKHUXQXSWR:72DFFHVVLRQLQODWH&KLQD·VOHJLVODWLYHDGPLQLVWUDWLYHDQGOHJDOV\VWHPVPRYHGDKHDGLQDIUHQ]\RQUHJXODWRU\FKDQJHVWKDW ZRXOGPDNHWKHVHV\VWHPV:72FRPSOLDQW$VLIWKHVFRSHRIWKHVHOHJDOFKDQJHV DORQHZHUHQRWGDXQWLQJHQRXJKWKHVHUXOHVKDYHWREHWUDQVPLWWHGGRZQZDUGWR WKHSURYLQFLDODQGORFDOOHYHOVRIJRYHUQPHQWLQFOXGLQJWRWKHORFDOMXGLFLDODQG DGPLQLVWUDWLYHV\VWHPVLQFKDUJHRIDGMXGLFDWLQJGLVSXWHV

7KH SUHVVXUH IURP WKH8QLWHG 6WDWHV DQG:72 IRU UHIRUPRI&KLQD·V OHJDO V\VWHPZDVDLPHGÀUVWDQGIRUHPRVWDWIRVWHULQJWUDQVSDUHQF\LQ&KLQD·VWUDGH V\VWHP7KLVLQWHUQDWLRQDOSUHVVXUHIRXQGGRPHVWLFVXSSRUW&KLQHVHHFRQRPLF UHIRUPHUVDSSHDUHGWRDJUHHWKDWFOHDUHUUXOHVJRYHUQLQJWKHHFRQRP\ZRXOGQRW RQO\DOORZ IRU:72FRPSOLDQFHEXWDOVR VWUHQJWKHQ WKHPDUNHWHFRQRP\DQG UHGXFHLQFHQWLYHVIRUORFDOSURWHFWLRQDQGFRUUXSWLRQ5HIRUPHUVIXUWKHUEHFDPH DZDUHRIWKHDGYDQWDJHVRIXVLQJODZWRSURWHFW&KLQD·VLQGXVWULHVDJDLQVWSRWHQWLDOO\XQIDLUFRPSHWLWLRQIURPIRUHLJQÀUPVDVLOOXVWUDWHGE\WKHSUHYLRXVO\GLVFXVVHGPRYHWRVWUHQJWKHQLWVDQWLGXPSLQJUHJLPH

7KH LPSRUWDQFH RI WKH OHJDO DGPLQLVWUDWLYH DQG MXGLFLDO FKDQJHV WRZKLFK &KLQDKDVFRPPLWWHGVKRXOGQRWEHXQGHUHVWLPDWHG5DWKHUWKDQPHUHO\FKDQJLQJ &KLQD·V WUDGH UHJLPHDW WKHSRLQWRIHQWU\DQGH[LW WKH UXOHV LQVHUW WKHPVHOYHV GHHSO\LQWRWKHZD\WKH&KLQHVHFRQGXFWJRYHUQPHQWDQGEXVLQHVVDIIDLUVLQWHUQDOO\

Domestic political foundations of trade liberalization $Q\ QDUUDWLYH RQ WKH GRPHVWLF SROLWLFV RI&KLQD·V WUDGH OLEHUDOL]DWLRQPXVW EH SXQFWXDWHGE\UHFRJQLWLRQRIWKHNH\UROHSOD\HGE\WRSOHDGHUV7KXVWKHGHFLVLRQ LQ WR´RSHQ&KLQD WR WKHRXWVLGHZRUOGµZDVQRW IRUFHGRQ&KLQD HLWKHU ELODWHUDOO\ RUPXOWLODWHUDOO\ IURP RXWVLGH UDWKHU LW UHVXOWHG IURP D OHDGHUVKLS GHFLVLRQ E\'HQJ;LDRSLQJ DQG D FRKRUW RI UHIRUPHUV7KLV GHFLVLRQ UHÁHFWHG WKHLQLWLDWLRQRIZKDWZRXOGHYROYHLQWRDJHQXLQHSDUDGLJPVKLIWDERXW&KLQD·V UROH LQ WKH JOREDO HFRQRP\ LQFOXGLQJ SROLWLFDO DFFHSWDQFH WKDW &KLQD FRXOG EHQHÀWIURPWKH´REMHFWLYHµQRWFDSLWDOLVWODZVRIFRPSDUDWLYHDGYDQWDJHDQG WKHLQWHUQDWLRQDOGLYLVLRQRIODERU3HDUVRQ²7KHGHFLVLRQLQWR

VHHN*$77PHPEHUVKLSZDVVWURQJO\LQÁXHQFHGE\WKHQSUHPLHU=KDR=L\DQJ 0RUHRYHUWKHQHJRWLDWLQJSRVLWLRQDWWKLVWLPH²WKDWWDULIIUHGXFWLRQUDWKHUWKDQ PDUNHW DFFHVV VKRXOG EH WKH FHQWHUSLHFH RI &KLQD·V HQWUDQFH SURWRFRO ² ZDV DSSDUHQWO\LQÁXHQFHGE\'HQJ;LDRSLQJ/DWHULQ'HQJ;LDRSLQJ·VIDPRXV ´VRXWKHUQWRXUµJDYHQHZOLIHWRWKHHFRQRPLFUHIRUPSURJUDPDVDZKROHSXOOLQJ WKHSURFHVVRXWRIWKHSRVW7LDQDQPHQFRQVHUYDWLVPWKDWKDGVWDOOHGUHIRUPVLQ PDQ\ DUHDV:KLOH WKLV LQMHFWLRQRI OLIH LQWR WKH UHIRUPVZDV EURDGHU WKDQ WKH WUDGHDUHQD WKRVHQHJRWLDWLQJ&KLQD·VHQWU\ WR*$77IHOW WKDW WKH\ZHUHJLYHQ DVWURQJSRVLWLYHVLJQDOWRSURFHHGZLWKQHJRWLDWLRQV7KHÀQDOSXVKIRU:72 DGPLVVLRQFXOPLQDWHGLQHDUO\ZLWKGHFLVLRQVE\ERWK3UHVLGHQW-LDQJ=HPLQ DQG3UHPLHU=KX5RQJMLWKDWLWZDVWLPHWRFORVHWKHELODWHUDOQHJRWLDWLRQVZLWK WKH8QLWHG6WDWHV WKDWZHUH WKHPDLQ VWXPEOLQJEORFN WR DFFHVVLRQ DQGZKLFK KDGGUDJJHGRXWIRUWKLUWHHQ\HDUV3HDUVRQ²7KXVWKHOLEHUDOL]LQJ LQWHUYHQWLRQVRIUHIRUPHUVKDYHEHHQFUXFLDO<RQJ

7KHUROHRIFHQWUDODFWRUVDQGLGHRORJ\GRQRWWHOOWKHZKROHVWRU\RIWKHSROLWLFV WUDGHSROLF\KRZHYHU$VZLWKWKHLQVWLWXWLRQVFRQFHUQHGWKHUHKDVEHHQSOXUDOL]DWLRQRIWKHSROLWLFDODFWRUVLQYROYHG7UDGHDQGLQYHVWPHQWOLEHUDOL]DWLRQEHJDQ DVDKLJKO\FHQWUDOL]HGSURFHVVGHVLJQHG WR OLPLW WKHSDUWLFLSDQWV WR WKHIRUHLJQ SROLF\EXUHDXFUDF\LHWKRVHOHDVWOLNHO\WRREMHFWWROLEHUDOL]LQJSODQV%\WKH WLPHRI&KLQD·V:72DFFHVVLRQKRZHYHU WKHQXPEHURISDUWLFLSDQWV LQYROYHG LQ QHJRWLDWLRQV KDG H[SDQGHG WR DOPRVW XQPDQDJHDEOH VL]H DQG GLYHUVLW\7KLV SOXUDOL]DWLRQ LQ SROLF\PDNLQJ SDUWLFLSDQWV FDQ EH H[SODLQHG ERWK E\ &KLQHVH SROLF\PDNLQJSURFHVVHVDQGE\WKHQDWXUHRIWUDGHSROLWLFVLQPRVWWUDGHRULHQWHG UHJLPHV&KLQHVHSROLF\PDNLQJLVRIWHQGHSLFWHGDVRSHUDWLQJDFFRUGLQJWR´ IUDJPHQWHGDXWKRULWDULDQLVPµLQZKLFKDFRPSOH[PDWUL[RIUHOHYDQWEXUHDXFUDFLHV HQJDJHVLQH[WHQVLYHFRRUGLQDWLRQDQGEDUJDLQLQJWRSURGXFHUHODWLYHO\FRQVHQVXDOSROLF\/LHEHUWKDODQG/DPSWRQ7KLVV\VWHPRIGRPHVWLFEDUJDLQLQJ ERJJHGGRZQ&KLQD·V:72QHJRWLDWLRQVDQGZDVDNH\FRQGLWLRQIRU-LDQJ·VDQG =KX·VLQWHUYHQWLRQLQHDUO\:KHUHDVSUHYLRXVO\IRUHLJQWUDGHZDVUHODWLYHO\ LVRODWHGIURPWKHIUDJPHQWHGDXWKRULWDULDQLVPWKDWSHUYDGHGGRPHVWLFSROLF\DV WKH EURDG GRPHVWLF LPSOLFDWLRQV RI*$77 DQG WKHQ:72 DFFHVVLRQ EHFDPH PRUHZLGHO\XQGHUVWRRGLQWKHVPRUHVWDWHDFWRUVDVVHUWHGWKHLUYLHZV

&RQFUHWHO\ FURVVIXQFWLRQDO GHYHORSPHQW JURXSV ² QRWDEO\ WKH 6WDWH 'HYHORSPHQW3ODQQLQJ&RPPLVVLRQ6'3&DQGHVSHFLDOO\WKH6WDWH(FRQRPLF DQG>GRPHVWLF@7UDGH&RPPLVVLRQ6(7&²EHFDPHLQYROYHGDVGLGLQGXVWULDO EXUHDXVDQGPLQLVWULHVZLWKVWURQJLQWHUHVWVLQSDUWLFXODUDUHDV/RFDOLQGXVWULHV DQGJRYHUQPHQWVDOVREHFDPHPRUHDFWLYHRYHUWLPHSURYLGLQJVRPHRIWKHPRVW GHWDLOHGDQDO\VHVRIWKHSRWHQWLDOLPSDFWRI:72DFFHVVLRQRQWKHLUORFDOHFRQRPLHV6LPSO\SXWWUDGHSROLWLFVEHFDPHPRUHSRURXVWREXUHDXFUDWLFDFWRUVZKR SUHYLRXVO\KDGEHHQODUJHO\H[FOXGHGIURPWKHIRUHLJQWUDGHSROLF\SURFHVV$Q LQWHUHVWLQJSDUDOOHOEHWZHHQSROLWLFRLQVWLWXWLRQDO UROHVRI WKH8QLWHG6WDWHVDQG WKH35&FDQEHGUDZQLQERWKV\VWHPVWUDGHQHJRWLDWRUVVSHQGWKHOLRQ·VVKDUH RI WKHLU WLPHPHHWLQJZLWKGRPHVWLF FRQVWLWXHQWV UDWKHU WKDQZLWK WKHLU IRUHLJQ LQWHUORFXWRUV

7KHVH LQWHUHVWV HQJDJHG LQ D &KLQHVH YHUVLRQ RI LQWUDVWDWH ´OREE\LQJµ LQ

RUGHU WR LQÁ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

$OWKRXJKWUDGHSROLWLFVKDVEHFRPHPRUHSRURXVDQGSOXUDOL]DWLRQRISROLF\ PDNLQJKDVPDGH&KLQHVHWUDGHSROLWLFVORRNPXFKOLNHWKDWLQRWKHULQGXVWULDOL]HG QDWLRQVWKHUHDUHOLPLWVWRDQ\FODLPRIFRQYHUJHQFH7KHLQVWLWXWLRQDODFWRUVLQ WKH35&DUHRYHUZKHOPLQJO\IURPwithinWKHVWDWH²PLQLVWULHVEXUHDXVDQGVWDWH RZQHGHQWHUSULVHV²QRW WKHSULYDWHEXVLQHVVHVZLWKZKRP8QLWHG6WDWHV7UDGH 5HSUHVHQWDWLYH8675RIÀFLDOVVSHQGVRPXFKRIWKHLUWLPH0RUHRYHUGHVSLWH WKHULVHRISOXUDOYRLFHVZKLFKSXWQHJDWLYHSUHVVXUHRQQHJRWLDWRUVWKHGHDOWKDW ZDVVLJQHGZLWK WKH8QLWHG6WDWHVDQGZLWK WKH:72PHPEHUQDWLRQVGLGQRW EURDGO\VSHDNLQJUHÁHFWWKHLUSUHVVXUH&KLQHVHQHJRWLDWRUVGLGQRWZLQVSHFLDO GHDOVIRUDQLQGXVWU\LQWKHZD\WKDWIRUH[DPSOH(XURSHDQLQVXUHUVZHUHJLYHQ VSHFLDOWUHDWPHQWLQWKH(8²&KLQDELODWHUDODJUHHPHQW7RWKHH[WHQWWKDWWKH35& DUJXHG ODWH LQ WKH QHJRWLDWLRQV IRU VSHFLDO SURWHFWLRQV IRU &KLQHVH DJULFXOWXUH WKLVZDVQRW VRPXFKD UHVXOWRI VSHFLDO LQWHUHVWSUHVVXUH IURP WKH0LQLVWU\RI $JULFXOWXUHDVDSRVLWLRQGHYHORSHGDWWKHFHQWUDOOHYHODQGFRQVLGHUHGFUXFLDOIRU WKHVWDWHRIWKHZKROHHFRQRP\,QVKRUWFRQWURORYHUWKHÀQDOGHDOZDVDVVHUWHG IURPWKH WRSDW%HLMLQJ:KLOH WKLVFLUFXPQDYLJDWLRQRI WKHEXUHDXFUDWLFDFWRUV PD\KDYHIDFLOLWDWHGWKHIRUPXODWLRQRIDÀQDOSDFNDJHE\EUHDNLQJWKHVWDOHPDWH LQQHJRWLDWLRQVLWDOVREHFDPHDIDFWRULQEXUHDXFUDWLFLQWUDQVLJHQFHLQLQGXVWU\ FRPSOLDQFHZLWK&KLQD·V:72FRPPLWPHQWV

'HEDWHRYHUH[DFWO\KRZmuch&KLQDVKRXOGLQWHJUDWHWRWKHJOREDOHFRQRP\ ZDV QRW UHVROYHG E\ WKH SURQRXQFHPHQWV RI 'HQJ DQG RWKHU UHIRUPHUV RU E\ DFFHVVLRQ LQGHHG DUJXPHQWV RYHU WKH EHQHÀWV RI HFRQRPLF OLEHUDOLVP YHUVXV PHUFDQWLOLVPFRQWLQXH WRGD\$V H[SHFWHGPRUHRYHU SURWHFWLRQLVW YRLFHVKDYH FRQWLQXHG DIWHU:72 DFFHVVLRQ WR EH VWURQJHU WKDQ OLEHUDOL]LQJ RQHV IRU WKH FRVWVRIOLEHUDOL]DWLRQDUHUHODWLYHO\FRQFHQWUDWHGZKHUHDVWKHEHQHÀWVDUHPRUH GLIIXVH ([SRUWHUV HVSHFLDOO\ WH[WLOHV DQG DSSDUHOPDQXIDFWXUHUV DQG FRQVXPHUVZKRJDLQHGDFFHVVWRFKHDSHULPSRUWHGSURGXFWVVWDQGWREHWKHZLQQHUVLQ WKLVSURFHVV$VSURWHFWLRQLVWZDOOVWRLPSRUWVFRQWLQXHWRIDOOORVHUVLQFOXGHWKH PDQXIDFWXULQJ ÀUPV WKDW DUH XQDEOH WRZHDWKHU LQHYLWDEOH OD\RIIV DQG EHFRPH PRUHFRPSHWLWLYH

The role of international pressure in China’s trade liberalization 7KHJUHDWHURSHQQHVV WRQRQWUDGLWLRQDO&KLQHVHYRLFHV LQ WUDGHSROLF\PDNLQJ UDLVHVWKHSRVVLELOLW\WKDWLQWHUQDWLRQDOIRUFHVDOVRKDYHJDLQHGLQÁXHQFH,QGHHG WKHTXHVWLRQZKHWKHU&KLQD·VRSHQLQJ WR WKHRXWVLGHZRUOG LV GXHSULPDULO\ WR GRPHVWLFFKDQJHRUWRLQWHUQDWLRQDOSUHVVXUHLVRIWHQUDLVHG$GHFLVLYHDQVZHUWR WKLVTXHVWLRQLVH[WUHPHO\GLIÀFXOWWRDVFHUWDLQERWKLQWHUQDODQGH[WHUQDOSUHVVXUHV KDYH EHHQ HYLGHQW DQG DW GLIIHUHQW WLPHV HDFK KDV DSSHDUHG WR GRPLQDWH7KH GLVFXVVLRQLQWKLVVHFWLRQDWWHPSWVWRPDNHVRPHVHQVHRIWKHFRPSOH[G\QDPLF EHWZHHQ LQWHUQDO DQG H[WHUQDO SUHVVXUH DV LW KDV LQWHUDFWHGZLWK &KLQD·V WUDGH OLEHUDOL]DWLRQ

$V GLVFXVVHG DERYH &KLQD·V UHIRUP OHDGHUVKLS PDGH PDQ\ NH\ GHFLVLRQV DIIHFWLQJWUDGHOLEHUDOL]DWLRQLQWHUQDOO\IRUGRPHVWLFHFRQRPLFUHDVRQVDQGZLWKRXWFRHUFLRQIURPRXWVLGH2EYLRXVO\WKHQDJUHDWGHDORIWKHFRQFUHWHLPSHWXV IRU FKDQJHFDPH IURPZLWKLQ([WHUQDOSUHVVXUHPRUHRYHUKDVEHHQPHGLDWHG WKURXJKGRPHVWLFSROLWLFVDQGLQVWLWXWLRQV+DYLQJDFNQRZOHGJHGWKHNH\UROHRI GRPHVWLF IRUFHV WKRXJK WKHUHZHUHNH\PRPHQWV DWZKLFK IRUHLJQ H[LJHQFLHV WRRNFHQWHUVWDJH$VDJHQHUDOWUHQGPRUHRYHU LQWHUQDWLRQDOSUHVVXUHRYHUWKH VSHFLÀFFRPPLWPHQWVUHTXLUHGIRU:72DFFHVVLRQJUHZRYHUWLPH2QFH&KLQHVH UHIRUPHUVGHFLGHGLQWKHODWHVWRPDNHLQGXVWULDOL]DWLRQRIWKHHFRQRP\WKH FRXQWU\·VÀUVWSULRULW\LQ´7KH)RXU0RGHUQL]DWLRQVµWKHLQWHUQDWLRQDOFRQWH[W LQZKLFKWKH\IRXQGWKHPVHOYHVEHFDPHFUXFLDO

,QGHHGWKHVLWXDWLRQIRUWKHSRVW0DRUHIRUPHUVZDVPDUNHGO\GLIIHUHQWIURP 0DR·VHIIRUW WREXLOG&KLQD·V HFRQRP\ LQ WKH6RYLHW LPDJHDQG IURP WKH WLPH ZKHQKHFKDQJHGFRXUVHGLVDVWURXVO\LQWKH*UHDW/HDS)RUZDUGHIIRUWWRVXUSDVV WKH:HVW%\ WKH ODWH V WKHVH WZR DOWHUQDWLYHPRGHOV RI6RYLHWVW\OH LQGXVWULDOL]DWLRQ DQG VHOIUHOLDQFH KDG EHHQ GLVFUHGLWHG LQ &KLQHVH H\HV 7KH VXFFHVVRIPDUNHWRULHQWHG+RQJ.RQJZDVREYLRXV7KH´(DVW$VLDQPLUDFOHµ PRGHORIODUJHLQGXVWULDOFRQJORPHUDWHVZLWKVWURQJWLHVWRDQGVXSSRUWIURPWKH VWDWHUHWDLQHGUHOHYDQFHIRUWKHPRVWVWUDWHJLFVHFWRUVRIWKHVWDWHRZQHGHFRQRP\ EXWLQWKHZDNHRIWKH$VLDQÀQDQFLDOFULVLVZDVQRWVHHQDVDYLDEOHPRGHOIRU WKHHFRQRP\DVDZKROH7KXV'HQJ;LDRSLQJDQGKLVFDGUHRIUHIRUPHUVIRXQG WKHPVHOYHV ZLWK QR YLDEOH DOWHUQDWLYHPRGHO IRU LQGXVWULDOL]DWLRQ EXW RQH WKDW LQYROYHGLQWHJUDWLRQLQWRWKHZRUOGWUDGLQJV\VWHP

,WZDV WKHUHIRUH WKH GHVLUH WR JDLQ WKH SHUFHLYHG EHQHÀWV RI WKH HVWDEOLVKHG JOREDOPDUNHWV\VWHPDQGLQWHUQDWLRQDOWUDGHUHJLPHRYHUZKLFKWKH\KDGOLWWOH PHDQLQJIXO OHYHUDJH DW WKH WLPH WR VKDSH WKDW JDLQHG D IRRWKROG LQ UHIRUPHUV· PLQGV DQG XOWLPDWHO\ SXVKHG WKHP WR OLEHUDOL]H $V &KLQHVH UHIRUPHUV FDPH LQFUHDVLQJO\WREHOLHYHWKDW&KLQDFRXOGUHDSWUHPHQGRXVUHZDUGVIURPLQWHUQDWLRQDO WUDGH WKH\ FRPPLWWHGPRUH DQGPRUH WR WKH V\VWHP1RZKHUHZDV WKLV FOHDUHUWKDQZLWKWKHWH[WLOHVDQGDSSDUHOLQGXVWU\DQGLQWKHQHZIRXQGZHDOWK RI&KLQD·V´QHZµLQGXVWULDOFLWLHVLQZKLFKH[SRUWRULHQWHGWRZQVKLSDQGYLOODJH HQWHUSULVHV79(VWKULYHG7KHGHFOLQHRIH[SRUWPDUNHWVDIWHUWKH$VLDQÀQDQFLDO FULVLVDQGWKHVORZLQJRIWKHZRUOGHFRQRP\LQWKHODWHVDQGHDUO\V VXJJHVWHGKRZPXFKWKHVHVHFWRUVDQGUHJLRQVKDGFRPHWRGHSHQGRQRYHUVHDV

PDUNHWV$QRWKHUIRUPRILQWHUQDWLRQDOSUHVVXUH²&KLQD·VGHVLUHWREHULGRIWKH DQQXDOF\FOHRIPRVWIDYRUHGQDWLRQVWDWXVUHQHZDOLQWKH86&RQJUHVV²ZDVDOVR DVWURQJLPSHWXVIRU:72PHPEHUVKLS

0RUHFRQFUHWHO\NH\QHJRWLDWLRQVZLWKIRUHLJQJRYHUQPHQWVDQGLQWHUQDWLRQDO RUJDQL]DWLRQVSDUWLFXODUO\WKH86JRYHUQPHQWSXQFWXDWHGWKHOLEHUDOL]DWLRQSURFHVV2QFH&KLQDGHFLGHG WKDW:72PHPEHUVKLSZDVFUXFLDO IRU LWVHFRQRPLF GHYHORSPHQWLWKDGWRPHHWWKHUHTXLUHPHQWVLPSRVHGIURPRXWVLGH%HFDXVHWKH UHTXLUHPHQWVIRUDQ\FRXQWU\·VHQWU\WR:72ZHUHVXEVWDQWLDOO\KLJKHUWKDQWKRVH IRU DGPLVVLRQ WR*$77 DQG EHFDXVH RI WKH SHUFHSWLRQ RXWVLGH&KLQD WKDW WRR OHQLHQWDQDFFHVVLRQSDFNDJHZRXOGEHKDUPIXOWRZRUOGWUDGHIRUHLJQSUHVVXUH LQFUHDVHGRYHUWKHVHFRQGKDOIRIWKHV,QGHHGWKHUHTXLUHPHQWVIRU&KLQD·V HQWU\ZHUHVHWKLJKHUWKDQWKRVHIRUSUHYLRXV:72HQWUDQWV7KHIDFWWKDW&KLQD RIWHQPDGHOLEHUDOL]LQJUHIRUPVDKHDGRIWKHGHDGOLQHVLPSRVHGE\IRUHLJQQHJRWLDWRUVVXFKDVWKHHDUO\WDULIIUHGXFWLRQVWKDWEURXJKWWDULIIVRQPDQ\JRRGV LQWR:72 FRPSOLDQFH HYHQ EHIRUH &KLQD·V IRUPDO DFFHVVLRQ KDV PDGH WKHVH FKDQJHVDSSHDUQRQFRHUFHG<HWWKH&KLQHVHJRYHUQPHQWFOHDUO\PDGHWKHPZLWK DQH\HWRZDUGPHHWLQJH[WHUQDOO\LPSRVHGUHTXLUHPHQWV

&KLQHVHDGYRFDWHVRI:72PHPEHUVKLSDUJXHGLQGRPHVWLFQHJRWLDWLRQVZLWK VWDWHRZQHGÀUPVSURYLQFHVHWFWKDWGRPHVWLFHFRQRPLFDFWRUVKDGWRFKDQJH WKHLUEHKDYLRUWRPHHWLQWHUQDWLRQDOUHTXLUHPHQWV:72DFFHVVLRQWKHUHIRUHFDPH WREHVHHQDVDWRROIRUSURPRWLQJLQWHUQDOFKDQJHVWKDW&KLQD·VUHIRUPHUVFRXOG QRWDFKLHYHRQWKHLURZQ,URQLFDOO\VLQFHDFFHVVLRQWKHORVVRI&KLQHVHÁH[- LELOLW\ GXH WR WKH RXWVLGH SUHVVXUH IRU VWULFW FRPSOLDQFHZLWK UXOHV RULJLQDWLQJ IURPRXWVLGH&KLQDZDV LQWHUSUHWHGE\VRPHDVUHÁHFWLQJ&KLQD·V LQWHUQDWLRQDO ZHDNQHVVDQGDVKHPPLQJ&KLQDLQWRGRLQJWKLQJVLQDSDUWLFXODUZD\DQGRQD UHVWULFWHGWLPHWDEOH7KHUROHRIRXWVLGHSUHVVXUHLQ&KLQD·VWUDGHOLEHUDOL]DWLRQ IRVWHUHGDEDFNODVKRIHFRQRPLFQDWLRQDOLVPDPRQJPDQ\FLWL]HQV

$OWKRXJKLWLVLPSRVVLEOHWRGHWHUPLQHZKHWKHULQWHUQDWLRQDORUGRPHVWLFIDFWRUVKDYHEHHQPRUHLPSRUWDQWLQVKDSLQJ&KLQD·VWUDGHOLEHUDOL]DWLRQLWLVFOHDU WKDWLQWHUQDWLRQDOFRQWH[WDQGGLUHFWSUHVVXUHIURPRXWVLGHKDYHEHHQH[WUHPHO\ LQÁXHQWLDO ,Q FRQWUDVW WR WKH SDWWHUQ RI &KLQD·V HFRQRPLF GHYHORSPHQW LQ WKH 0DRLVWHUDWKHSRVW0DRUHIRUPHUVKDYHVXEMHFWHGWKHPVHOYHVWRWKHH[LJHQFLHV RIWKHLQWHUQDWLRQDOPDUNHWDQGLQWHUQDWLRQDOHFRQRPLFLQVWLWXWLRQV,QGHHGLQWKH ODWH WZHQWLHWKFHQWXU\WKHUHDSSHDUHGWRWKHPWREHQRDOWHUQDWLYH$W WKHVDPH WLPH&KLQD·V RSHQLQJ KDV WKH FOHDU LPSULQW RI LWV VWDWLVW OHJDF\ ,Q WKLV VHQVH &KLQD·VYHUVLRQRI´ODWHOLEHUDOL]DWLRQµÀWVZHOOWKHFRUHLGHDRIWKLVYROXPH

Looking ahead – the impact of Chinese WTO membership on PRC trade politics

&KLQDKDVPDGHDFOHDUDQGGUDPDWLFJDPELW IRU WUDGH OLEHUDOL]DWLRQ<HWPDQ\ LPSRUWDQWLVVXHVFUXFLDOWRWKHFKDUDFWHURI&KLQD·VWUDGHV\VWHPUHPDLQXQVHWWOHG 7KLV FRQFOXGLQJ VHFWLRQ ÁDJV WKUHH NH\ LVVXHV WKDW ZLOO VKDSH WKH IXWXUH RI &KLQD·V SDUWLFLSDWLRQ LQ WKH LQWHUQDWLRQDO WUDGH UHJLPH WKH QHHG IRU GHHSHU LQVWLWXWLRQDOL]DWLRQ RI &KLQD·V PRUH RSHQ WUDGH UHJLPH WKH JURZLQJ GRPHVWLF

VHQVLWLYLW\ RI WUDGH SROLWLFV DQG WKH SUREOHP RI FRPSHQVDWLRQ RI ORVHUV DQG LQWHUQDWLRQDOIULFWLRQV

The pressure for deeper institutionalization 7KH GRPHVWLF LQVWLWXWLRQDO UHIRUPV WKDW WKH 35& KDV XQGHUWDNHQ DV DPHPEHU RI WKH :72 DUH UHODWHG WR &KLQD·V RYHUDOO HIIRUW WR EXLOG UREXVW FDSDFLRXV LQVWLWXWLRQVWRVXSSRUWWKHQHZGLUHFWLRQ$NH\LVVXHLQXQGHUVWDQGLQJ&KLQD·V IRUPDOFRPPLWPHQWVWR:72LVWKHIDFWWKDWHYHQLIVXSSRUWHGE\WRSOHDGHUV FRPSOLDQFH FDQQRW EH DFKLHYHG ZLWKRXW VXFK LQVWLWXWLRQDOL]DWLRQ &KLQD·V DJUHHPHQWWRPDNHQXPHURXVLQVWLWXWLRQDOFKDQJHVRQDVKRUWWLPHWDEOHLQPDQ\ LQVWDQFHVWKUHHWRÀYH\HDUVKHLJKWHQVWKHXUJHQF\RIWKLVLVVXH,WLVXQOLNHO\WKDW WKHGHSWKRILQVWLWXWLRQDOL]DWLRQQHFHVVDU\WRDFKLHYHFRPSOLDQFHFDQRFFXUDWWKH SDFHGLFWDWHGE\WKHDJUHHPHQW

35&FRPSOLDQFHZLWKWKH:72LVEHLQJZDWFKHGYHU\FORVHO\IURPRXWVLGH +RZHYHUHYHQPRUHLPSRUWDQWLVWKHdomesticQHHGWRGHYHORSWKHVHLQVWLWXWLRQV 6DDGLD3HNNDQHQ·VFRQWULEXWLRQWRWKLVYROXPHLOOXVWUDWHV-DSDQ·VOHJDOGHYHORSPHQWYLVjYLV:72PHPEHUVKLS-DSDQLQUHFHQW\HDUVKDVEHHQNHHQWROHYHUDJH :72UXOHV WR LWVDGYDQWDJHLQ WUDGHGLVSXWHV²DSURFHVVRI´OHJDOL]DWLRQµ<HW WKRXJKVXFKOHYHUDJHDWWHPSWVXQGRXEWHGO\ZLOOEHFRPHLPSRUWDQWWR35&LQWHUQDWLRQDOVWUDWHJ\&KLQDVWDUWVDWDPXFKPRUHEDVLFOHYHO,WLVRQO\QRZEXLOGLQJ DPRGHUQUHJXODWRU\VWDWHZLWKWKHFDSDFLW\WRPDQDJHDFRPSOH[PDUNHWRULHQWHG HFRQRP\0RUHRYHU DW WKLV MXQFWXUH WKHSOXUDOL]DWLRQRI:72SROLWLFVKDVSXW SUHVVXUHVRQWKH&KLQHVHVWDWHWKDWLQPDQ\ZD\VZRUNagainstLQVWLWXWLRQEXLOGLQJ3UHVVXUHIURPVXEVWDWHDFWRUVWHQGVWREHPDGHRQSURWHFWLRQLVWJURXQGVLQ ZD\VWKDWFRQWUDYHQH&KLQD·V:72FRPPLWPHQWV$WWKLVSRLQWWKH&KLQHVHVWDWH PXVWEHUHOLHGXSRQDVWKHGULYLQJIRUFHIRUOLEHUDOL]DWLRQ

Domestic political sensitivity of trade and the pressure for compensation 7KHHFRQRPLFQDWLRQDOLVWGHEDWHDQGHYLGHQFHRIEDFNODVKWROLEHUDOL]DWLRQVXJJHVWV WKH LPSRUWDQFH RI H[DPLQLQJ WKH GRPHVWLF VHQVLWLYLWLHV WR WUDGH LQWHJUDWLRQ &RQFHUQVDERXWORVVRIHFRQRPLFVRYHUHLJQW\DUHSDOSDEOHVRPXFKVRWKDWWKRVH DURXQGWKHQ3UHVLGHQW-LDQJ=HPLQUHMHFWHGXVHRIWKH&KLQHVHHTXLYDOHQWRIWKH WHUP´LQWHJUDWLRQµZKHQUHIHUULQJWRWKHSURFHVVRI:72DFFHVVLRQ7KLVWHUPLQ &KLQHVHrongheLPSOLHVDEVRUSWLRQLQWRWKHRXWVLGHZRUOGDQGORVVRILGHQWLW\DQG SRZHU,WLVWKHWHUPWKDWKDVORQJEHHQDSSOLHGWR&KLQD·VSROLF\WRZDUGGRPHVWLF HWKQLFPLQRULWLHV 1HZO\ DFWLYH SOXUDOL]HG DQG ODUJHO\ SURWHFWLRQLVW LQWHUHVWV ZHUHVTXHOFKHGE\WKHWRSOHYHOVRI WKH&KLQHVHJRYHUQPHQWLQRUGHUWRREWDLQ &KLQD·VHQWU\ LQWR WKH:72GHVSLWH WKHUHPDUNDEOHSXEOLFFDPSDLJQGHVLJQHG WRIRVWHUFRPSOLDQFHZLWKWKH:72WKHVHFRQVWLWXHQFLHVKDYHQRWGLVDSSHDUHG 'HVSLWH KDYLQJEHHQ VW\PLHG LQ WKHQHJRWLDWLRQSKDVH WKH\KDYHEHFRPHHYHU VWURQJHU LQ WKH LPSOHPHQWDWLRQ SKDVH$Q LPSRUWDQW TXHVWLRQ WKHUHIRUH LV KRZ WKHVHLQWHUHVWVEHFRPHLQVWLWXWLRQDOL]HGSDUWLFXODUO\DVWKH\PRYHIURPWKHVWDWH·V SXUYLHZWRWKHSULYDWHUHDOP7KHDQVZHUWRWKLVTXHVWLRQUHPDLQVRSHQ

(IIRUWV WRPDQDJHGRPHVWLFDFWRUVQHZO\ LQWHUHVWHG LQ WUDGHSROLF\²DQG WR

SD\RIIRURWKHUZLVHFRPSHQVDWHORVHUV²DUHPDGHERWKGLIÀFXOWDQGSROLWLFDOO\ QHFHVVDU\E\WKHVLJQLÀFDQWFRVWVRI:72LQWHJUDWLRQSDUWLFXODUO\LQWKHVKRUWWR PHGLXPWHUP7KHPDMRUFRVWVDUHH[SHFWHGWREHLQFUHDVHGOHYHOVRIXQHPSOR\- PHQWLQVRPHVHFWRUVUHVXOWLQJIURPGLVSODFHPHQWRIGRPHVWLFLQGXVWULHV/D\RIIV LQ 62(V VHFWRUV DUH ZRUULVRPH $V RQH SXEOLF VHFXULW\ RIÀFLDO IURP $QKXL 3URYLQFH VWDWHG ´:HQHHG WRSD\ FORVH DWWHQWLRQ WR WKRVH FRPSDQLHV WKDWPD\ H[SHULHQFHDKXJH>XQHPSOR\PHQW@LPSDFWIURPRXUMRLQLQJWKH:72µDGGLQJ WKDW´WURRSVRIGRPHVWLFVHFXULW\µVKRXOGSUHSDUHIRU´DFWXDOFRPEDWµRYHUIDLOLQJ 62(V+DPULQDQG&DUQHV8QHPSOR\PHQWLQFRPHJDSVDQGSRWHQWLDO XQUHVW LQ WKHDJULFXOWXUDOVHFWRUDQG LQODQGUHJLRQVKDYHEHHQSDUWLFXODUO\ZRUULVRPH IRU WKH\ H[DFHUEDWH WKH H[LVWLQJ GLVFULPLQDWLRQ RI WKH RYHUDOO UHIRUPV ,VVXHV RI XUEDQ²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

International cooperation/international friction 7KHGRPHVWLFWHQVLRQVHQXPHUDWHGKHUHGRQRWRFFXULQDYDFXXPDQGWKHPDQQHU LQZKLFKWKH\PD\EHDIIHFWHGE\LQWHUQDWLRQDOHYHQWVSDUWLFXODUO\UHODWLRQVZLWK &KLQD·V WUDGH SDUWQHUVZLOO EH UHOHYDQW WR WKHLU RXWFRPH0RVW VDOLHQW IRU WKH SXUSRVHVRIWKLVYROXPHDUH&KLQD·VUHODWLRQVZLWKWKH8QLWHG6WDWHVDQG-DSDQ DQGWKHSURVSHFWVIRUIXUWKHUUHJLRQDOWUDGHLQWHJUDWLRQ

,WUHPDLQVWREHVHHQKRZFLUFXPVSHFWWKH86JRYHUQPHQWZLOOEHDERXWGLIÀFXOWLHV&KLQDLVOLNHO\WRKDYHLQPHHWLQJLWVVWULQJHQWWLPHWDEOHVIRUFRPSOLDQFH DFURVVDPXOWLWXGHRIIURQWV,QWUDGHDVGLVFXVVHGSUHYLRXVO\FRPSOLDQFHZLWK PDQ\RIWKHWDULIIDQGQRQWDULIIFRPPLWPHQWVZDVZHOOXQGHUZD\EHIRUHDFFHVVLRQDQGPRVWSKDVHGLQFRPPLWPHQWVKDYHEHHQPHWRQWLPH<HW LQHYLWDEO\ WKHUHKDYHEHHQDQGZLOOFRQWLQXHWREHGLVSXWHV%\IDUWKHPRVWGLIÀFXOWSUREOHP FRQFHUQV WKH86 WUDGH GHÀFLWZLWK&KLQDZKLFK KDV JURZQ VWHDGLO\ GHVSLWH D GHFOLQHLQ&KLQD·VWUDGHVXUSOXVZLWKWKHZRUOGDVDZKROH5DWKHUWKDQEHLQJ UHGXFHGE\&KLQD·VHQWU\WRWKH:72&KLQD·VLQFUHDVHGDELOLW\WRH[SRUWWH[WLOHV DQGDSSDUHOWRWKH8QLWHG6WDWHVLWVSURMHFWHGDEVRUSWLRQRINH\H[SRUWPDUNHWV IURPRWKHU$VLDQUHJLRQVDQGLWVRYHUDOOH[SRUWVWUHQJWKLQVHFWRUVRIVWURQJ86 FRQVXPSWLRQ KDYH UHVXOWHG LQ DQ LQFUHDVH LQ WKH ELODWHUDO GHÀFLW RYHU WKH SDVW VHYHUDO\HDUV,QGHHGWKHGHÀFLWH[FHHGHG86ELOOLRQLQ7KHGHÀFLW LVVXH KDV EHHQ SOD\HG RXW LQ WZRZD\V$V SDUW RI WKH ELODWHUDO DJUHHPHQW RQ :72DFFHVVLRQ WKH86JRYHUQPHQWQHJRWLDWHGVWURQJO\SURWHFWLRQLVWPHDVXUHV WKDWSHUPLWWUDGHDFWLRQVDJDLQVW&KLQDXQGHUPXFKPRUHÁH[LEOHFULWHULDWKDQLV WKHQRUPLQWKH:72SURGXFWVSHFLÀFVDIHJXDUGVDQGVSHFLDOWH[WLOHVDIHJXDUGV

/DUG\²0RUHRYHUGHVSLWHWKHJUDQWLQJRI3175VWDWXVWRWKH35& E\ WKH86 JRYHUQPHQW LQ WKH IXQFWLRQ RI KDYLQJ D SODWIRUP WRPRQLWRU &KLQHVHEHKDYLRUWKDWKDGEHHQVHUYHGE\DQQXDO175UHQHZDOZDVVLPSO\VKLIWHG WRRWKHURUJDQL]DWLRQV([DFWO\KRZMXGLFLRXV86SROLWLFDODFWRUVFKRRVHWREHLQ HPSOR\LQJWKHVHWRROVUHPDLQVWREHVHHQ(YLGHQFHIURPWKHÀUVWIRXU\HDUVDIWHU DFFHVVLRQGRHVQRWOHDGWRRSWLPLVPDERXWDVPRRWKUHODWLRQVKLSDVRXWVRXUFLQJ WR&KLQDDQGWKHRYHUYDOXHG&KLQHVHFXUUHQF\ZHUHLQFUHDVLQJO\WDUJHWHGE\86 SROLWLFLDQVDVWKHVRXUFHRIPDQ\HFRQRPLFSUREOHPVLQWKH8QLWHG6WDWHV

&KLQD·VWUDGHUHODWLRQVZLWK-DSDQDUHDOVRSRLVHGWREHWHQVHDVZRUULHVDUH JURZLQJ LQ -DSDQ DERXW FRPSHWLWLRQ IURP &KLQD LQFOXGLQJ D ÀUVWWLPH WUDGH GHÀFLWZLWK&KLQDLQFOXGLQJ+RQJ.RQJ%URRNH$V-DSDQ·VHFRQRPLF VOXJJLVKQHVVGUDJVRQDQG-DSDQHVHPDQXIDFWXUHUVVKLIWSURGXFWLRQWRWKHPDLQODQGPDQ\-DSDQHVHRIÀFLDOVKDYHZRUULHGWKDWWKHKLJKZDJH-DSDQHVHHFRQRP\ ZLOO EH VXIIRFDWHG E\ &KLQD·V ORZHUZDJH G\QDPR0RUHRYHU -DSDQ·V KLJKO\ SURWHFWHGIDUPHUVKDYHEODQFKHGDWORZFRVWLPSRUWVIURP&KLQDLQVHYHUDODUHDV *LYHQ-DSDQ·VWXUQWROHJDOL]DWLRQWRUHVROYHGLVSXWHV:72GLVSXWHPHFKDQLVPV DUHOLNHO\WREHJLYHQZLGHUEHUWKWRUHVROYHELODWHUDOGLVSXWHV$WWKHVDPHWLPH KRZHYHU&KLQDKDVSDVVHGWKH8QLWHG6WDWHVDV-DSDQ·VODUJHVW WUDGLQJSDUWQHU VXJJHVWLQJDGHHSHQLQJLQWHUGHSHQGHQFHDQGQHHGIRUDWWHQWLRQE\ERWKJRYHUQPHQWVWRLWVLPSOLFDWLRQV%OXVWHLQ

Conclusion &KLQD·VSURFHVVRIODWHOLEHUDOL]DWLRQFOHDUO\ZLOOFRQWLQXHWREHDIIHFWHGE\WKH LQWHUQDWLRQDOFRQWH[WRI WKHHDUO\ WZHQW\ÀUVWFHQWXU\QRWRQO\E\ELODWHUDODQG UHJLRQDOLQWHUDFWLRQVEXWDOVRE\HYROXWLRQRIJOREDOQRUPVRIWUDGHPDQDJHPHQW DQGWKHQLFKHLWWDNHVLQWKHJOREDOHFRQRP\0RUHWKDQLQ-DSDQKRZHYHUWKH VWDWHZLOOFRQWLQXHWRGRPLQDWH&KLQD·VSURFHVVRIOLEHUDOL]DWLRQDQGSHUKDSVEH WKHFUXFLDOGULYHURIOLEHUDOL]DWLRQDJDLQVWPRUHSURWHFWLRQLVWGRPHVWLFLQWHUHVWV 7KLV LQWHUSOD\ EHWZHHQ WKH ZLQQHUV IURP OLEHUDOL]DWLRQ ZLWK HOHPHQWV RI WKH UHIRUPLVWVWDWHDVWKHLUFKDPSLRQDQGWKHORVHUVDQGWKHLUFKDPSLRQV²PDQ\RI ZKRPDUHDOVRORFDWHGLQWKHSXUYLHZRIWKHVWDWH²ZLOOEHWKHFUXFLDOG\QDPLF DIIHFWLQJ&KLQD·VRQJRLQJFRPPLWPHQWWROLEHUDOL]DWLRQRIWUDGH