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12 Pac. Rim L. & Pol'y J. 751 (2003)
China's New Foreign Law Firm Regulations: A Step in the Wrong Direction

handle is hein.journals/pacrimlp12 and id is 763 raw text is: Copyright D 2003 Pacific Rim Law & Policy Journal Association CHINA'S NEW FOREIGN LAW FIRM REGULATIONS: A STEP IN THE WRONG DIRECTION Jane J. Hellert Abstract: Following China's accession to the World Trade Organization (WTO), the Chinese government issued new regulations governing foreign law firms in China. A number of commentators have analyzed these regulations to evaluate whether China is 'on track to fulfilling the commitments it undertook to gain entry to the WTO. However, a more basic question that should be addressed is whether the new regulations meet China's goals in joining the WTO: to foster trade and economic development and to accelerate the growth of China's legal profession. Although China appeared willing to engage in significant liberalization of the legal services sector when it joined the WTO, the new regulations reflect a much more cautious approach in recognition of the vulnerability of Chinese law firms to foreign competition. On one hand, the regulations shield an infant domestic industry from competition in spheres of activity where Chinese law firms already dominate, while, on the other hand, they favor the expansion into China of some of the largest foreign firms in the world by erecting costly barriers to entry that deter entry by smaller foreign firms. As China's market for legal services expands, and the demand for legal expertise in complex commercial transactions grows, Chinese firms, which lack a deep pool of attorneys experienced in commercial transactions, are likely to be squeezed out of the transactional segment of the market by larger, more efficient foreign firms. China's approach in adopting the new regulations fails to recognize the benefits of competition and the regulations should therefore be revised. By lowering barriers to entry and permitting free interaction between Chinese and foreign lawyers, China can accelerate the development of its legal services sector and continue to sustain high levels of economic growth. I. INTRODUCTION The accession of the People's Republic of China (China) to the World Trade Organization (WTO) on December 11, 2001, after nearly fifteen years of negotiations, was a historic step toward free trade on a truly global scale.t China's accession package was the most complicated and lengthy accession agreement by any WTO member (Member) to date.2 t The author would like to thank Professor Donald Clarke and the Pacific Rim Law & Policy Journal staff for their valuable comments. 1 See Press Release, World Trade Organization, WTO Ministerial Approves China's Accession (Nov. 10, 2001), available at http://www.wto.org/english/news e/pres0le/pr252_e.htm (last visited Apr. 30, 2003). See, e.g., Charlene Barshefsky, Enter China: WTO Membership has Important Potential, WASH. POST, Nov. 9, 2001, at A37, available at LEXis, News Group File; Paul Blustein & Clay Chandler, WTO Approves China's Entry; Move Expected to Speed Beijing's Transition to Capitalism, WASH. POST, Nov. 11, 2001, at A47, available at LEXis, News Group File; Press Release, European Union, China in WTO: Lamy Hails China's Accession Greatest Leap in History of Organisation (Nov 10, 2001), available at http://europa.eu.int/comm/trade/bilateral/china/prl 21101 en.htm (last visited Apr. 30, 2003). 2 William Abnett, China and Compliance With World Trade Organization Commitments. The First Six Months, in NATIONAL BUREAU OF ASIAN RESEARCH SPECIAL REPORT No. 3: CHINA'S WTO ACCESSION: THE ROAD TO IMPLEMENTATION 6-7 (Nov. 2002).

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