Expert: China making rapid headway on WTO requirements

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Last updated at: (Beijing Time) Monday, January 19, 2004

Expert: China making rapid headway on WTO requirements

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Since its accession to the World Trade Organization (WTO) in December 2001, China has repealed a total of 2,300 laws and regulations that were deemed incompatible with WTO requirements. Meanwhile, it has introduced new laws and is revising others to facilitate the opening of its markets.

Notable among those are the Law of Administrative Licensing, which was implemented earlier this month and the Foreign Trade Law, which is under revision. The drafting of other laws, including the Anti-Trust Law and Anti-Dumping Law, is proceeding in full swing.

What's more, China has sharply lowered tariffs on a wide range of imports. In 2004, the average import tariff will drop to 10.4 per cent.

The country is making rapid progress in opening its banking, insurance and foreign trade sectors to foreign participation.

China has done what a veteran Chinese expert on the WTO describes as "an excellent job" of meeting its commitments to the international body.

"I would like to give China '95' marks out of 100 for its performance in the past two years," Tong Zhiguang, China's chief trade negotiator between 1991 and 1993 and former vice-minister of foreign trade, told China Daily in an exclusive interview.

Not only has China kept its promises to the WTO, it has also reaped the expected benefits from its WTO entry while minimizing the negative impact on the domestic sector, says Tong, who is now chairman of the China Society for WTO Studies.

"We have done all what we should have done," he says.

Although there is still room for further improvement in such areas as transparency, Tong says he believes China "has tried its best" in market opening and establishing a level playing field for all.

"Related laws have been made or revised according to the requirements of the WTO while the Chinese Government has been serious in implementing and enforcing such laws and regulations," he says.

Those foreign countries that are still not satisfied are simply expecting too much and are trying to impose "unreasonable demands" on China, Tong says.

Although China's major trading partners, including the US and European Union, had both commented positively on China's WTO fulfillment at the annual review meeting of the WTO, there is still lingering criticism in the foreign media that not enough has been done in certain areas.

A report by the US trade representative also says that China's WTO implementation efforts "lost a significant amount of momentum" in 2003. The report claims that "China fell far short of implementing its WTO commitments" in a number of different sectors.

The European Union and Japan also expressed hopes for more efforts in areas such as the protection of intellectual property rights and the distribution of goods in the domestic market.

"China is still in its WTO transitional period," Tong says. "The promises we made cannot be realized in only one step."

Foreign critics, he says, have overly high expectations because they don't fully understand the state of China's situation.

Take the pirating of VCDs as an example. The production and sales of pirated VCDs are prohibited under Chinese laws and regulations. Both the central and local governments are serious about cracking down on the trade in pirated VCDs. Each year, hundreds of thousands of fake VCDs are confiscated and destroyed.

"But China is such a big country, there is no way we can make all the pirated VCDs disappear overnight from the market," Tong says. "The fight against counterfeit goods has to be a gradual process," he says.

Instead of making unreasonable demands, countries should treat each other as equals, Tong says. "If a country is demanding too much from another country, it may lose the friendship of that country and the business opportunities it provides," he says.

He cites the US as a typical example. Claiming itself an advocate of free trade, the US is leading some other developed countries in trade protectionism and unilateralism.

Developed countries can benefit from free trade through global sourcing to facilitate the growth of their industries.

The process will invariably enrich developing nations, especially those that are production powerhouses. The new found wealth will enable these developing countries to increase their purchasing power.

In contrast, protectionism by developed nations will greatly inhibit the growth of developing countries, Tong says. "Then who is going to buy from the developed countries?" he asks.

Tong says that protectionism largely stems from political expediency rather than long-term national interests. For that reason, the calls for protectionism by politicians are usually shriller during election years, he observes. "It is part of a myopic political game."

He notes that global economic growth can only be ensured by increased trade flow between developed and developing nations that treat each other equally.

This, Tong says, is the guiding spirit of the WTO and China has benefited substantially from being a member of this global organization.

"It (WTO membership) creates an unprecedented favourable foreign trade environment for China," he says.

"As a member of the world trade club, China has gained an international platform to raise its objections to unfair trade barriers against its products, thus making it less likely for other member nations to take unilateral actions," Tong says.

China's foreign trade rose to US$851.21 billion in 2003, up 37.1 per cent from 2002. The boom in trade has fuelled the development of many related industries, including transportation, logistics and finance.

"Almost all sectors of the economy have benefited from WTO entry although there have been continuous anti-dumping charges by some importing countries in relation to Chinese agricultural produce, textiles, chemicals and garments," Tong says.

These charges, he says, merely reflect the competitiveness of those Chinese products in the world market.

But the very existence of those charges also shows the lack of clout Chinese enterprises have on the international marketplace, Tong says.

He calls for the formation of large Chinese conglomerates through mergers and acquisitions and for greater co-ordination among the various Chinese enterprises to raise their profile and voice in the world trade arena. For instance, the various trade associations in China should play a bigger role in answering anti-dumping charges, Tong says.

The former vice-minister says one thing that he is most pleased about is that the domestic sector has weathered the changes brought about by WTO accession well despite many earlier predictions of doom. One example is the car manufacturing sector.

"China's auto industry has not only adapted to post-WTO trading conditions, but has also succeeded in taking full advantage of the opportunities brought about by the WTO to develop at an even faster pace in the past two years," he says.

During this time, nine of the world's most famous car markers have increased their investments in China. Some companies, such as Toyota, which used to prefer selling products to China rather than transferring technologies, have changed their strategies.

Volkswagen, one of the first foreign auto makers to begin manufacturing in China, is reaping the gains from its early investments. With two joint ventures in China, VW has now gained a stranglehold on approximately one third of China's passenger car market.

Tong says that companies like Volkswagen owe their success partly to the stable political environment that has provided the foundation for economic growth and won foreign investors' confidence.

Moreover, China's huge market will remain one of the biggest attractions for foreign investment.

"Chinese people's spending power has never been as strong as it is now," Tong says.

He also notes that China's recent moves to forge regional trade co-operation is in line with the WTO framework.

China reached agreements last year with Thailand, India, Pakistan and the Association of Southeast Asian Nations (ASEAN) on tariff reduction.

The Closer Economic Partnership Arrangements between the mainland and Hong Kong and Macao also took effect on January 1, this year. "Such moves do not violate China's commitments to the WTO," Tong says.

Source: China Daily

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