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US business group cites Chinese WTO shortcomings
BEIJING (September 20 2002) : Nearly a year after joining the World Trade Organisation, China is falling short on many of its promises, a US business group said on Thursday, citing impossibly tough rules on meat imports and new restrictions on foreign banks.
When China entered the WTO last December, it promised to drop many import tariffs, remove a range of restrictions on foreigners doing business in the country and allow more overseas investment in protected industries.
"The key message at this stage in the process is that the Chinese government at the central level is fairly determined to meet its commitments," said Chris Murck, chairman of the China branch of the American Chamber of Commerce.
"At the same time there are many technical and practical difficulties and areas in which they may not be fully in compliance," Murck told Reuters in an interview, after a China WTO progress report by the group was published this week.
The report covered similar ground to one released last week by the US Chamber of Commerce, a separate business group, that found problems in major areas like agriculture and services, but stopped short of calling for formal action against Beijing.
There has been major progress in cutting tariffs, such as on information technology products, for which import duties were now basically zero, Murck said.
China imported $40 billion worth of such goods in the first half, and without the tariff cuts there would have been $7.5 billion in tariffs paid.
China has also revised many laws to comply with WTO rules, and has made the laws available to foreigners, Murck said.
But while Beijing has stuck to the letter of its WTO pledges in many cases, it has thrown up other obstacles, such as tough new standards on genetically modified crops that threaten $1 billion in US soyabean exports, Murck said.
"The biggest general problem area is agriculture. It's one of the most sensitive areas for both sides," Murck said.
"Farmers' incomes have been under pressure for a number of years.
There is excess labour in the countryside, and both politically and economically, it's one sector that will face severe adjustments from having to open the market," Murck said.
NOT CUTTING SLACK: In one example, China slapped impossibly high sanitation standards on meat and poultry imports after joining the WTO, though no equivalent rules exist for domestic products, the report says.
"A policy of zero tolerance for pathogens is unscientific and constitutes a non-tariff trade barrier.
No tests are performed on domestic products, but if they were, virtually all raw meat and chicken would have to be destroyed to meet the standard imposed on imports," the report said.
In the financial industry -- another sector where US companies have high hopes -- China has allowed foreign banks to provide more services, such as foreign currency transactions for individuals.
But it has imposed tough capital requirements for banks which want licences to conduct a full range of services that will soar from $12 million per branch now to $72 million per branch in five years, the report said.
"The levels set by China are extremely high by international standards and will deter many banks from entering the market, or expanding their business scope, even though they will technically be allowed to do so," the report said.
Murck said the US business community was not trying to go easy on China.
"The approach to resolving this is not so much to cut China some slack but to identify the problems early and quickly, and to enter into bilateral discussions," Murck said.
"We're not at the point where people are talking about taking disputes to be filed with the
WTO. WTO dispute resolution is not an effective way to fight the cases of individual companies," Murck said.
Courtesy Business Recorder
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