China WTO: Some China segments still closed to US firms

22 September 2004 21:20 [Source: ICIS news]

WASHINGTON (CNI)--Persistent problems plague China’s effort to meet World Trade Organization (WTO) compliance standards, the leading US private trade association said here Wednesday, including Chinese refusal to open some segments of its economy to global competition.

The US Chamber of Commerce (CoC) said in a press conference today that China’s most critical problem is “widespread and brazen” piracy of US and other nations’ products and technology. But in announcing its third annual review of China’s effort to complete a five-year WTO rules compliance program, the CoC also identified continuing Chinese restrictions on trade as a significant issue.

Ray Sander, senior vice president for international government affairs at New York Life International and co-chair of the CoC Asia task force, told reporters that China’s work toward WTO compliance can be summed up in “four Ps.” “China,” he said, “has made positive progress, but there are persistent problems.”

Sander said that CoC’s new study of China’s WTO compliance effort shows that China is still trying to protect some of its business sectors from foreign competition in the domestic China market. In particular, he said, China is trying to shelter its high-tech industries, and especially computer software within that segment.

Sander noted that China is still barring US firms from access to China’s domestic software market. “These trade restrictions,” Sander said, “will have some short-term benefit for, in this example, Chinese software companies. But in the long-term, we are convinced that these restrictive barriers are not in China’s interest.”

He argued that by creating unique sector barriers to the entry of US and other countries’ companies, “China will remove itself as a world player.” As long as these barriers remain, he said, “foreign investors will be reluctant to enter China, and if Chinese producers of software or other products develop in a protected environment, their standards will not meet international norms and they will not be competitive in the global market.”

In comments provided to the CoC in preparation of its report on China’s WTO compliance, US chemicals manufacturers complained that China’s failure to enact and enforce laws protecting intellectual property rights (IPR) is a major issue in US-China trade and for US companies’ investment in China. The American Chemistry Council (ACC) also noted in its comments to CoC that new Chinese regulations on new chemical products are duplicative and not uniformly applied.

“Although the new chemical regulations apply to domestically manufactured substances as well as imports,” the ACC reported, “the requirements have not been widely communicated and are virtually unknown to local industry.”

Sander said that while China needs to do much more on IPR protection and in eliminating trade restrictions, progress is being made, at least in the context of the last three years of effort. Sander also noted that China’s pet capita gross domestic product (GDP) has recently topped $1000 (Euro820), an “amazing achievement” for China’s economy and one that hints at the huge potential for Chinese consumer demand.

However, CoC officials also raised complaints about Chinese restrictions on distribution of products imported from the US and other foreign markets.

China must meet WTO trade compliance standards by the end of 2006.

The US Chamber of Commerce is the world’s largest business federation and is not affiliated with the US government. A broad range of US chemical and plastics firms are among the CoC’s 3m member firms.

By: Joe Kamalick
+1 713 525 2653

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