Second TPR of China

China just finished its 2nd TPR in the WTO recently. The TPR confirmed
once again that China's problems are not in tariff barriers, but more
in regulatory and non-tariff barriers. Who says the WTO is only for
"Trade"?

TRADE POLICY REVIEW: CHINA

21 and 23 May 2008

Concluding remarks by the Chairperson

This second Trade Policy Review of the People's Republic of China has
provided an excellent opportunity to improve transparency, and thereby
a better understanding of China's trade and related policies. I thank
Assistant Minister Qiu Hong and her delegation together with the
Discussant, Ambassador Noor Yacob of Malaysia, and Members of the
Trade Policy Review Body for contributing to our exchange of views.
China's response to a large number of questions is also much
appreciated. I join Members in extending sympathies to the victims and
those suffering as a result of the recent earthquake in the Sichuan
province of China.

Members complimented China on its strong attachment to the WTO and its
support for the Doha Development Agenda. Many Members also expressed
their appreciation of China's assistance to LDCs. On China's
bilateral/regional trading agreements (RTAs), which it regards as a
necessary supplement to multilateral trade liberalization, Members
hoped that they would not diminish China's commitment to the
multilateral trading system.

Members commended China's continuing reforms, including trade
liberalization, which had contributed to real economic growth of over
10% annually since its previous Review, resulting in rapidly rising
per capita income and poverty reduction. Many Members noted that
China's growth provided an impressive example of how a country can
foster development. China has also continued to be one of the largest
recipients of inward foreign direct investment. Clearly, the
multilateral trading system, to which China has been a Member for more
than six years, has also contributed to China's economic growth, by
keeping foreign markets open to China's exports. Nevertheless, China
faces a number of challenges. These include the need to stimulate
domestic consumption without fostering inflation, growing income
inequality between urban and rural areas, unequal growth in different
sectors of the economy, and social welfare and environmental concerns.
Some Members called for a greater flexibility in China's
monetary/exchange rate policy, which would be facilitated by a more
smooth-functioning capital market.

Members remarked on the fact that all China's tariff lines are bound
and that the relatively low applied MFN rates are close to bound MFN
rates, thereby imparting a high degree of predictability to its tariff
regime. Nonetheless, Members were concerned about remaining regulatory
and other barriers to trade and investment, especially customs
procedures, import restrictions, anti-dumping measures, standards,
technical regulations and SPS, and restrictions on foreign investment.
Concerns were also raised on China's export regime, which had become
more restrictive, and potentially distorting product markets. Members
appreciated China's efforts to enhance transparency, but some aspects
of China's policy regime, including standards and domestic
regulations, remained complex and opaque; Members looked forward to
improvements in this regard. Many Members welcomed China's application
to join the Agreement on Government Procurement in December 2007.

Members welcomed China's move towards adopting new competition and
property rights legislation. However, Members expressed concern that
industrial policies entailing government intervention were still used
in certain sectors, particularly manufacturing, including iron and
steel. Many Members thought that, despite China's continued efforts,
the enforcement of intellectual property rights remained insufficient,
partly due to the lack of appropriate infrastructure and insufficient
manpower. They urged China to continue addressing this matter.

Agricultural reform was commended by Members, although some were
concerned about tariff and non-tariff barriers and the re-introduction
of price controls on some agricultural products. Members noted that,
in China, labour productivity in agriculture was one-fifth of that in
the rest of the economy. Members called for more market-oriented
energy pricing.

On services, many Members noted that commitments undertaken by China
were more extensive than those of most other developing countries.
However, liberalization in services had been slower than in other
areas and most services sectors remained subject to both a high degree
of state control and significant restrictions on foreign investment
and private-sector activities. Members encouraged China to continue to
accelerate its liberalization of services.

With China now the world's third largest economy and trader, Members
looked to China to assume greater leadership in shaping the
multilateral trading system. Members urged China to continue its
active participation in the current negotiations and to continue to
work towards a successful conclusion of the Doha Development Agenda.

This review has been very useful in providing us with an update of
China's trade policies and practices. I would once again like to thank
the Chinese delegation for their efforts, the Discussant for his
insightful and thoughtful comments, and Members for contributing to
what has been a very extensive and informative two days of
discussions. We look forward to receiving responses to the remaining
questions within the next month.