Vice-Minister GAO Huchen recently spoke about the state of China's textile trade. Here are some key facts:
1. By restricting the growth on a small portion of China's textile exports (which accounts for only 7.4% of the total value of China's textile exports in 2006), China has been able to secure stable growth for the majority of its textile exports.
2. The utilization rate of the quota under the China-EU textile deal is only 54%−97%.
3. The quantitative restriction would expire at the end of 2007. After that, the textile products under the China-EU deal would be subject to a bilateral monitoring system, but no quota will be applied.
According to a leaked report, the WTO Selection Committee for AB members has recommended Prof. Zhang Yuejiao, along with 3 other candidates, be appointed as AB members in 2008. If the recommendation is adopted by the WTO Members, this will be the first time a Chinese citizen is ever appointed to the "World Court on Trade".
In addition to Prof. Zhang, there are two other new Members from Asia, i.e., Bautista (Philippines) and Oshima (Japan). As there are now three members from Asia, the interesting question is which one represents the Asian seat. Obviously that would not be Japan, as Japan's seat is among those reserved for three of the quad countries and Japan usually does not regard itself as part of Asia for various reasons. As between China and the Philippines, I suspect that China will probably hold to this seat for a long time, if not forever, considering that China is the 3rd largest trader and has not had anyone serving as Panelist yet (excluding those from HK and Chinese Taipei). Thus, it seems the truly Asian (including Oceania) seat would be that of the Philippines. This could mean that, in addition to Japan and China, citizens of other Asian countries, such as Korea, Malaysia or Singapore, could one day have their citizens appointed as AB members.
When the WTO AB was first established in 1995, 3 of the 7 seats were allocated to three of the "Quad countries" while the directorship of the AB Secretariat allocated to Canada, the fourth Quad member. As China now claims the AB seat in its own right rather than as a rotational Asian seat, it seems that China is filling the vacuum left by Canada, which has dropped out of the top four traders lately, and becomes a new Quad member.
Dear Colleagues, Students, Alumni and Friends of the University,
It is my great pleasure to report that in today's Times Higher Education Supplement (THES), HKU has been ranked 18th amongst the world's top universities for 2007. This ranking puts us at the top of all the universities in China and Hong Kong, and makes us the 2nd highest ranked university in Asia, just after Tokyo University.
Although many of us at the University regard rankings and league tables with a degree of ambivalence, as they often highlight only certain aspects of the achievements of universities, I think we can all agree that our position in the well-respected THES league table at least indicates that HKU is among the very best in the world.
I hope all members of the HKU Family are proud of the University's achievement and happy to share its success.
Nevertheless, I would like to take this opportunity to thank everyone for the hard work, contribution and dedication, for without which it would not have been possible for HKU to attain this exceptional recognition. And, as a publicly funded university, we must also thank the Government and the general public for believing in our cause and supporting our endeavours.
I look forward to working with you as we strive to bring the University to even greater heights of excellence.
Research Fellow: Emerging Dynamic Global Economies (EDGE) Network
WTO Institutional Reform Project
Location: University of Ottawa
The Emerging Dynamic Global Economies (EDGE) Network is now accepting applications for the position of a Research Fellow for its World Trade Organisation (WTO) Institutional Reform Project. The project is an international collaborative research project, funded by International Development Research Centre (IDRC) and Networks of Centres of Excellence (NCE), Canada.
Project Description:
The project will examine questions relating to the governance and legitimacy of the WTO as an international organization within the rapidly transforming global economy. It will focus fundamentally on the institutional structure of the WTO as an international organization.Issues to be analyzed are: decision making within the WTO, transparency, internal management structure, external relationships, and the role of regional trade agreements within the multilateral system. The objective of the project is to develop concrete, practical proposals and policy recommendations that are capable of being implemented within the WTO.
Qualifications:
-Graduate or post-doc student in international trade law, with knowledge of WTO's institutional structure
-Strong interest and academic background in the area of international trade law
-Candidates should be well organized with strong research and writing skills
-Fluency in English is essential, with strong writing skills in English
-Candidate must be a citizen of a developing country
Start and End Date:
We expect to fill this position at the earliest and the fellowship will last until 30 September 2008.
Remuneration: Stipend plus transportation and health insurance will be provided
To Apply: Please send your CV and a brief note explaining your interests, availability as well as nationality and visa status to the following address:
At the 8-19 October 2007 meeting of the SPS committee of the WTO, the Members discussed the possibility of increasing the transparency of standards set by private firms. Will the WTO further expand its scope to become a WSO (World Standard Organization)?
Contrary to the boring headlines, the headline of this news item, "'untransparent' private standards criticized in a week of more transparency", is also both interesting and provocative.
The MNCs that choose to manufacturer their products in China are not only responsible for the design defects of such products, but also one fourth of the carbon emissions that have been attributed to China. For more information, check out this new report by the Tyndall Centre of the University of Sussex.
Last week, I was invited to speak at the Second Annual Conference of the EDGE Network (Emerging Dynamic Global Economies) held in Vancouver, Canada. A project initiated by Prof. Debra Steger from the University of Ottawa, the purpose of the Network is to help Canada develop effective strategies to deal with the new international economic order marked by the new emerging economies, especially China, India and Brazil.
Recently the senior executives of Mattel apologized for their recall of the toys made in China. The Chinese media seize this opportunity to claim that the wave of Western media reports questioning the country's export safety was unfair. It is worth noting, however, that technically the apologies from Mattel are only to the Chinese people, more specifically the Chinese customers (see below for the excerpt from Reuters); they are not to the Chinese government, or the Chinese OEM manufacturers for Mattel.
The Mattel apology underlines the fact that China is not only the factory of the world, it is also the market of the world, where billions of consumers, armed with an ever-stronger RMB, tries to buy more and more goods, which, of course, include Barbie, the top money-maker for Mattel. Moreover, one can not really separate "Made in China" with "Sold in China": without the money they make in the foreign-invested firms in China, how could an average Chinese worker afford all these expensive Western products? Thus, Mattel probably should also apologize to their suppliers, because when the workers in these factories get off work, they become the consumers whom Mattel wants to please.
Below is the Reuters Report:
China seizes on Mattel apology to emphasize safety Mon Sep 24, 2007 12:56pm EDT
BEIJING (Reuters) - China highlighted Mattel's apology over its recall of huge numbers of toys on Monday to press Beijing's claim that its exports are generally safe and foreign politicians and media have unfairly hyped quality scares.
Before those recalls, a spate of complaints involving unsafe Chinese products ranging from other toys and seafood to toothpaste that entered EU and U.S. markets prompted calls on both sides of the Atlantic for stricter scrutiny of made-in-China goods.
Thomas Debrowski, executive vice president of worldwide operations for toymaker Mattel Inc, apologized on Friday following recalls of about 21 million Chinese-made toys over five weeks. The recalls stoked U.S. complaints that lax Chinese quality controls threatened foreign consumers.
"Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people and all of our customers who received the toys," Debrowski told China's quality watchdog chief, Li Changjiang, in Beijing.
The vast majority of recalled toys suffered from a design defect that was Mattel's own fault, Debrowski said.
Mattel subsequently issued a statement saying his words had been "mischaracterized" -- though it did not specify how -- and his apology was directed at buyers of its toys.
But China's state-run media have seized on his remarks to make their government's case that the country has been the victim of unfair accusations echoed throughout the international media.
"The apology, though delayed, should help dispel the suspicion American customers harbor against Chinese-made products," the China Daily said in an editorial.
"Its (Mattel's) reputation will be impaired when the whole truth about the recalls is finally made public."
Last week Mattel CEO Robert Eckert had to defend his company's toy safety record as Democratic lawmakers accused him of stonewalling a U.S. congressional probe into production practices in China.
The People's Daily -- the official voice of China's ruling Communist Party -- said the apology showed the wave of Western media reports questioning the country's export safety was unfair.
"If China's toy exports depended solely on a cheap price and did not ensure quality, we would never have won such a massive worldwide market," the paper said, citing a toy-making association official in Guangdong, the southern province where Mattel produces many of its toys.
The paper said that China-based suppliers and workers had suffered unfairly because of the Mattel recalls.
The International Herald Leader, a newspaper issued by the official Xinhua news agency, called for U.S. news media to follow Mattel's example and apologize for what it called flagrant bias.
"The U.S. media have also made an irreplaceable contribution to making made-in-China wear these dark accusations for so long," the paper said.
But Xinhua has also reported that police detained four Chinese nationals accused of having supplied one of Mattel's contract manufacturers, the Lida Toy Company, with the substandard paint behind the first recall in August.
Recently China brought a case against the US on the measures taken by the US on imports of coated paper. I was interviewed by the WSJ on the case (see below). For those who are interested in knowing more technical details about the case, you can find my posting at the International Economic Law and Policy Blog here.
China, in assertive move, challenges U.S. at WTO Andrew Batson. The Wall Street Journal Asia. Hong Kong: Sep 17, 2007. pg. 8
BEIJING -- China is showing a new willingness to aggressively defend its interests as the world's largest exporter, filing a case at the World Trade Organization challenging U.S. trade policies.
The dispute concerns trade penalties the U.S. imposed in March in a fairly narrow market for a kind of glossy, high-quality paper, which is used in magazines and art books.
But it has the potential to broadly affect Chinese exporters, because the U.S. broke with 23 years of its practice and allowed U.S. firms much broader leeway to seek protection against Chinese imports.
Underscoring the importance of the case, this is only the second time China has formally used the WTO's dispute-settlement process since it joined the trade group in 2001. The first time was in March 2002, when China followed several other nations in challenging duties U.S. President George W. Bush imposed on steel imports.
In Washington, where anti-China sentiments are fueling a broader political backlash against globalization, the Bush administration brushed aside the complaint.
"We are fully confident in our trade-remedy laws," said Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab. Mr. Spicer said the administration intends to "vigorously defend" U.S . trade laws before the WTO.
Chinese officials have long preferred private dialogue to public confrontation and have criticized the U.S. for bringing several cases this year against China at the WTO. Political pressure to block Chinese imports has been rising in the U.S., and the trend has been compounded by recent scares over unsafe Chinese toy imports and pet food tainted with illegal chemicals from China.
With Chinese exporters increasingly worried about access to the U.S. market, China's government is under pressure to challenge any barriers, analysts said.
"Instead of trying to work out the solutions through secret political negotiations, China now becomes more and more willing to use the dispute-settlement system," said Henry Gao, a former WTO official.
China's representative at the WTO, Sun Zhenyu, wrote a letter Friday to his U.S. counterpart, Peter Allgeier, requesting the WTO consultations. The Ministry of Commerce in Beijing declined to comment beyond its initial statement announcing the request.
The U.S. decision at issue concerns a kind of trade measure known as countervailing duties. Such duties can be imposed if complaining companies can demonstrate that their overseas competitors are being subsidized by the government. The measures are distinct from a more common type of trade-protection measure known as antidumping duties, which are intended to stop overseas companies from selling products below cost.
The U.S. designates China as a "nonmarket" economy, a condition that makes it easier for domestic companies to win antidumping actions against Chinese goods. But it hadn't previously permitted companies to also seek countervailing duties against goods from China and other nonmarket economies.
In March, the U.S. Commerce Department reversed that position and imposed preliminary countervailing duties of 10.9% to 20.4% on Chinese producers of the coated paper.
---
Greg Hitt in Washington contributed to this article.
According to a senior official from the the State Intellectual Property Office (SIPO), "We cannot rule out the fact that some transnational corporations abuse their IPR rights and attempt to snuff out the emergence of Chinese firms." Now the matter is not one about TRIPS, it's really about trade and competition instead!
Also, the MOFCOM noted that Chinese companies have suffered lost opportunity costs of between $69.1 billion and $147 billion in recent years as a result of IPR disputes. How much is the loss for Western companies due to the TRIPS violations in China?
More Support for Firms in IPR Disputes Wednesday,September 12,2007 Posted: 00:31 BJT(1631 GMT) From:China Daily
The government is to establish a litigation response contingency fund to help companies deal with intellectual property rights (IPR) disputes, the State Intellectual Property Office (SIPO) has said.
The move comes in the face of increased IPR disputes since China's accession to the WTO in 2001.
The United States International Trade Committee (ITC) has launched 12 cases against Chinese companies - involving $1.66 billion - from January to August this year, Ministry of Commerce officials said.
The number of cases and the amount of money involved showed a year-on-year increase of, respectively, 43.8 percent and 43.2 percent, Yu Benlin, deputy chief of the ministry's fair trade bureau, said.
Such investigations have jeopardized China's hi-tech industries and structural upgrades in the country's trade exports, he said.
For the fifth year in a row, China was accused of the most violations under Section 337 of the Tariff Act of 1930. By the end of last year, the US had launched 58 investigations against Chinese companies, since it joined the WTO. There were 13 cases lodged in 2006, accounting for 39.3 percent of the world's total.
SIPO deputy chief Zhang Qin said there were two reasons for this. First, some Chinese firms do not fully understand IPR protection.
Second: "We cannot rule out the fact that some transnational corporations abuse their IPR rights and attempt to snuff out the emergence of Chinese firms."
Wrong impression
Many small and medium-sized firms choose not to challenge IPR accusations in court because of time constraints, complexity and expense, Yu said.
This may have given US investigation agencies the wrong impression that IPR infringements are common among Chinese firms, Yu said.
"This situation has led to (problems) for Chinese companies and the issuance of exclusion orders by foreign companies preventing them from doing business in the US market."
Global rivals request investigations against Chinese companies to prevent them taking significant market share and force them out of the US market because of prohibitive litigation costs, Yu said.
According to the commerce ministry, Chinese companies have suffered lost opportunity costs of between $69.1 billion and $147 billion in recent years as a result of IPR disputes.
The SIPO intends to create a steering committee on corporate IPR management and a mechanism for expert assistance, helping Chinese companies with their patent strategies.
It also aims to provide research for new technologies and products, as well as drafting IPR management charters.
Additionally, it aims to evaluate company performance regarding IPR protection, establish information platforms for domestic and global patents
It will also introduce technology monitoring mechanisms to track the activities of competitors to Chinese firms.
In response to the establishment of the panel in the subsidies case, the MOFCOM made a statement (see below). Two points worth noting about the statement: 1. According to MOFCOM, the Complainants "misunderstood the relevant policies", they even "included some measures that have already been repealed in their panel request". 2. MOFCOM alleged that the Complainants were "doing this for domestic political reasons, in an attempt to dress up their score-card on WTO dispute settlement by claiming credit for the unilateral actions by China to improve its own tax system".
According to Ms. Zhou Xiaoyan, Commissioner of the Fair Trade Bureau of MOFCOM, 76 countries have recognized China's market economy status. Norway and Switzerland are among the latest in according market economy status to China. More info is available here.
Bloomberg recently carried a report on China's move to limit exports of the lalor-intensive products. Will this, coupled with the charges over products " Made in China", mark the end of the Manufacturing Empire of China?
China to Limit Exports of Labor-Intensive Products
By Li Yanping
July 25 (Bloomberg) -- China will curb exports of cheap labor-intensive products to force manufacturers into making higher-quality goods, in a move to narrow the world's largest trade surplus and reduce environmental damage.
The Ministry of Commerce will expand its catalogue of processed goods subject to export limits in the second half of 2007, following the July 23 move to increase a levy for exporters, the ministry's industry director Wang Qinhua said today.
``The new policy will add cost and affect the cash flow of exporters, especially those engaged in the labor-intensive part of the industry,'' she said at a press conference in Beijing. ``Our calculation shows that the impact will force exporters to increase value to their products and upgrade their technology.''
China's record $112.5 billion first-half trade surplus has fanned tensions with the U.S. and European Union, flooding the world's fourth-largest economy with more than $1.3 trillion in foreign currency reserves. Cheap wages and lax environmental rules have attracted manufacturers, 50 percent of them invested by Hong Kong companies, to produce leather goods, electronics, metal products, toys and other goods for sales abroad.
``Every nation wants to upgrade its technology, especially at a time of increasing global competition and rising raw material costs,'' said Huang Yiping, Citigroup Inc.'s Hong Kong- based China economist. ``Many companies in China already have been moving up the technology ladder and value chain, and this new policy will only accelerate this process.''
Capital Requirement
China on July 23 said it would raise a levy on companies that import metals, plastic and textiles into China for use in products that will in turn be shipped abroad.
A total of 1,853 types of commodities including copper, lead, zinc and cloth will be added to the restricted category, requiring importers to deposit half of their payable levies including duty and value-added tax at the customs office, according to the trade ministry's statement.
The new limit may add about 8 billion yuan ($1.06 billion) to costs for exporters, 50 percent of which have been invested by Hong Kong-based companies, the commerce ministry's trade director Wang Jian said today.
``Hong Kong-invested producers will probably be the hardest- hit by this move,'' the ministry's industry director Wang said today. The trade ministry needs the move ``due to the changing international and domestic environment and China's promise to upgrade its industries,'' she said, adding the government will provide some aid and incentives to help Hong Kong manufacturers with the transition.
Killing the Growth Engine?
China's economy, expanding 10 percent every year on average since 1982, has been driven mostly by the so-called processing trade, in which companies import tax-deductible raw materials to turn into export products.
The proportion of processing trade has surged 333-fold over the past 25 years and accounted for 45 percent of China's total value of imports and exports in the first six months of this year, according to the trade ministry's data.
The government doesn't want to completely stop investments that have helped the economy balloon almost 40-fold in the past 25 years.
Manufacturers can be exempted from the exports limit if they shift their production to inland provinces including Shaanxi, Xinjiang and Gansu further away from the Chinese coast, part of a plan by the government to close the income gap between the wealthy coastal cities and the interior, Wang said today.
Western Region Exempted
``Processing trade manufacturers can alternatively move to central or western regions from the south and east coasts to be exempted from the export restrictions,'' she said. ``Production and labor costs are relatively low.''
China's 2008 trade surplus is estimated to increase 45 percent to a record $257 billion.
That's prompted some U.S. congressmen to draft legislation to force the Chinese central bank to let the yuan strengthen against the dollar. Some lawmakers have also called for laws to tie Chinese exports to the country's environmental and labor record.
In a series of moves this year, China lowered export incentives and increased tariffs to slow the pace of overseas sales and ease trade tension with major partners including the U.S. and the European Union.
The latest move to restrict exports also strike at energy- intensive industries with high amounts of emissions and effluents, in an attempt to reduce China's energy dependence and improve the country's environmental record. The policy may not be able to pare the trade record, said Societe Generale's Chief Asia Economist Glenn Maguire.
Buying Time?
``This buys some time politically but it's clearly supportive of a large trade surplus in the longer term,'' as manufacturers shift to higher-end products, Maguire said today in Hong Kong. ``China still has to allow the yuan to appreciate to ease excess liquidity in the economy.''
The yuan has strengthened 9.5 percent against the U.S. dollar since the Chinese central bank ended the currency's dollar link in 2005.
Some U.S. lawmakers deem the gain as insufficient. The U.S. Senate Finance Committee is set to consider legislation tomorrow to push China to raise the value of its currency.
The economy expanded 11.9 percent in the second quarter, the fastest pace in 12 years, backed by an 84 percent jump in trade surplus because exporters produced more and rushed their shipments ahead of a June deadline to curb overseas sales.
Separately, the National Development and Reform Commission, the Chinese government's top planning agency, said today the prevention of ``overheating'' is the most important policy goal in the second half of 2007, reiterating a government priority to curb inflation.
It seems that in addition to the WSJ, the CNN is also interested in food safety issues. They interviewed me in HK last week, and the special program on this, called "Made in China", will be aired in HK on Thursday July 26 at 1930pm and 2230pm, then again on Friday July 27 at 0030am and 0930am.
The schedules for other regions of the world on July 26 are: Buenos Aires 1130 Berlin 1630 New Delhi 2000.
You can find more about this special program here.
I was recently interviewed by the WSJ for the trade war between the US and China on technical standards. Here's the story. The WSJ (China) also has a Chinese version here, which is also reproduced at the end of the current page:
Safety supplants quotas as hot-button trade issue; As China, U.S. play tit for tat, fears grow rules may be abused
Andrew Batson. The Wall Street Journal Asia. Hong Kong: Jul 16, 2007.pg. 1
As China and other nations exchange heated accusations over the safety of their food and other products, it is becoming clear that safety and quality standards are increasingly replacing tariffs and quotas as focal points for international trade disputes.
In the latest of what appears to be an escalating series of tit-for-tat moves, Chinese authorities Friday announced a temporary suspension of imports of some products from several U.S. meat processors, including Tyson Foods Inc., Sanderson Farms Inc. and Cargill Inc. The notice said China's tests had found safety problems including salmonella in frozen chicken from Tyson and residues of growth hormones in Cargill's frozen pork ribs.
The move highlights the Chinese government's determination to show it has food-safety issues under control after a series of scares and scandals has undermined the confidence of domestic consumers and hurt the image of China's exports abroad. The U.S. Food and Drug Administration has blocked shipments of Chinese-made toothpaste and of several types of farm-raised Chinese seafood, because of worries about chemical contamination. In recent days, Chinese authorities have pledged to tighten scrutiny of exported products, and said that thousands of unlicensed or unsafe food producers have been closed down.
They also have pledged to look more closely at what China is importing from abroad. In addition to the frozen chicken and pork ribs blocked last week, China in recent weeks has turned back shipments of French bottled water, Australian seafood and U.S. drink mix that authorities said were contaminated or failed safety tests.
Safety standards have a history of being used as trade barriers, a pattern that observers in both China and the U.S. worry may be reappearing. The back and forth of blocked imports looks increasingly like a trade battle, although one in which accusations of endangering consumers have taken the place of charges of unfair competition and dumping.
'We are likely to see these requirements increasingly being used, and abused, as a trade barrier,' says Leora Blumberg, an international-trade adviser based in Hong Kong for the law firm Heller Ehrman LLP. Ms. Blumberg, a former South African trade official, says that a series of global trade pacts has reduced import duties across the board and restrained nations' ability to block trade through other means.
The current U.S. furor over issues such as tainted pet food and dangerous toys that were made in China has emerged at a time when U.S.-China trade is a potent political issue in Washington. Several U.S. lawmakers had called for trade sanctions against China because of what they describe as unfair trading practices, even before safety concerns became widespread.
'It's difficult to weigh what is the safety element and what is the trade element, but my sense is that both elements are there in the discussions,' says Zhang Hongjun, a partner in the law firm of Holland & Knight LLP who divides his time between China and the U.S. 'Certainly it provides a lot of support to the people who are anti-international trade or anti-China trade.'
The growing food-safety tension between the U.S. and China threatens to further complicate an already delicate period in relations between two of the world's major economies. 'The risk is a cascade of punitive or blocking steps, misinterpretation, second guessing and retaliation,' Donald Straszheim, of the investment firm Roth Capital Partners, wrote in a recent report. 'This is the last thing we need.'
No one disputes that regulators in China and the U.S. have genuine concerns over consumer welfare and food safety. The rise in public concern over health and food safety in wealthy North American and European countries also has pushed governments to be tougher on safety standards.
But the highly technical nature of food safety and product standards gives governments a lot of leeway in practice, and makes it difficult to ensure that rules are enforced fairly and objectively. That is challenging the international-trade system to find ways to resolve this particularly thorny type of trade dispute.
'There are lots of standards where it's impossible to judge whether it is for consumer protection or to create trade barriers,' says Henry Gao, a former World Trade Organization official who now teaches at the University of Hong Kong. The WTO requires any safety standard to have a scientific basis, but that is usually 'a procedural safeguard, not a substantive analysis,' Mr. Gao says. That is because the WTO often isn't equipped to judge the scientific basis of such rules, so it simply looks to see whether a country followed a proper process when drafting them.
Adding to the convergence between the two issues is that sometimes groups calling for trade protection also are flagging safety concerns.
For instance, the Southern Shrimp Alliance, a U.S. industry group that has filed trade complaints against imported Chinese shrimp, also has called for more testing of imported seafood, calling the nation 'a known violator of U.S. food-safety laws.' China has acknowledged shortcomings in its regulatory system but says more than 99% of U.S. food imports from China passed Food and Drug Administration inspection in each of the last three years.
'Governments are sometimes pressured to go beyond what is necessary to protect human, animal and plant health and to use this type of restriction to protect domestic industries from foreign competition,' says Ms. Blumberg, of the Heller Ehrman law firm.
China and other developing nations frequently complain that tough safety standards are being used to keep their products out of rich nations' markets. Poorer nations often don't have the resources or expertise to cope with constantly shifting technical requirements, or to effectively challenge them as trade restraints. At meetings this year of WTO committees, several developing countries said they feel the expanding number of standards is blocking trade. Argentina, for example, has asked for a review of new standards on acceptable levels of pesticide residues.
China has stepped up efforts to make sure exporters are up to date on new standards in their target markets. The government has estimated that 15% of all Chinese exporters encountered some form of technical trade barrier last year, causing them direct losses of some $75.8 billion. China exported $969.08 billion of goods last year.
'Traditional trade policies like tariffs and quotas have less and less impact on international trade, while the impact of technical trade policies such as standards, technical regulations and conformity-assessment procedures is becoming increasingly obvious,' China's Commerce Ministry said last week.
The WTO has a special committee devoted to food-safety issues in trade — known as 'sanitary and phytosanitary measures' — where nations can raise concerns about each other's policies. But many disputes drag on for years: Out of 245 problems raised at the committee over the past decade, a solution has been reported for only 66, according to WTO figures.
One outstanding complaint by the U.S. is China's restrictions on imports of U.S. beef, which date from the finding of bovine spongiform encephalopathy, or mad-cow disease, in a U.S. cow in 2003. The U.S. has taken several measures to make sure supplies of beef won't be contaminated by any future cases of the disease, and contends China's import ban is excessively cautious. The U.S. ambassador to China recently met with the agency in charge, the General Administration of Quality Supervision, Inspection and Quarantine. But despite such lobbying, the ban hasn't been lifted.
特別報導
‧ "中國製造"危機
面對近期發生的一系列有損國內消費者信心和出口產品形像的醜聞﹐中國政府此舉凸現了其嚴格控制食品安全的決心。此前﹐美國食品和藥物管理局(Food and Drug Administration, FDA)禁止了中國產牙膏和多種養殖海產品的進口﹐原因是擔心這些產品受到了化學污染。近日來﹐中國有關部門已承諾加大對出口商品的審查力度﹐同時表示已下令關閉了數千家無證經營和生產問題食品的企業。
中美食品安全問題上緊張氣氛的不斷加劇有可能使這兩個世界主要經濟體之間眼下本已相當微妙的關係變得更加複雜。投資公司Roth Capital Partners的唐納德•斯特拉斯哲姆(Donald Straszheim)在近日的一份報告中寫道﹐目前的風險是﹐從懲罰性和限制性舉措﹐到接下來的曲解、猜忌和報復﹐勢態會不斷升級﹐這些是我們最不願看到的事情。
曾任世界貿易組織(World Trade Organization, WTO)官員、現在香港大學(University of Hong Kong)任教的高樹超(Henry Gao)說﹐標準有很多很多﹐你根本無法判斷它什麼時候是為了保護消費者﹐什麼時候是為了設立貿易壁壘。他說﹐世貿組織要求任何安全標準都要有科學依據﹐ 但這往往只是程式上的保護﹐而非實質性的分析。那是因為世貿組織往往不具備判別這類安全標準科學依據的能力﹐因此它只是看成員國在起草安全標準時是否遵循了恰當的程序。
美國就中國限制美國牛肉進口所提出的申訴就是眾多未決案中的一起。此案事起2003年美國一頭牛被發現染有瘋牛病。事發後美國採取了多項措施確保今後的牛肉供應不會受到污染或瘋牛病困擾﹐但中國一直沒有取消美國牛肉進口禁令。美國因此向世貿組織提出申訴﹐稱中國進口禁令過分。近日美國駐華大使與中國國家質量監督檢驗檢疫總局(General Administration of Quality Supervision, Inspection and Quarantine)官員見了面﹐但遊說無果﹐禁令猶在。
U.S. Piracy Case May Raise Trade Tensions With China
Washington - The Bush administration formally took its longstanding spat with China over pirated movies, music and books to the World Trade Organization. The move represents a further increase in trade tensions between the two countries.
U.S. Trade Representative Susan Schwab made the official announcement. "Piracy and counterfeiting levels in China remain unacceptably high," Ms. Schwab said in a prepared statement.
While acknowledging China's leaders have made progress to improve property rights protections for movies, music, books and other goods, she said the U.S. and China haven't been able to agree on legal changes the U.S. believes are needed for China to comply with its commitments as a member of the WTO.
The U.S. plans Tuesday to ask for dispute-settlement consultations from the WTO on two matters: one claiming deficiencies in China's legal structures to protect and enforce copyrights and trademarks; and the other challenging barriers to China's market for books, music, videos and movies.
The Chinese Ministry of Commerce didn't have any immediate comment on the expected move, which was reported in Saturday's editions of The Wall Street Journal and New York Times.
While supported by the U.S. movie and music businesses, the complaints have stirred unease among executives of other U.S. industries, including drug companies and high-tech manufacturers. Many fear that a clash with China over piracy could undermine the increasing cooperation they have won over the past year with local Chinese officials on combating the problem.
Ma Xiushan, deputy general secretary of the China Intellectual Property Society, said the cases will be seen as a negative signal from the U.S. at a time "when China is working very hard to narrow our distance from the U.S. and other developed countries in intellectual property rights protection."
Henry Gao, a former WTO official who teaches at the University of Hong Kong now, said, "I am not sure the U.S. can win this case." He noted that the criminal penalties for piracy in China are, under WTO rules, supposed to be "consistent with the level of penalties applied for crimes of a corresponding gravity." It isn't obvious what crimes are equivalent to being caught with 500 CDs, he said. "This is where the U.S. will have to come up with some really good arguments."
"This will drag the WTO into sensitive political issues and I think the WTO probably will be very cautious here," he added. Yet he noted that in the past China has taken action to defuse WTO complaints before they come to a head.
China has taken a number of steps recently to crack down on piracy, increasing penalties and lowering the thresholds for what constitutes a criminal act. Chinese provincial authorities have worked alongside U.S. industries to carry out a series of raids against factories and warehouses trafficking in counterfeit goods.
"The piracy issue is a world-wide issue," said Chen Zhaokuan, deputy director of the Copyright Society of China. "Many countries are facing the same challenges in their anti-piracy campaigns. For China, we are a later-comer in this area, and it's natural that the sense of copyright protection among the Chinese people is not that strong. Considering how much work we have done to promote the copyrights protection and to fight against piracy in the past 10 years, we already have made many achievements."
U.S. industry groups that aren't expected to support the WTO cases include the Business Software Alliance, whose members include Microsoft Corp. and Apple Inc., and the Pharmaceutical Research and Manufacturers of America, the drug industry's main trade group. Both sectors have made their own market-access and antipiracy advances and don't want to see that work disturbed, administration and industry officials said.
The cases add to a list of U.S. trade actions against China in recent months. The administration in February filed a WTO case alleging that Beijing doled out unfair subsidies to a range of Chinese industries, while last month the Commerce Department broke decades of precedent by opening the way for U.S. companies to seek higher tariffs on some Chinese paper imports found to have benefited from government subsidies.
The first case will make a number of specific complaints against China's enforcement of its own piracy laws. Current Chinese law says that in the case of counterfeit CDs, for instance, one must be caught with at least 500 to be charged with a crime. The U.S. will argue that there should be no such threshold.
The case will also argue that it should be illegal to either distribute or produce counterfeit goods. Chinese law requires one to be caught doing both before being charged.
"This case is going to be very technical, very targeted and very specific," said one industry official with knowledge of the administration's case.
The other complaint will target what the U.S. alleges to be overly restrictive rules on the distribution of foreign CDs, DVDs, books and other media products. The case won't seek to overturn the limit placed by Beijing on foreign films that are allowed to show in Chinese theaters, which is now set at 20 films a year.
DVDs of Hollywood blockbusters and CDs of the latest pop hits are readily available in shops or on streetcorners in Chinese cities. Almost all of them -- 90% or more, according to most industry estimates -- are illegal copies. The problem has also stunted the development of China's own film industry, as pirated DVDs hit the market so quickly that most films can make little money from ticket sales or legitimate DVD sales.
One reason the U.S. is also pushing its complaint about restrictions on distribution of foreign movies is that there is currently little legally available content to compete with pirated versions in China. As previously reported, studios like Fox and Warner have been trying to market legitimate DVD products in China at prices the local market can bear in an effort to wean Chinese consumers off pirated alternatives.
On June 22, at the invitation of Prof. Won-mog Choi and the Korean Scoeity of International Economic Law, I presented a paper on China's FTA strategy at a symposium in Seoul. It was my first time in Korea, and I found it a wonderful country.
In celebration of the 10th anniversary of the establishment of the anti-dumping system in China, the MOFCOM held a conference on the Law and Practice of Anti-dumping System in China from the 25th to 26th of June. At the conference, Vice-Minister Gao Hucheng noted that Chinese firms have become more willing to use international rules to protect their own interests, while the Chinese investigating authorities have greatly improved their ability to apply anti-dumping measures and participate in making international rules. As a result, China has initiated 48 investigations and adopted anti-dumping measures in 35 cases. Indeed, according to the statistics from the WTO, China has become one of the major users of anti-dumping measures.
Notwithstanding its achievements, China's anti-dumping system still suffers from some major problems. In the article "Procedural Issues in the Anti-Dumping Regulations of China: A Critical Review Under the WTO Rules", I analyzed some of these problems. You can find the article here.
On April 10, 2007, the United States took the unprecedented move by filing two complaints against China in the WTO. While there have been a lot of discussions on the first complaint, i.e., the case on measures affecting the protection and enforcement of intellectual property rights, the second compliant has received little attention. In my view, the second complaint is more interesting as it illustrates the tension between trade liberalization and open economy on the one side, and political censorship and ideological control on the other side, which is the defining feature of the Chinese society today.
I will be presenting my latest paper on this case at the International Conference on"Culture Diversity under International Trade Regime: Policy and Practices", which will be held at the National Taiwan University in Taipei this Wednesday and Thursday. You can find more details about the conference here.
Another of my paper made Top Ten on the SSRN. This is "Procedural Issues in the Anti-Dumping Regulations of China: A Critical Review Under the WTO Rules", which was recently listed on SSRN's Top Ten download list for "Asian Law". It is a paper that I co-authored with Dr. Won-Mong Choi from Korea. The paper is available here.
Another good news: In addition to being listed on SSRN's Top Ten download list for "Emerging Markets: Economics", my paper "China's Participation in the WTO: A Lawyer's Perspective" also made into the Top Ten Papers for "International Law & Trade Journals" for the period of April 6, 2007 to June 5, 2007. My paper is also one of the only two in the Top Ten dealing with the traditional trade (WTO) issues, with the others mostly on tax and IP topics.
Thanks for the interests from all of you. For those of you who wants to know more about the paper, it is available at http://papers.ssrn.com/abstract=958877. More details on the ranking can be found here.
After more than 20 hours of travelling, I finally arrived at the HerstMonceux Castle on May 26th to start my teaching at the International Study Centre (ISC) of Queen's University (Canada).
Here's a bit of the history of the Castle from ISC's website:
The rich history that surrounds Herstmonceux Castle and the impressive structure of the Castle itself offer special appeal for students participating in ISC programs. In fact, the area shows evidence of prehistoric activity dating back as far as the Paleolithic period, over 20,000 years ago.
Herstmonceux’s Written History The Battle of Hastings on October 14, 1066, occurred just a few kilometres from the Saxon village of Herste and changed the course of world history. The first written evidence of the existence of the Herste settlement appears in William the Conqueror’s Domesday Book which reports that one of William’s closest supporters granted tenancy of the manor at Herste to a man named ‘Wilbert’.
The Herstmonceux Name By the end of the twelfth century, the family at the manor house at Herste had considerable status. Written accounts mention a lady called Idonea de Herste, who married a Norman nobleman named Ingelram de Monceux. Around this time, the manor began to be called the “Herste of the Monceux”, a name that eventually became Herstmonceux (pronounced Herst-mon-soo).
Herstmonceux Castle Estate A descendant of the Monceuxes, Roger Fiennes, was ultimately responsible for the construction of Herstmonceux Castle in the County of Sussex. Sir Roger was appointed Treasurer of the Household of Henry VI, and needed a house fitting a man of his position, so construction of the castle on the site of the old manor house began in 1441. Today it is the oldest brick building of any note still standing in England. The castle was built of brick, a highly unusual material for the time in Britain, and the builders of Herstmonceux Castle concentrated more on grandeur and comfort than on defence to produce a truly magnificent estate. The property passed through the hands of a number of private owners until it was sold in 1946 to the British Admiralty, which bought the estate for the Royal Greenwich Observatory. The site served as an important scientific institution for over 40 years. The estate still provides housing for the Newton Telescope and the Equatorial Telescope Buildings, which have been converted to an interactive science centre for schoolchildren.
I am in Beijing at the moment, where the International Federation of the Periodical Press (FIPP) is holding its 36th World Magazine Conference. One can't help wondering the connection between this "timely" conference and the WTO complaint against China on trading rights and distribution services for foreign periodicals.
In a speech by Director-General Liu of the General Administration of Press and Publication, he stressed that both local and foreign media enjoy "equal protection in China" so long as they carry out "lawful businesses".
I've recently been appointed by the World Bank as an International Consultant to conduct research on trade in services issues in the proposed Australia-China FTA. I would appreciate any inputs or stories relating to the topic, especially those on China's export interest in services in Australia.
I just received a notice from the SSRN today announcing that my paper "China's Participation in the WTO: A Lawyer's Perspective" was recently listed on SSRN's Top Ten download list for "Emerging Markets: Economics". I checked the SSRN website and found that my paper was listed as the 7th most downloaded paper for Journal of Emerging Markets: Economics for the period from March 11, 2007 to May 10, 2007. This is not bad for a paper that is yet to be published in paper format (it is forthcoming in the Singapore Year Book of International Law http://law.nus.edu.sg/sybil/).
I taught at the Academy of International Trade Law in the summer of 2006. It is a wonderful program hosted by the Institute of European Studies of Macau. Last year I taught the module on Dispute Settlement, which is originally scheduled to be taught by Prof. Joseph Weiler from New York University School of Law. When he was unable to come to Macau due to personal reasons, I was recommended to teach the module instead.
This year, I will continue teaching in the course. Students from law schools across the world are welcome to apply. If you are interested, you can find more details about the course and how to apply here.
From April 23 to 24, I went to Kuala Lumpur, Malaysia for the Conference on "Trade, WTO and Sustainable Development: A Cause for Concern?", organized by International Islamic University Malaysia, Southeast Asian Council for Food Security and Fair Trade, Education and Research Association of Consumers Malaysia, Federation of Malaysian Consumer Associations and United Nations Development Program (UNDP). At the conference, I presented a paper on " Winning a WTO Case based on non-WTO Law: Illusion or Reality?". Further information about the conference can be found at here.
In her recent comment on the TRIPS case by US against China, the Iron Lady of China, Vice Premier Wu Yi, reportedly said the following:
"The United States Trade Representative, the USTR, has totally ignored the massive strides China has made," Wu told an intellectual property forum in Beijing.
The US action "flies in the face of the agreement between the two countries' leaders to propose dialogue as a way of settling disputes," Wu said, adding that never before had a WTO member simultaneously mounted two cases against another country.
"This will have an utterly negative impact and will inevitably badly damage bilateral intellectual property cooperation," she said, while also warning it would "harm" cooperation over market access issues.
"The Chinese government is extremely dissatisfied about this, but we will proactively respond according to the related WTO rules and see it through to the end," Wu said.
There's an interesting post about the recent case by the US against China at the Danwei Blog. The original is here.
Blame Canada! Posted by Maya Alexandri, April 18, 2007 04:08 PM
Yesterday, the State Council News Office held a press conference at which the State Intellectual Property Office (SIPO) news spokesperson Wang Ziqiang (王自强) responded to the WTO cases that the United States filed last week. China's position is both predictably general and surprisingly specific.
Predictably, counterfeiting is a world-wide problem that can't be eradicated in a short period of time. While China doesn't deny that its shops are teeming with counterfeit products, that's no reason for the WTO cases. Moreover, the WTO cases will strain Sino-US cooperative anti-counterfeiting efforts.
Surprisingly, in filing the WTO cases, the US is picking on China instead of focusing on the country with "the world's most serious piracy problem": Canada. Citing an International Intellectual Property Alliance (IIPA) filing with the USTR, Wang Ziqiang explained that the United States' IP-related per capita losses in Canada were $16.78, compared with a staggeringly low per capita loss of $1.68 in China.
That per capita losses in Canada are greater than in China is almost inevitable: any number divided by 32 million will be larger than if it's divided by 1.3 billion. Curious about why the IIPA would bother with such a useless calculation, your correspondent checked the filing at issue. In fact, the numbers cited by the IIPA reflect industry-by-industry financial losses and the estimated levels of piracy. Regarding business software, for example, IIPA reports that 64% of business software in Canada is pirated, causing losses of $551 million. This compares to an 82% piracy rate in China, corresponding to losses of $1.9 billion.
Plainly, IIPA's numbers show that China, not Canada, is the worse offender. China, apparently, took the initiative to divide the loss figures by each country's respective population size to come up with a statistic that suggests otherwise.
1st case: According to TRIPS Article 61, Members must provide remedies for IPR violation, which shall include imprisonment and/or monetary fines sufficient to provide a deterrent, but this is only supposed to be "consistent with the level of penalties applied for crimes of a corresponding gravity". The question is what are "crimes of a corresponding gravity" with being caught with 500 CDs in hand. This is where the US will have to come up with some really good argument.
2nd case: With regard to the importation of books, newspapers, periodicals, electronic publications and audio and video products, China has not reserved them for state trading. Thus the US should have a case. China can, however, raise a defense for the protection of the public morals under GATT Art. XX, but the big question will be whether the measures China take are "necessary" to achieve such goal. This will drag the WTO into sensitive political issues and I think WTO probably will be very cautious here.
To summarize, if the US win both cases, people in China might not be able to buy a pirated copy of the "Red Dragon" off the street corner 10 days after its release, but they will instead be able to go into the cinema to watch " Red Corner" 10 years after it was released.
U.S. Piracy Case May Raise Trade Tensions With China By NEIL KING JR. April 7, 2007; Page A3
WASHINGTON -- The Bush administration is preparing to take its longstanding spat with China over pirated movies, music and books to the World Trade Organization, a move that could notch up trade tensions between the two countries.
The administration this coming week will file twin cases challenging China's lax enforcement of its own antipiracy laws as well as its tight restrictions on the distribution of foreign movies, music and printed material. The antipiracy complaints will mark the culmination of several years of work within the administration to build a case against China over alleged intellectual-property abuses, which hit U.S. exports ranging from auto parts to scientific journals.
While supported by the U.S. movie and music businesses, the impending complaints have stirred unease among executives of other U.S. industries, including drug companies and high-tech manufacturers. Many fear that a clash with China over piracy could undermine the increasing cooperation they have won over the past year with local Chinese officials on combating the problem.
Industry groups that aren't expected to support the case include the Business Software Alliance, whose members include Microsoft Corp. and Apple Inc., and the Pharmaceutical Research and Manufacturers of America, the drug industry's main trade group. Both sectors have made their own market-access and antipiracy advances and don't want to see that work disturbed, administration and industry officials said.
The cases will add to a list of U.S. trade actions against China in recent months. The administration in February filed a WTO case alleging that Beijing doled out unfair subsidies to a range of Chinese industries, while last month the Commerce Department broke decades of precedent by opening the way for U.S. companies to seek higher tariffs on some Chinese paper imports found to have benefited from government subsidies.
The first case being filed this coming week will make a number of specific complaints against China's enforcement of its own piracy laws. Current Chinese law says that in the case of counterfeit CDs, for instance, one must be caught with at least 500 to be charged with a crime. The U.S. will argue that there should be no such threshold.
The case will also argue that it should be illegal to either distribute or produce counterfeit goods. Chinese law requires one to be caught doing both before being charged.
"This case is going to be very technical, very targeted and very specific," said one industry official with knowledge of the administration's case.
The other complaint will target what the U.S. alleges to be overly restrictive rules on the distribution of foreign CDs, DVDs, books and other media products. The case won't seek to overturn the limit placed by Beijing on foreign films that are allowed to show in Chinese theaters, which is now set at 20 films a year.
The cases come as China has taken a number of moves recently to crack down on piracy, increasing penalties and lowering the thresholds for what constitutes a criminal act. Chinese provincial authorities have worked alongside U.S. industries to carry out a series of raids against factories and warehouses trafficking in counterfeit goods.
Cambridge has published a new book on "The WTO in the Twenty-first Century: Dispute Settlement, Negotiations, and Regionalism in Asia". I contributed the 19th Chapter on "Reflections on the relationship between WTO negotiations and dispute settlement: lessons from the GATS". More details on the book is available from here.
The APEC has just published a report on "The New International Architecture in Trade and Investment – Current Status and Implications". I contributed by writing the economy paper for China as well as preparing the synthesis report.
This book is part of the outputs for the project on "Capacity Building for the New International Architecture in Trade and Investment" by the APEC Human Resources Development Working Group. For more details, please check here. The whole report is available for download at here.
On 11 May 2006, the Commission adopted a Decision requiring Member States to ensure that, from 11 March 2007, cigarette lighters are child-resistant when placed on the EU market. The Decision also prohibits the placing on the market of lighters which resemble objects that are particularly attractive to children; so-called Novelty Lighters. Certain lighters, such as luxury lighters, are excluded from the scope of the Decision based on a number of technical criteria, but must anyway comply with the general safety requirements for these products. In short this means that from 11 March 2007:
Cigarette lighters placed on the EU market must be child resistant (With the exception of lighters which are sold with a 2 year written guarantee, are refillable and can be repaired by a European-based after-sales service)
Novelty lighters can no longer be placed on the market (For a definition of novelty lighter, please see the Guidelines)
All lighters must be safe (This has already been the case since 1992. Lighters which comply with all requirements of ISO9994 are presumed to be safe)
The World Trade Organization reiterated Monday that it only uses nomenclature that was agreed upon when Taiwan entered the organization in 2001 and that it will continue to do so, refuting allegations that under Chinese pressure, the organization changed Taiwan's official title in a recent international meeting.
According to news reports from Taipei, Taiwan's title was changed to "Taiwan Province of China" in all documents circulated at a global fisheries subsidies meeting held in Geneva March 1-2 under the auspices of the WTO and the United Nations Environment Programme.
Taiwan's Ministry of Foreign Affairs immediately protested Beijing's latest "political plot" to downgrade Taiwan's international status and also called for the WTO to show respect for the rights and interests of every member country of the WTO.
Asked to comment on the controversy, WTO spokesman Keith Rockwell said the complaints arising over the use of nomenclature are based on "a lack of understanding of the facts," as the meeting in question was not a WTO event.
The two-day seminar on "Disciplining Fisheries Subsidies" was co-hosted by the UNEP and the world conservation group WWF, with fishery experts and officials of WTO member states participating.
"The WTO always uses the nomenclature which was agreed upon when Chinese Taipei acceded in 2001, and it will continue to do so," Rockwell stressed.
Taiwan's formal title in the WTO is "the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu," also referred to as "Chinese Taipei."
On March 16th, China announced that another 11 vegetables and 8 fishery products from Taiwan will be granted zero tariff when imported into China. I have pointed out two years ago in an interview with Asia Times that such zero tariff violates the MFN rule of the WTO. No WTO Member, however, seemed to have enough interests in these products to bring the issue up in the WTO. The new list includes shrimp, which is a major export items for several countries in Asia. There might be some complaints from them this time.
At the press conference of the 5th session of the 10th NPC on March 12th, Minister of Commerce Bo Xilai indicated that China would not hesitate to take cases to the WTO if bilateral consultations does not work out. Does this mean that China has finally decided to adopt the "Aggressive Legalism" strategy?
