The Hindu : Business : China using export controls to manage international trade

Online edition of India's National Newspaper
Thursday, Apr 20, 2006

Business

Business

China using export controls to manage international trade

R. Gopalakrishnan

WTO report cites widening disparities between domestic regions

Trade Policy Review highlights feverish pace of economic growth China maintains export restraints on certain textiles Twelve large sectors in GATS list

CHENNAI: Export controls, rather than technical or import tariff barriers, are the major instruments that the People's Republic of China uses to manage international trade, going by the first Trade Policy Review (TPR) of the People's Republic undertaken by the World Trade Organization (WTO).

The WTO's TPR documents released on Wednesday highlight both the feverish pace of economic growth that China has achieved before and after becoming a member of the organisation two years ago and the challenges it faces by way of increasing disparities between urban and rural areas and between coastal regions (where foreign-investment-driven manufacturing is concentrated) and inland regions.

According to the review report prepared by the WTO Secretariat, many of the export controls exercised by China are meant to deal with domestic supply constraints and to meet international obligations.

Complex export regime

The export regime, which includes export taxes, export prohibitions, export licensing and export quotas, "remains complex,'' says the review. Destination-based export quotas are also maintained with respect to China's autonomous regions of Hong Kong and Macao.

Ironically, certain restrictions are imposed on exports at the behest of China's leading trade partners from the developed world, which want to stem the flow of imports from China.

Under memoranda of understanding signed with the European Union and the United States, China maintains export restraints on certain textiles and clothing products, which are due to remain in place until the end of 2007 and 2008, respectively.

"In addition, export of rice, maize, cotton, coal, crude and processed oil, tungsten ore and products, antimony ore and products, silver and tobacco products are subject to state trading to ensure stable domestic supply, prevent disruption in the international market and protect exhaustible resources,'' says the TPR.

Pointing to the general lowering of China's MFN tariffs on merchandise, the report also says with reference to GATS (General Agreement on Trade in Services) that "specific commitments made (by China) are relatively extensive by developing country standards, covering nine out of the 12 large sectors in the GATS list.''

China has entered into bilateral preferential trade agreements with some countries, including Pakistan and Chile, which "appear to have recognised China as a market economy,'' the Trade Policy Review adds.

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