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Trade Standards: Barrier or Boost to Export?

China suffers an annual loss of tens of billions of US dollars in its exports trade due to product standards imposed by developed countries, according to discussions at a seminar in Beijing on the World Trade Organization's (WTO) 2005 World Trade Report.

The "Standardization & Int'l Trade: Seminar on 2005 World Trade Report" was jointly held by the Ministry of Commerce, General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), China Certification and the Accreditation Administration and Standardization Administration of China on September 5.

Almost half of the report expounds on the relationship between standards and trade, pinpointing standards as the major non-tariff barrier in today's international trade.

Standards are also the largest obstacle that China faces in its export trade.

Take DVDs for example. China pays a patent fee of US$20 for every exported DVD product while the export price of a DVD product is US$29. In line with the contract between Chinese DVD firms and 4C Patent Group managed by the Dutch conglomerate Royal Philips Electronics, the China-updated technology based on the original patented technology also belongs to 4C.

This arrangement embodies the role of standardization.

Seminar delegates said that more and more Chinese products are subject to standards imposed not only by other countries but also domestically. About 20 percent of China's washing machines were boycotted by domestic market for failing to meet the national noise standard implemented in August.

Chinese electronic and electrical equipment enterprises will be charged an extra recycling fee for their exports to the European market because of two green directives announced by the European Union (EU): the WEEE (waste from electric and electronic equipment) directives that took effect on August 13, and the ROHS (restriction on hazardous substances) directive that will take effect on July 1, 2006. Industry experts have estimated that the ROHS directive will lead to a 10 percent rise in production costs.
"Standardization plays an active role in international trade," Shi Yonghai, president of the China International Trade Association, said. But they don't only affect China. The technical barriers affect developing countries in general, according to a survey conducted by the Organization for Economic Cooperation and Development (OECD). But the issue is more serious in China, the third largest trading player in the world.

As tariffs go down, non-tariff barriers including technological rules and regulations, specifications and quarantine laws are increasingly used by many developed countries to lower imports thereby protecting local industries, Li Zhonghai, president of the Standardization Administration of China, said.

Li added that the only way out for China is to participate in stipulating international standards.

It's also important that domestic firms work towards sustainable product development.

To date, 6,500 national product standards, or 40 percent of the total, were developed in line with international standards. However, only 20 or so standards developed by China were approved by the ISO/IEC (International Organization for Standardization/International Electronic Commission), which controls more than 17,000 standards.

(China.org.cn by Guo Xiaohong, September 11, 2005)

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