The Ministry of Commerce recently issued a foreign market access report reviewing Chinese companies' trade and investment environment in its 19 major trading partners last year. It highlights the ministry's concern over barriers in some foreign markets.

This article contains excerpts from the report dealing with Japan and the United States:

Biggest trading partner

By 2003, Japan was China's largest trading partner for 11 consecutive years.

China exported US$59.42 billion worth of goods to Japan last year, a 22.7 percent increase, while China imported US$74.15 billion worth of goods from Japan over the same period, up by 38.7 percent.

Removal of generalized preference

Products enjoying the rate within the generalized system preference (GSP) scheme are subject to annual adjustment, with a fall in the number of products enjoying this form of preferential treatment. For example, Japan removed Chinese lead oxide, pottery tableware and bedding from GSP in March 2003, increasing the import duty on the above three categories from nil to more than 2 percent. Japanese GSP was amended once again in December 2003, which aimed at removing soda power, scissors and spoons from GSP and raising their import duties from nil to 5.5, 3.7 and 3.9 percent. China has expressed concern over this, as the removal of Chinese products from GSP has a major negative impact on the nation's exporters and hampers Chinese exports to Japan.

Silk import quotas

Using the excuse that importers have limited capability to import, the Japanese side has not distributed all of its import quotas on silk and silk clothing. Despite several sets of negotiations which have been launched by the Chinese side, this dispute has yet to be settled.

Rice tendering

Japan's rice import regime makes Chinese rice uncompetitive on the Japanese market, according to the ministry, which adds that it will closely monitor rice tendering reform measures taken in Japan, as well as improved transparency.

Unfair process

Compulsory inspection is applied to certain imported foodstuffs previously subject to investigation of samples. This rigorous inspection process is not only lengthy, but also expensive, which diminishes the competitiveness of these imported products in terms of price and quality. Japan's insufficient number of inspection agents means that fresh vegetables such as Holland beans, sweet beans and Matsutake have to wait for more than 20 days before they can be inspected, harming their quality and resulting in costly testing fees. The measure severely impedes the export of these products from China.

Safeguard investigations

Japan has planned to carry out safeguard investigations on eels, bicycles, towels and other textile products over the past two years. Although Japan did not launch the investigations after several rounds of consultation, the plans still severely disturbed the export of Chinese products.

Barriers to service trade

Japan has taken many measures to protect its domestic construction market despite its strong capacity in this sector. International bidding is only applied to a small numbers of projects such as gardens, civil construction, embassy buildings and corporate buildings. And the only foreign workers allowed to take part in these projects are managerial staff and technicians. Labor costs are expensive in Japan, increasing the successful bidder's construction costs, forcing many foreign firms to withdraw from these projects.

United States

The United States was China's second-largest trading partner in 2003. According to China Customs, the nation's exports to the United States totaled US$92.47 billion last year, a 32.2 percent increase, while China's imports from the United States in the previous year were US$33.86 billion, up 24.3 percent. China had a US$42.72 billion surplus.

Import licensing

The United States currently imposes quota restrictions on textile and clothing products from China, India, Pakistan and Viet Nam. But Chinese products suffer from the most severe quota restrictions in terms of the categories of products involved and the quantitative controls. And the US authorities sometimes even decide to unilaterally deduct certain quotas from China, claiming that illegal transhipments exist in China's textile trade. However, the US side fails to provide sufficient evidence as required by relevant bilateral agreements. In fact, many of the transhipments were conducted by exporters in third countries rather than Chinese exporters, and exporters engaged in such transit trade even included some US importers with the assistance of some US Customs employees who imported Chinese products to the United States, which were originally destined for third countries. Consultations were held for solving these problems between China and the United States, and the United States has only corrected some of its practices so far.

Bonsai

After rounds of consultation initiated by China, the United States declared a bill in 2003 which agreed on the import of five varieties of bonsai, but also set out stringent quarantine requirements. For example, the trees were not allowed to have contact with soil during the entire growing process. The above requirements have rendered normal trade of this product impossible. The Chinese side is deeply concerned about this, and hopes the US side will implement the bilateral agreement in a concrete way.

Trade remedies

The United States filed nine anti-dumping investigations and two product-specific safeguard investigations involving Chinese exports last year.

Much US legislation contains discriminatory provisions regarding Chinese products. Many unfair practices that exist in the investigations also serve as barriers to China's exports to the United States.

China's market economy status

The United States has ignored China's achievements in building a market economy, continuing to regard the nation as a non-market economy.

Chinese respondents have applied to be regarded as Market Oriented Industries (MOI) in numerous anti-dumping investigations, providing sufficient proof to back this up. The US authorities refused to give these industries MOI status, insisting on using the unfair surrogate country approach. This practice has disregarded China's achievements in the development of its market economy, failed to reflect Chinese products' advantages in terms of raw material and labour costs, resulted in the determination of unduly high dumping margins and severely damaged the interests of Chinese companies.

Restriction on Chinese textile products

The US Committee for the Implementation of Textile Agreements (CITA) decided to request consultation with China on imports of brassieres, knitted fabrics and robes and dressing gowns on December 17, 2003. CITA made a formal request for consultation, and started to restrict China's exports of the above textile products on December 24. China and the United States have held two rounds of consultations on this matter, but have so far failed to reach any agreement.

The Chinese side believed the documents submitted by the US petitioner lack the definition of a causal link, and bear other inconsistencies with Paragraph 242 of the Protocol on the Accession of China to the WTO, and that the implementation procedures of the US restriction measures lack determination on basic concepts such as market disruption, which renders the whole implementation process inconsistent with the basic requirements for petition as set out by Paragraph 242.

GSP

The Trade Act of 2002 which was signed by US President George W. Bush on August 6, 2002, renewed the GSP authorization and extended the GSP scheme to 31 December 2006. As a developing country, China should be eligible for the US GSP as other developing countries are. China has already officially made this request to the US side.

(China Daily June 11, 2004)