China schedule gets a corrigendum

by Chakravarthi Raghavan

Geneva, 4 Oct 2000 - The secretariat of the World Trade Organization which last week had circulated to members of the China Working Party a consolidated tariff schedule in the goods area that had been filed by China, has now issued a corrigendum - a note to the Consolidated Tariff Schedule, trade diplomats said this week.

This, as well as some details of the discussions at the working party at informal meetings that have now emerged, and the charges being traded about China going back on its bilateral commitments, and the angry Chinese denial, suggests there is something more than meets the eye.

The note to the consolidated tariff schedules that China must have put in along with the schedules was not apparently circulated with the tariff schedules.

But discussions in the informal working party meetings, and some of the sharp exchanges and frayed tempers led some of the trade diplomats to carefully examine the bulky documents (rather than merely verify the schedules of concessions exchanged by them with China, as is customary).

Whether as a result of this and inquiries by them, or other reasons not very clear, the secretariat apparently issued the corrigendum.

The note is a very customary one. It starts with an opening paragraph that the schedule includes tariff offers committed in the bilateral negotiations by China to members which have signed bilateral agreements with China so far and does not contain offers of China to Members which have not yet signed bilateral agreements, and that the schedule is subject to the verification of Members concerned.

It then provides technical information on the HS nomenclature used, and that the base rates used are the “applied rates” of 1998, other details, and the concordance of the 1996 and 2000 HS nomenclatures for verification by members.

Since China is yet to join the WTO, and thus has not ‘bound’ its rates, the issue of applied or bound rates to be used for future tariff cuts do not arise here.

The note also explains how its tariff heading conversions have been done, as well as another para that along with the goods tariff schedules, the ITA (information technology agreement) schedule has also been given, and that the latter is incorporated into the tariff schedule.

A final paragraph says: “The specific implementation periods of tariff reduction contained in this schedule are conditional upon the entry into force of China’s Draft Protocol before 31 December 2000. Should the effective date is (be?) a later date, the specific implementation periods shall be modified accordingly.”

It is difficult to quarrel with this. Western nations, particularly the major ones, can’t expect to raise newer and newer problems and hold up the accession, and still expect to get benefit of tariff concessions exchanged effective end of this year.

Any event, several of the complaints (about issue of insurance licences to the EU companies or some other for the US) seem more to do with the services schedule, yet to be filed.

But the exchanges and comments and discussions at the informal working party, some participants said, had brought up questions about what China has yielded to the US and others, and its effects on existing developing-country members or others seeking accession.

One such question appears to relate to the issue of the schedule to be filed in respect of agriculture, whereby China has to calculate and specify the ‘support’ at product level they are providing and the total of such support for all products, the Aggregate Measure of Support (AMS) which are subject to reductions and disciplines.

Under the Agreement on Agriculture, the AMS of each product is added up to arrive at a total AMS, and developing countries under each AMS have a 10% de minimis level below which they cannot be asked to reduce.

The problem in China is that it has no domestic support, rather a negative AMS. There is some suggestion that China has agreed—some Chinese sources contest this—that in averaging and totalling up the AMS, it would not show any negative AMS, but show them as zero.

According to some reports, when the technical people on the Chinese side were engaged in negotiating the calculation of AMS, they were asked by the US side to show all negative AMS as zero, but that the technical people said they could not do this.

What AMS China puts in or has agreed to do is of course China’s business.

However, several other developing countries are concerned that this concept of converting negative AMS into zero, would have some implications for their own situations and positions, and even more for new entrants from among developing countries.

As a result, some of them have been opposing any references in the report of the working party to this AMS issue.

A second issue relates to the ‘transition review’ mechanism—which becomes important given the US-China accords on questions like anti-dumping etc.

Some delegations of developing countries preferred to have this worded so that questions like implementation of commitments by China could be raised via the transition review mechanism.

China in this regard would appear to have said that it too then would be entitled to have recourse to the review mechanism to raise non-implementation by others.

Ultimately, India would appear to have suggested a formulation providing a right for China to raise when the other partners engage in illegal acts. China would appear to have agreed to this formulation—a necessarily lengthy and perhaps involved one. The Swiss Chair would appear to have intervened to say that the Indian formulation had been taken care of in a shorter formulation by Chairman Girard.

In the situation of frayed tempers, the Chinese side said it preferred the Indian formulation, and accused the chair of partiality. Ultimately, every one cooled down.

Also involved in this was the question of the length of the transition period and the mechanism for review.

However, all these brought up the complicated problems of drafting and linguistics —all accentuated by a basic sense of doubt and lack of confidence.-SUNS4754

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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