There were some restriction imposed on the import of textiles and clothing goods that were from China. The restriction was on the quantity and was kept alive by the WTO members. It was proposed by the Working Party that these restrictions be brought into notice of the Textiles Monitoring Body(TMB) and the proposal was approved by the representatives of China. The WTO Agreement on Textiles and Clothing will hold these notifications as the base requirement for the enactment of Articles 2 and 3 of the agreement. The phrase in article 2.1 of ATC , “day prior to the date of entry into force of the WTO Agreement” would directly refer to the date before China’s accession with reference to the above mentioned WTO members. According to Articles 2.13 and 2.14 of the ATC, the uplift in the growth rates should be applied to the base levels with respect to China’s accession.
Below are the arrangements that have been agreed by representative of China in terms of trading of textiles and apparel till December 31, 2008. These will also be a part of the terms and conditions for China’s Accession to the WTO
In case a WTO member had valid reasons to hold that the Chinese import of textiles and clothing products were causing market disruption, then that particular member can inform China and consult on the matter to take measures to decrease or prevent such a situation. The products should be covered under ATC as per date of signing WTO agreement. The particular member should be able to provide a detailed description of the situation and the reasons for posing this consultation request with factual data. The request submitted should have information on the kind of market disruption that has been created and also a proper description on how Chinese products has brought about the situation.
Once the request is submitted by the member, the consultation should take place within 30 days. A solution should be reached in 90 days of submission of request which will mutually benefit both the parties. The date of action can be extended on a mutual agreement basic.
On accepting the consultation request, China will hold its shipments of the products over which the consultation has been requested. The quantity of the shipment held will not be greater than 7.5 percent of the quantity that has entered in the previous 12 months with respect to the 14 months before the consultation request was placed.
If the matter was not reached to a mutual agreement in the 90 days of submitting the request by the WTO member, then the talks would continue according to the clause in point (c) for consultations raised over the product or products that come under the category or categories involved in the consultation.
The term of restriction that has been mentioned under the clause (d) would hold true from the date of consultation request till the date of 31st December of that year. If less than 3 months remained from the above mentioned date towards the year end, then the period would end in 12 months from the date of request.
Any kind of action that has been taken with respect to the consultation will not last for more than a year unless reapplied under request, or agreed mutually by the concerned Member and China.
The provision for consultation request and also the Section 16 Draft Protocol provision holds that both the provisions cannot be imposed on the same product at the same time.
The allocation on the export of textile and related products has been revised under the Uruguay Round Agreement on Textiles and Clothing (ATC) to have quotas phased out will change the situation of the exports from developing countries. Each country will have a different level of restriction as these quotas are not one sided. As the allocations are cancelled under the ATC agreement, the countries that have been facing strict restrictions are expected to become more competing while those countries who have been facing less strict quota rules may face issues dealing with market shares.
China’s accession into the WTO membership will automatically make China a part of the ATC agreement and this will open up liberal access for China into the textile and apparel exports scenario. The previous ATC was signed in 1995 and China was not a part of this agreement and thus faced strict restrictions on regards to export rules. With China’s accession into WTO and its specific security mechanism, the effect of the accession will go on a good number of years. The addition of China into the ATC will open up new arenas of export opportunity for the country.
According to certain pointers, it has been projected that China’s export market is bound to increase remarkably following the lift of restrictions. China’s footwear export market has seen tremendous increase as there are no restrictions on this category. This data is a direct indication of the benefits that the lifting of textile export restrictions will do for the country. Survey reports point out that China’s market share in footwear export had increased by more than three times from 1990 to 2000 when the textile share percent remained the same. China’s export restrictions to USA was removed in early 2002 and with this several other developing countries saw a decline in their exports. By 2005 the rest of the quotas will also be phased out and reports suggest that the effect of this will be more profound as these restrictions constitute a major part of the export controls.
As China becomes a member of the WTO, it will have to abide by the rules and requirements of the Agreement on Textiles and Clothing. Even though, the allocations on textiles exports will end by 31st December 2004 for all members of the WTO, there will still be some security measures put in place till 2008 end which holds that the fellow members of the WTO can keep a check on the imports by China in case of any kind of market disruption.
Agricultural Subsidies
According to the WTO Agreement on Agriculture, all the members are bound to follow the defined limit for agricultural endowment. Following China’s accession and inclusion into WTO, this value has been set at 8.5% of the production value for the country. All kind of agricultural export grants will also be phased out. Agriculture is one of the most difficult areas to reach an agreement and the same problem had been faced with every other WTO member during their accession. WTO consists of both developed and developing countries and any kind of issues that relate to agriculture usually led to talks that extended over a long period of time. This is the situation that existed not only between the developed countries but also between the developed and the developing countries. The accession of China into the WTO and its entry into Agreement on Agriculture has raised some concerns as China is a developing country and a large part of the population live away from the city. The concern has been raised because the Chinese farmers who do agriculture on small land plots with simple technologies might find it difficult to compete with the industry in developed countries like USA, Canada and Australia who make use of complex technologies. The fact that the price of agricultural produce in China is greater or levels with the world market. Data over agricultural pricing in 1999 that compares the price of corn in China and Chicago shows that the pricing in China was 2 times greater than Chicago and this makes the concern understandable.
There has been double sided trade agreements between China and US and even China and Europe. In the agreement with US agricultural clause has been given more priority and the agreement is rather complete. This has made the agreement rather popular when compared to the one signed with Europe.
The contents of the China-US agricultural trade agreements are
There were bans imposed on import of wheat from TCK affected areas of US. This was lifted with respect to wheat, citrus and meat based on sanitary and phytosanitary grounds.
Chinese allowances and grants to agri-exports was removed
The supreme power of the state owned companies was relaxed and opportunity was provided to the private agencies to take part in agricultural trade.
TRQ or Tariff-rate quota was introduced on cereal imports.
Agricultural imports from US was earlier imposed with duty of above 20% and this was cut down for major imports following the agreement.
The lifting of ban on wheat, citrus and meat will not be a matter of major concern as they only form a small segment of the imports. Implementation of such kinds of trade restrictions which involve a small amount of product is practically difficult. Chinese subsidies on agricultural exports are very few and removing of those will not have a big impact on the country. Taking the third point into consideration, this will be beneficial for the Chinese market as it opens up a bigger opportunity leaving aside the state monopoly. This healthy competition between the state owned traders and individual traders will eventually prove beneficial to the people of China. The main talks and concerns have been over the fourth and fifth points mentioned above which dealt with lowering of import duty and also the agreement over import of grains from US.
Trade in Services
Following the accession of China, the country has agreed to let down several restrictions that govern the service sectors like banking, insurance, distribution, business services, computer department, movies, videos, telecoms and sound services with effect from the year 2000. It will also include professional services of the legal and accounting sector. This allows foreign access to the services in a transparent and easy licensing procedure. The main points under the agreement include
Trade and Distribution Agreement: Foreign service suppliers who are licensed will be allowed to sell products on a retail basis with effect from 2003. The state will have its trading monopoly over some sectors like oil and fertilizers and the other goods will be open to import and export for foreign firms from 2005. By 2007 domestic retailing and distribution of all goods will be open to all foreign companies.
On accession of China into WTO, the financial sector will be open to foreign companies to provide open banking services on foreign currencies which will be extended to local currency by 2003 and within the year 2006, the services can be provided to all Chinese.
Telecoms
Foreign telecom companies can join in a combined venture alongside Chinese in the form of a foreign investment. There will be no quantitative restrictions, but as per the accession agreement, the foreign investment amount cannot go above 25%. In the first year of accession, the facility will open up only in some cities which will be expanded to include several other cities within a year of Chinese accession and also the foreign investment restriction will be relaxed to 35%. After three years from the date of accession, the max investment by foreign firms will be increased to the final level of 49%. And the opportunity to set up telecom joint investment venture for foreign firms will be open to all cities of China within five years of accession.
Insurance
Foreign general insurance companies will be given the first entry into China’s insurance sector whereby they can join hands with a Chinese company holding 51% of the investment. This restriction will be relaxed within two years of accession so that the foreign non-life insurance company can register as a fully owned company. The insurance sector will also open up life insurance companies to have joint alliance with the Chinese companies on a 50% investment basis. Foreign companies with an equity share of below 50% can enter the large scale insurance sectors like commercial, transport, marine, aviation and reinsurance. This will be increased to 51% within a year of accession and by five years foreign insurance companies will be permitted to operate as wholly-owned entities.
Banking
Following the accession, foreign banking companies will be able to provide foreign currency services in China to all clients. This will be open up to local currency services with restriction to only Chinese enterprises by 2003. The local currency service cannot be provided by the foreign companies to others except Chinese enterprises till five years of accession to WTO. After five years, the foreign banking companies can provide local currency services to all clients in China irrespective of any client restrictions.
Agencies To Overlook the Policy and its Implementation
Different agencies will be responsible for the implementation and creation of the various IPR policies as informed by the verified representative of China
The patent sector will be overlooked by The State Intellectual Property Office (SIPO)
The trademark registration will be handled by The Trademarks office which operates under the governance of State Administration for Industry and Commerce (SAIC)
SAIC will also overlook the working of the Copyrights Office which will ensure that there is no unfair competition taking place and will also safeguard the trade secrets.
The pharma sector will be under the governance of State Drug Administration and also the General Customs Administration which will look into the border measures.
The integrity of the plant species diversity will be taken care by The Ministry of Agriculture and Forestry Administration Sector.
All integrated layout circuits will be checked and rechecked for safety by The Ministry of Information Industry.
Any kind of duplicating actions will come under the jurisdiction of the State General Administration of the People’s Republic of China for Quality Supervision and Inspection and Quarantine and will be backed by the SAIC.
The IPR rights will also be protected by other organizations like the courts and police at all levels.
Chinese Participation in the Intellectual Property Agreements
China had become a part of the World Intellectual Property Organization way back in the year 1980. It had taken part in the Paris Convention in the year 1985 that was held for the Protection of Industrial Property. The Treaty on Intellectual Property in Respect of Integrated Circuits was first signed by China which was finally bought into enactment in 1989. The same year China signed the Madrid Agreement Concerning the International Registration of Marks. It also has become a member to protect the integrity of artistic works by taking part in the Berne Convention. Unauthorized duplication of phonograms was a major issue faced by phonogram producers and China was a member of the 1993 convention to safeguard their rights. In 1994 the Patent Cooperation Treaty was signed followed by the Budapest Treaty in 1995 which concerned patent over microorganisms. The agreement over International Classification of Industrial Designs was signed in 1996, known as the Locarno Agreement. In the following year the Strasbourg Agreement was signed over International Patent Classification. The last of them has been the TRIPS agreement after the Uruguay round of the Agreement
Application of National Treatment
The Working Party of the WTO had some members who raised concern over some of the rules by China that did not assure unified national consideration to foreign individuals and agencies that had national rights. The Rules on Banning Infringement of Business Secrets did not have any consideration for foreign individuals or organizations. The request for a complete national consideration was requested so that any kind of copyright violation would not have to undergo multiple clearances especially by the National Copyright Administration in Beijing.
The Chinese representative had responded to this request by the Working Party members. The foreigner would be considered based on any treaty that involved the nationality of the foreigner under concern and China or under the agreement of the principle of reciprocity. The request for national and MFN treatment for foreigners was taken seriously by China and the representative had assured that changes would be bought about to the laws to consider this request.
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