February 15, 2000
- China will reduce its tariffs on textiles and apparel products from its
current average tariff of 25.4% to 11.7% -- essentially implementing the
textile harmonization formula. Reductions will commence upon accession and
will be completed by January 1, 2005.
- Tariff rates agreed to in the 1997 U.S-China Bilateral Textile Agreement
will be implemented and bound in the WTO by 2001. Further tariff reductions
will be implemented by 2005.
Trading Rights and Distribution
- Currently in China, the right to engage in trade (importing and exporting)
is strictly limited; only companies that receive specific authorization or
who import goods to be used in production have such rights. This limits the
ability of U.S. companies to do business in China, and has limited U.S.
exports. China has agreed that companies in China and U.S. companies will be
able to import most products, including textile and apparel products, into
any part of China three years after accession. This commitment is phased in
over the three-year period.
- China also generally prohibits companies from distributing imported
products or providing related distribution services such as repair and
maintenance services. China will permit foreign enterprises to engage in the
full range of distribution services over a three-year phase-in period for
almost all products, including textile and apparel products. (See separate
papers on distribution services and related services.)
- Most Chinese quotas on priority U.S. exports will be eliminated upon
accession, except that quotas on thirty yarn, synthetic filament tow, and
fiber products will be eliminated after one year.
- The United States will apply the WTO Agreement on Textiles and Clothing to
China with a phase-out of our quotas under that Agreement.
- China has committed to two strong provisions to address concerns regarding
import surges of textile and apparel products:
-- A textile safeguard provides a mechanism to address market disruption
in this sector based on provisions in 1997 U.S.-China Bilateral Textiles
Agreement. The mechanism allows the imposition of quotas if market
disruption occurs. This provision covers all products under the WTO
Agreement on Textiles and Clothing as of 1 January 1995. The mechanism
remains in effect until 31 December 2008.
-- China has also agreed to a product-specific safeguard that addresses
rapidly increasing imports from China that cause or threaten to cause market
disruption on a product-specific basis. This provision remains in effect for
12 years after accession.
- The U.S. and China agreed that we will be able to maintain our current
anti-dumping methodology, which treats China as a non-market economy. This
provision will remain in effect for 15 years.
- China has agreed to certain subsidy rules, including rules applicable to
state-owned enterprises. Specifically, where government benefits are
provided to an industry sector and state-owned enterprises are the
predominant recipients or receive a disproportionate share of those
benefits, the United States could take action under our unfair trade laws.
- In addition, the agreement establishes that the United States can
determine whether government benefits, such as equity infusions or soft
loans, have been provided to an industry using market-based criteria rather
than Chinese government benchmarks.
- To alleviate the uncertainty associated with China’s inconsistent
application, refund, and waivers of its 17% VAT tax, China has agreed to
apply all taxes and tariffs uniformly to both domestic and foreign
- Additional subsidies issues will be addressed multilaterally in China’s
Protocol and Working Party Report.
Thursday, October 14, 2004 PM