Trade Remedies and FTA China’s Perspective

By Cheng, Yongru

Fair Trade Bureau, Ministry of Commerce

The People’s Republic of China

Currently Situation of RTAs The vast majority of WTO members are party to one or mo

re regional trade agreements. The surge in RTAs has continued unabated since the early 1990s. Some 250 RTAs have been notified to the GATT/WTO up to December 2002, of which 130 were notified after January 1995. Over 170 RTAs are currently in force; an additional 70 are estimated to be operational although not yet notified. By the end of 2005, if RTAs reportedly planned or already under negotiation are concluded, the total number of RTAs in force might well approach 300. http://www.wto.org/english/tratop_e/region_e/region_e.htm

China and FTA

＊ ＊ China and ASEAN Comprehensive Economic Cooperation

Framework Agreement Agreement of Trade on Goods√ Agreement on Dispute Settlement Mechanism

＊ ＊ China and Chile Free Trade Agreement√

China and FTA (Cont’d)

△China and Pakistan Agreement of Early Harvest

△ China and New Zealand△ China and Australia△ China and GCC△ China and SACU△ China and other countries

China and CEPA

▲ Mainland China -Hong Kong, China▲ Mainland China-Macao, China▲ Mainland China-Chinese Taipei

Global Safeguards: China

China-ASEAN (Art 9.1) Art XIX of GATT1994 WTO Agreement on Safeguards

(SG)

China-Chile (Art 51) Art XIX of GATT1994 WTO Agreement on Safeguards

(SG)

Global Safeguards: Int’l Comparison

WTO Jurisprudence ☆ GATT1994 Art XIX vs Art XXIV

☆ Parallelism, sufficient reasonable explanation, non-attribution ﹡Argentina-Footwear (EC)-DS121 ﹡US-wheat Gluten (EC)-DS166 ﹡US Circular Welded Carbon Quality Line Pipe (Korea)-DS202 ﹡ US Certain Steel Products(EC, etc.)-DS248, etc. ☆ SG Art 2.1,2.2,4,2 Australia-US Art XIX of GATT1994, SG; may exclude if not substa

ntial cause of serious injury or threat thereof

Australia-Thailand Art XIX of GATT1994, SG, any other relevant provision of the WTO agreement; may exclude if not a cause of serious injury or threat thereof or of serious damage or actual threat or any other factor in the above provisions

Global Safeguards: Int’l Comparison (Cont’d)

New Zealand-Thailand Art XIX of GATT1994, SG, any other relevant provisions in the WTO agreement; may exclude if not a cause of serious injury or threat thereof

NAFTA Art XIX of GATT1994 and any other safeguards agreement; shall exclude from each other party unless (a) not a substantial share of total imports individually (b) contribute importantly to the serious injury or threat thereof by the imports from a party individually or in exceptional circumstances imports from parties collectively

US-Chile Art XIX of GATT1994, SG

Bilateral/Transitional Safeguards: China

China-ASEAN Art 9.2-9.12

Art 9.2 Transition period of 5 years Art 9.3 Unforeseen development, the effects of the obligations

incurred, absolute or relative increase, serious injury or threat thereof Art 9.5 3 years + 1 year

Art 9.11 No simultaneous recourse to global safeguard

China-Chile Art 44-50

Art 44 As a result of the reduction or elimination of duties,transitional period, absolute or relative increase, substantial cause of serious injury or threat thereof

Bilateral/Transitional Safeguards: Int’l Comparison

NAFTA ☆US-Mexico/Canada-Mexico: as a result of the reduction of a duty provided in the NAFTA, in such increase qualities in absolute terms, alone, substantial cause of serious injury or threat thereof

☆US-Canada: as a result of the reduction of a duty provided in the NAFTA, in absolute terms as to alone constitute a substantial cause of serious injury

Australia-US As a result of the reduction or elimination of a customs duty, in absolute or relative terms, substantial cause of serious injury or threat thereof

Australia-Thailand As a result of the reduction or elimination of a customs duty, in absolute or relative terms, cause serious damage or actual threat thereof

Bilateral/Transitional Safeguards: Int’l Comparison (Cont’d)

Australia-New Zealand

☆ As a last resort when no other solution can be found ☆ In such increased quantities as to cause, or to pose an

imminent and demonstrated treat to cause, severe material damage

New Zealand-Thailand ☆ In such increased quantities in absolute or relative terms as to

cause or threaten to cause serious injury

US-Chile ☆ Transitional period, absolute and relative increase, substantial cause of

serious injury or threat thereof

Bilateral/Transitional Safeguards: Int’l Comparison (Cont’d)

EU-Mexico☆In such increased quantities and under such conditions as to

cause or threaten to cause (a) serious injury (b) serious disturbances in any sector or difficulties which could bring about serious deterioration in the economic situation of a region

EU-Chile☆ Mixed with global safeguards☆ Substantial interest when among the the five largest suppliers

of the imported product during the most recent three years in absolute volume or value

☆ Remedy serious injury

Rules of Origin: China Regulation on rules of origin for the import and

export goods ☆ Fully obtained or partially obtained ☆ Substantial transformation: (a) changes in the 4-digit tariff classification of the

Harmonized System (b)value-added percentage no less than 30%☆From Jan.2005, Substantial transformation assessment mainly on the changes in the 4-

digit tariff classification of the Harmonized System

FTA China-ASEAN

☆ Minimum value requirement from originating China-ASEAN members accumulated is 40% or

total value of originating non-China-ASEAN members not exceed 60% of obtained or the FOB priced goods and the last processing operation is finished within the territory of the members

☆Specific products: under negotiation

Rules of Origin: China (Cont’d)

CEPA: Mainland China and Hong Kong,China

Mainland China and Macao,China ☆ Substantial Transformation standards: (a)Manufacturing or processing

(b) changes in the 4-digit tariff classification of the Harmonized System

(c)Value-added percentage: 30% and the last processing operation

(d)others agreed upon (e) mixed

Bangkok Agreement

☆ Total value of originating non-members not exceed 50% of obtained or the FOB priced goods and the last processing operation is finished within the territory of the members

Conclusion

GATT1994 Art XXIV.    ☆ The purpose of a customs union or of a free-trade area should be to

facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories.

Doha Mandate 2001 Para. 29  ☆ Clarifying and improving disciplines and procedures under the existing

WTO provisions applying to regional trade agreements.

Effective, consistent and predictable rules of origin, stable and predictable environment for companies

Thank you!

All the opinions contained in these slides are only my personal thoughts and should not be attributed to government.

Email: chengyongru@mofcom.gov.cnTel: 0086-10-65198907Fax: 086-10-65198434