'China will have to lower import barriers'

THE MOST significant thing about China's admission to the World Trade Organisation (WTO), according to Duncan Bonnett of trade consultants, Whitehouse & Associates, is that its entry was followed a day later by that of Taiwan. "Add Hong Kong - which independently joined the WTO in 1995 before it was once again part of mainland China - and this now sees all "three Chinas" tied into the WTO. It's a combination of three of the world's most potent trade economies now all vying for the benefits of WTO membership." China, of course, is a gigantic economy in its own right, Bonnett added, and the latest move sends it out into competition with the rest of the world - this time playing under WTO conditions. "Probably the immediate downside," said Bonnett, "is when you look at how cheap Chinese goods just flooded the world market even before it enjoyed WTO benefits. "That's one thing that will accelerate." One of these areas is in clothing, Bonnett added. "The sheer impact on 3rd world clothing export countries is going to be enormous with China's ability to swamp markets. "But I think that's possibly a knee-jerk reaction. "Even without WTO benefit, China already exports more clothing to the US than the whole of Africa." But it does warn just what kind of economies of scale are present in this new WTO member, Bonnett added. On the opposite side, there is a lot to be gained for exporters willing to breach the vast Chinese import market. "There will be a lot of opportunity in this market as the Chinese will now have to start lowering their barriers to entry," said Bonnett. He highlights immediate benefits for SA exporters of food and beverages; iron and steel; and beneficiated minerals. "We're very strong in these areas," he said. But what about control of this vast, and often rather lawless, trade market now that it falls under the aegis of the WTO? "It will have to comply with the WTO provisions on anti-dumping and TRIPS (trade-related aspects of intellectual property rights)," said Bonnett. "The WTO will have to take a very strong position on China and also the countries being most impacted, like the USA, for example." But, he added, the positive strategy would be for SA to use this tremendous opportunity to see what we can get into the Chinese market. And for China's entry into the SA import market? "If you look at SA's import duties," Bonnett said, "China in the WTO makes little difference. "The only areas where incoming goods to SA benefit is where they fall under a bi-lateral agreement - which we don't have with China. "Our MFN (most favoured nation) rates - which we dole out to almost everybody - are the same as our WTO rates. So there's no benefit for China under WTO conditions." But would we suddenly be competing with China in major markets like Europe and the US? "Our preferential rates with those two markets - under AGOA (African Growth and Opportunity Act) in the US, and our bi-lateral free trade agreement (FTA) with Europe - are still going to be better than China gains under WTO rates," said Bonnett.