Tariffs

• China will reduce its tariffs on wood and wood products from its current average tariff of 10.6% to 3.8%. Reductions will begin on accession and will be fully implemented by January 1, 2004.

• If WTO Members agree to and adopt the forest products sectoral initiative that originated in APEC, China will join this initiative and eliminate its tariffs on these products.

Trading Rights and Distribution

• Currently, U.S. companies' ability to do business in China is strictly limited because the right to engage in trade (importing and exporting) is restricted to a small number of companies that receive specific authorization or who import goods to be used in production. This limits U.S. exports. China has agreed that any entity will be able to import most products, including wood products, into any part of China. This commitment is phased in over the three-year period with all entities being permitted to import and export at the end of the period.

• China -- which generally prohibits companies from distributing imported products or providing related distribution services -- will permit foreign enterprises to engage in the full range of distribution services. These rights will be phased in over a three-year period for almost all products, including wood products. (See separate papers on distribution services and related services.)

Other Commitments

• China has agreed to provide treatment to the United States on par with China's preferential programs. For example, if China grants a lower tariff rate to Malaysia than is applied in China's tariff schedule due to a WTO-consistent preferential program, that rate must also be provided to the United States for wood products.

• 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 businesses.

• China has agreed not to apply or enforce export performance, local content, and similar requirements as a condition on importation or investment approval.

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