Tariffs
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China will reduce its tariffs on textiles and apparel products from an
average tariff of 20.1 percent to 11.5 percent -- essentially implementing
the textile harmonization formula. China’s final bound rates range
as follows: yarns 5 percent to 6 percent, fabric 10 percent to 18 percent,
apparel 14 percent to 20 percent, and made up products 10 percent to 17.5
percent. Reductions on all but one item (HTS 5512.11.00 -- woven
fabrics of synthetic staple fibers, containing 85 percent or more by weight
of synthetic staple fibers, bleached or unbleached) will be completed by
January 1, 2005.
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China will establish a tariff-rate quota (TRQ) system for some textile
products with different in- and out-of-quota tariff rates.
Quotas
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China’s previous system of quotas on U.S. textile exports has been eliminated.
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The United States will apply the WTO Agreement on Textiles and Clothing
to China with a phase-out of its quotas under that Agreement.
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China will establish a TRQ system for wool tops (HS 51051000, 51052100,
and 51052900) that will permit a specific quantity of each of these products
to be imported at a low in-quota duty of 3 percent. These quotas
will grow over the three-year implementation period. Import volumes
above the specified quantity will not be limited, but will face a duty
of 38 percent.
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Year
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TRQ Amounts
(metric tons)
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2002
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72,500
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2003
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76,250
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2004
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80,000
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Expansion of TRQ amounts after 2004 is subject to further negotiations.
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Some raw wool and cotton fibers will also be subject to TRQs in China.
In addition, raw cotton will be subject to state trading (see Annex
2A to the Protocol), but with a significant portion of trade reserved
for importation through non-state trading enterprises.
Trading Rights and Distribution
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Prior to its accession, China restricted the number of companies that had
the right to import and export goods as well as the types of goods that
these companies could import. Because textile products were also subject
to designated trading, as identified in Annex
2B to the Protocol (i.e., fibers, yarns and fabrics of silk and cotton,
certain wool fiber, and certain fiber and yarns of acrylic), the number
of companies that could import and export these products was further restricted.
After China’s accession, the number of enterprises in China permitted to
import and export textiles products will be increased over a three-year
transition period. At the end of that period, all enterprises in
or outside of China will be able to import and export all textile products
(except with regard to a limited number of products reserved for state
trading enterprises, as identified in Annex
2A to the Protocol, i.e., cigarette filter tips of manmade fiber
and diacetate filament tow used in the production of cigarette filters
and raw cotton fiber).
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For enterprises and individuals that are not invested in China, the right
to import and export will be granted in a non-discriminatory and non-discretionary
way. Any requirements will be for customs and fiscal purposes only.
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Prior to its accession, China did not generally permit foreign companies
to distribute products through wholesale and retail systems in China or
to provide related distribution services, such as repair and maintenance
services. These prohibitions will be phased out over three years
for most products, including textile products. (See sector report
on Distribution
Services)
Import Procedures
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China has agreed to bring both its automatic and non-automatic import licensing
systems into conformity with the WTO Agreement on Import Licensing, ensuring
that these systems will not function as trade barriers and will comply
with the principles of national treatment and nondiscrimination.
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China will no longer condition importation or investment approvals on whether
competing domestic suppliers exist or on performance requirements of any
kind, such as export performance, local content, technology transfer, offsets,
foreign exchange balancing, or research and development.
Intellectual Property Rights
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In accordance with the WTO agreement on Trade-Related Intellectual Property
Rights (TRIPs), China is now obligated to comply with internationally accepted
norms for protecting and enforcing the intellectual property rights of
U.S. and other foreign companies and individuals in China.
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China is in the process of modifying its intellectual property laws and
regulations, including those relating to patents, trademarks, trade secrets,
test data, integrated circuits, and copyrights. In addition, China
has committed to strengthen the enforcement of these laws and regulations
by its courts and the responsible administrative agencies.
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China has further agreed that it will only impose, apply, or enforce laws,
regulations, or other measures relating to the transfer of technology that
are consistent with the WTO agreement on Trade-Related Investment Measures
(TRIMs) and the TRIPs agreement.
Taxes
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China has agreed to ensure that its laws, regulations, and other measures
relating to internal taxes and charges levied on imports comply with WTO
rules and are applied uniformly to both foreign and domestic enterprises.
This obligation applies not only to national taxes but to provincial and
local taxes as well.
Subsidies
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China has agreed to eliminate all subsidies on industrial goods that are
prohibited under WTO rules, i.e., export and import substitution subsidies.
(See separate report on Import
Related Issues)
Antidumping
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China has agreed that the United States (and other WTO members) may continue
to apply its non-market economy methodology for measuring dumping in antidumping
investigations of imports from China for the first 15 years following accession.
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China continues to have the opportunity to demonstrate that market conditions
prevail in its economy as a whole or in a particular industry, but any
such demonstration must be made to the satisfaction of the investigating
authority. (See separate report on Import
Related Issues)
Safeguards
Transitional China-Specific Safeguard Mechanism
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China's accession agreement includes a unique, China-specific safeguard
mechanism allowing a WTO Member to restrain increasing imports from China
that disrupt its market. This mechanism will be available for 12
years after accession. (See separate report on Import
Related Issues)
Textile Safeguard Mechanism
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China has agreed to a textile safeguard mechanism, which permits other
WTO Members to impose restraints on imports that, due to market disruption,
threaten to impede the orderly development of trade in textile and apparel
products. The products eligible for restraint under this safeguard
consist of all textile and apparel products covered under the WTO Agreement
on Textiles and Clothing (ATC) as of January 1, 1995.
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A restraint becomes effective upon receipt of a request for consultations.
Restraints may remain in place from the date of the request for consultations
through December 31 of that year, unless there are three months or less
remaining in that year, in which case the restraints may remain in place
for up to 12 months from the date of the request. No restraints may extend
beyond 12 months, without reapplication, unless otherwise agreed upon by
the WTO Member and China.
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Measures may not be applied to the same product at the same time under
both the textiles safeguard mechanism and the China-specific safeguard
mechanism. A member can, however, apply a China textile safeguard measure
and a WTO Safeguards Agreement measure to the same product at the same
time.
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This textile safeguard will be available until December 31, 2008.
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