China's government may already be flouting the WTO's rules less than two months after the country's admission to the trade body was hailed as a "huge breakthrough," US officials say.
Corporate and government leaders are voicing concern that as China tears down tariff barriers to meet WTO commitments, it is erecting non-tariff barriers to protect industries from a surge of foreign competition.
That may prompt the US to challenge China before the Geneva-based WTO, which the world's most-populous nation entered on Dec. 11 after a 15-year effort to be accepted into the rules-based trading system.
"There will be resort sooner or later to the WTO dispute-resolution process," said Chris Murck, president of the American Chamber of Commerce in China, which represents 750 companies.
Citigroup Inc and other companies have faced snags in their efforts to enter or expand in the market.
The George W. Bush administration weighed in on Friday when US Agriculture Secretary Ann Veneman and US Trade Representative Robert Zoellick issued a statement warning of US$1 billion in lost US soybean sales to China because of rules governing imports of genetically modified crops.
China's leaders have expressed concern that many workers may lose jobs as inefficient, state-owned companies face off against foreign companies looking to break into the market.
Yunrou Dai, commercial counselor at the Chinese Embassy in Washington, said China is trying to implement its WTO commitments and said the agreement allows China to protect certain industries.
"We are doing everything in line with the WTO agreement," he said.
At stake for US companies is a chance to expand in the world's largest consumer market of 1.3 billion people.
US trade with China has ballooned since a 1999 agreement that paved the way for China's WTO membership, rising more than 36 percent to US$116.3 billion last year from 1998. Trade has more than doubled since 1995.
The potential for even greater trade has caused US companies to chafe at China's new rules.
The regulations on soybeans, approved last month, require US shippers to get safety certificates before unloading gene-altered crops and food ingredients at Chinese ports of entry.
Larry Cunningham, a vice president at Archer Daniels, said the burden is so great on both seller and buyer that Chinese companies won't buy US soybeans to avoid the hassle.
Zoellick and Veneman said the troubles may spread to cotton and corn, two other products in which genetic modification has produced new forms of the crop.
"The result could be a halt in exports of farm products," they said. "This is an unacceptable situation."
Murck, managing director of the China operations of Grey Global Group Inc's APCO Worldwide, said in Washington on Friday that other US companies are facing obstacles.
These range from delays in publishing quotas for imports to legislative changes that China hasn't yet made in areas such as financial services, he said.
GMAC, the financial services arm of the world's largest automaker, is being "stalled" in its efforts to set up in China, said Jim Farmer, a GMAC spokesman.
That's because regulations have yet to be completed to govern foreign financial services providers that are units of companies whose primary business is in another industry, Murck said.
Chinese officials also have yet to rule on allowing Citigroup to buy an interest in Chinese banks. Under China's WTO agreement, non-Chinese financial services companies without operations in China must enter partnerships with a Chinese company.
RSS