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WTO-optimism on the retreat - analysis
2002/02/3

Shanghai – Worries on China’s way to deal with its membership of the World Trade Organization (WTO) have hit the foreign business community, less than two months after the country entered the organization.

China has started to release regulations to open up industries according to its obligations under the WTO. But often those regulations are accompanied by whole sets of new limitations that virtually reverse the promise of opening up. “It is one page of opening up and fifteen pages of trying to reverse it,” a European business man said on a meeting in Shanghai on Saturday.

Many did expect and tough and lengthy struggle to open up industries on a provincial and local level. The worrying part is that some of the new blockades also occur in the national regulations.

Hardest hit are at this stage have been the financial services, where both the merchant banks and the investment banks have been confronted by regulations of both the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC). In both cases huge cash requirements are making expanding into China too expensive for many foreign players.

In other industries, like the retail, business people complain that diminished import tariffs have been replaced by higher internal barriers that make some goods even more expensive that before the tariff cut on January 1.

"China is trying to buy more time by introducing non-tariff barriers after it got into the WTO," says Jim Enters, vice-president of the European Chamber of Commerce in China told Chinabiz earlier this week. "I have seen it in Japan, in Korea. The newcomers do stick to official regulations by lowering their tariffs but raise other barriers. China is learning very fast."

For the time being China’s major trade partners maintain an optimistic tone. Seeking redress from WTO arbitrators may not be the wisest move US trade representative Robert Zoellick told the US-China Business Council on Thursday according to a dispatch of Dow Jones. "I do sense a willingness to try to come to grips with these problems, but we need to help them come up with solutions as opposed to just smacking them," he said.

Among the foreign business community the support for that view point might be losing support.

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