China's accession to the WTO What convenience does it bring to the Chinese market?

The automobile industry is China's accession to the WTO is the most controversial, the biggest impact of an industry, because the industry's national policy to protect the most prominent. Like 50 years of learning to swim mom does not let go, the child is not a weapon, but thereafter, the child has to fight the wind and waves, swimming to the deep sea full of sharks. Some people have imaginatively compared, after joining the WTO, overseas manufacturers and Chinese car users feel like the car finally from the mountain road into the plains, while the situation of domestic manufacturers is like driving from the plains into the mountains, rugged and difficult. In this focus of attention, this newspaper on China's accession to the WTO interviewed the main manufacturers to listen to their views on the accession to the WTO - FAW-Volkswagen Sales Company General Manager Zhou Yongjiang; watching China's accession to the WTO in Shenzhen to watch the spectacular wave of ambitions for the presidency of the FAW - Audi In order to host the ceremony of FAW-Audi's sponsorship of VIP cars to the Tiger Woods Challenge at Mission Hills Golf, Zhou Yongjiang, FAW-Volkswagen's vice president and general manager of the sales company, witnessed China's accession to the World Trade Organization in Shenzhen, and also witnessed the spectacular scene of the collection of beautiful cars in Shenzhen - on November 11th, the Mission Hills Golf Club temporarily opened up a parking lot the size of 20 soccer fields! On, from 9:00 in the morning to 1:00 p.m., from Shenzhen to the luxury saloon car in a long line, a car uninterruptedly and slowly into the mountains as far as the thousands of shiny luxury car array covered. Beijing, Shanghai and Guangdong journalists got off the bus and transferred to the high stadium within half an hour of the queue, witnessed a Mercedes-Benz, BMW, luxury Jeep, Volvo, extended Cadillac from the side of the drive into the car park, the back of the highway arranged in a line of cars can not be seen to the end. The scene of the spectacular display of Shenzhen and South China market's huge automobile spending power, so that all present in the automotive industry was y shocked and inspired. Zhou Yongjiang said: domestic top model Audi should have more momentum in the promotion here! On the day of China's accession to the WTO, before the tide of private cars in China, Zhou Yongjiang talked to reporters about the challenges of the WTO. He said: FAW is China's earliest car manufacturers, product band is very wide. But the most rapid growth after WTO accession, the biggest challenge will be in the car this piece. China's auto production last year 2 million, this year's estimated 2.3 million, car trucks from each accounted for 1/2 to sedan occupies a large part, indicating that the market is now the fastest-growing private car as the main pull of the section. After accession to the WTO, for the localization rate, displacement restrictions, prices, access to qualifications, parts supply standards will be gradually liberalized, there will be more models on the ground. At the same time, the price of imported cars will fall year by year. This year, China's imported cars amounted to 6 billion, next year is expected to rise about 15% to 8 billion, these are real challenges. Zhou on the above challenges to show a frank attitude to deal with, he said, this year, Audi production and sales growth of 90%, Sapat, Honda also has a great growth, while Xiali and other types of cars have fallen sharply, which shows that the reality of China's automobile market shows that the real access to the market is the leading technology models, rather than low-priced backward models. Audi in line with the same planet, the same brand concept, is China's current production of the most upscale, the highest technological content of the sedan, and each year with the German Audi upgrade and the implementation of annual upgrades, and recently launched the "technology leading type". At the same time, taking into account the cost of transportation and other costs, even after joining the WTO 6 years after the tax rate dropped to 25%, the same Audi imports will still be much more expensive than the domestic local car. This is where the competitive advantage and confidence of Chinese auto joint ventures lie. WTO accession will bring a wealth of models, but also will bring changes in marketing. Zhou Yongjiang believes that: on the eve of WTO accession, China's automobile has experienced the baptism of the world's marketing trend. Such as Audi has been in the establishment and improvement of a set of service, sales, maintenance system, completely synchronized with the world, and in the image of the establishment, staff training has invested a lot of energy. This is the strength of Chinese automobile enterprises after joining the WTO. A new model (such as SHENBAO) into China, no service network is equal to no road, run up; users in the car such as domestic service distribution is not week also dare not buy, dare not run long distance. Zhou Yongjiang has been densely spread across the country FAW-VW Jetta - Audi sales and service network with deep confidence. He told reporters: FAW-Volkswagen has completed 10 years of product planning, accession to the WTO, high, medium and low-end products will be exciting every year. Ren Yong, General Manager of Fengshen Automobile: * Fengshen Company is designed to operate in the post-WTO environment from the beginning * In time China is expected to become the world's automobile factory Ren Yong, General Manager of Fengshen Automobile, said in an interview with the reporter that: WTO accession has its joys and sorrows, the beginning of the pressure is greater, and now the expectations are greater -- after all, China's auto industry There is no such huge pressure, it is difficult to press out the hard products and strong enterprises. Ren Yong believes that: after joining the WTO on the weak automobile enterprises out of the process is a market-oriented reshuffle process. Some employees from other small and medium-sized automobile enterprises to join the wind god said with deep understanding: although the original enterprise to get one or two cooperative products may be able to fire on a year or two, but in technology, successor products, team, operation is at stake, these enterprises in addition to "price reduction" is difficult to have a killer app. Fengshen is a new enterprise, was founded on the consideration of China's accession to the WTO environment, targeted to do something not to do. Something for is manufacturing. Currently, China Windshen has a cost advantage over both Nissan prototypes and Taiwan Yulon, but the whole car design is currently beyond our reach. Then, we take advantage of our familiarity with the Chinese market, sending personnel to Nissan to participate in the car design process, while learning over the needs of Chinese users embodied in the original development concept, proactive participation in international development. From our practical point of view, China's automobile enterprises to build on their strengths and avoid shortcomings, something for something, like home appliances and textiles and other products to become the world's factories, the day may be very close. Because, China's automobile enterprises have low-cost, modern production lines and other aspects of the advantages, so the WTO may have a huge pain in the early stages and shuffle, but in the long run, WYO will be more and more favorable to us, more and more stable. Just as China's light industrial products have been sold all over the world, China's production of automobiles can also have this day. The second benefit of WTO is the loosening of enterprise. Registration authority is decentralized, on the catalog and other government restrictions can be relaxed to comply with market demand, which for the wind such as enterprising enterprises is equal to loosen the reins. I believe that with the elimination of the WTO portfolio, we will grab more resources for the merger and reorganization - Ren Yong said: We are very proud, because the wind god company is a market-oriented enterprises, from the beginning of the establishment of the environment for the operation of the WTO after the operation of the design, this year, in the case of the WTO car market held the psychological situation, the wind god car best-selling as usual, the car is not afraid of. We are fearless.

Impact of China's WTO accession on Shanghai

1. Agriculture

The agreement agrees to increase and remove barriers to market access for a wide range of U.S. exports. Commitments include:

Substantial tariff reductions, which will be accomplished by January 2004.

Agricultural products have been reduced to roughly average tariffs. Broadly speaking, tariffs were reduced to an average of 17 percent for agricultural products and 14.5 percent for U.S. priority products.

Establishment of a tariff rate quota (TRQ) system for imports of bulk commodities such as wheat, corn, cotton, barley and rice, which would also be shared by private traders, and specific regulations on how the TRQs would work would increase transparency in the process and help ensure increased imports.

The right to import and distribute products without having to go through state trading enterprises or intermediaries.

China also agreed to remove barriers to SPS that are not based on scientific evidence and to stop subsidizing agricultural exports.

2. Industrial Products

China committed to removing a wide range of institutional barriers to U.S. exports, such as restrictions on who can import goods and distribute them in China, as well as barriers such as quotas and licenses restricting imports of U.S. products.

3. Tariffs

Tariffs were reduced to an overall average of 9.4 percent and 7.1 percent for U.S.-preferred products.

China will participate in the Information Technology Agreement (ITA), which eliminates all tariffs on, for example, computers, telecommunications equipment, semiconductors, computer equipment and other high-tech products.

In the automotive sector, China will reduce tariffs from the current 100 or 80 percent to 25 percent by 2006, with the largest reductions to be made in the first few years of WTO accession. Tariffs on auto parts will be reduced by 2006 to an average of 10 percent.

China will also significantly reduce tariffs on timber and paper from the current 12 to 18 percent on timber and 15 to 25 percent on paper to about 5 to 7.5 percent.

China will also implement much of the Chemical Harmonization Initiative. Under the initiative, tariffs will be zero, 5.5 and 6.5 percent for various categories of products.

4. Elimination of quotas and licenses

WTO regulations prohibit quotas and other quantitative restrictions. China has agreed to phase out these restrictions over five years.

Quotas: China will eliminate existing quota restrictions on U.S. preferential rationing (e.g., fiber optic cables) into the Chinese market. China will phase out the remaining quotas roughly by 2002, but no later than 2005.

To ensure a gradual increase in market access and to minimize the impact of quantitative restrictions, quotas at current trade levels will be increased at a rate of fifteen percent per year.

Automobile quotas will be phased out by 2005. During this period, the base level quota will be six billion dollars (the level that precedes China's industrial automobile policy) and will increase by fifteen percent per year thereafter until it is eliminated.

5. Import and distribution rights

Trading rights and distribution rights are a priority part of manufacturing. Currently, China severely restricts trading rights (import and export rights) and distribution rights (wholesale, retail, repair, transportation, etc.). Under the agreement, China will for the first time provide trading and distribution rights to U.S. companies. Trading rights will be phased in over three years. Distribution rights will be implemented in even China's most restrictive distribution sectors, such as wholesale, transportation, and repair. China will provide both trading and distribution rights.

6. Services

China has committed to removing most foreign equity restrictions in all key services sectors (especially those with strong U.S. commercial interests) after a reasonable transition period, agreeing to participate in the Basic Communications and Financial Services Agreement (BCFSA), and not restricting U.S. service providers from accessing current markets.

Impact of WTO Accession on Shanghai's Economy

China's accession to the WTO will have a similar impact on the above industries in Shanghai. Overall, China's accession to the WTO will benefit Shanghai's exports, stimulate consumption and expand demand. However, it will have an unfavorable impact on Shanghai's high-tech and short-started industries, such as the automobile industry, as well as monopolistic industries, such as the telecommunication industry.

1. Impact on the development of Shanghai's three industries.

Accession to the WTO will have a negative impact on China's agriculture, and will bring a huge impact on Shanghai's agricultural development. However, the employees of primary industry in Shanghai account for 12% of the employees of the whole national economy, and the added value of primary industry accounts for about 2% of the GDP. Therefore, the negative impact of WTO accession on Shanghai's primary industry will have little effect on the whole national economy. Its main impact will be in the secondary and tertiary industries. WTO accession to Shanghai's secondary industry in the six pillar industries adversely affect the automobile manufacturing industry, biological and modern pharmaceutical industry. But the steel manufacturing industry, household appliances manufacturing industry is favorable. The impact on Shanghai's textile industry is favorable. It will speed up the recovery of the textile industry and increase employment. The impact on the third industry is the most important. Many industries in the tertiary sector is a new industry and monopoly industry, after joining the WTO, a large amount of foreign capital and management technology will enter these industries, which will not only promote the development of these industries, but also to the domestic enterprises in these industries will bring great challenges.

2. Impact on Shanghai's Tenth Five-Year Plan and 2015 economic development.

Because of China's accession to the WTO, it is gradually opening up its market. Many agreements will not be fully implemented until after 2005. Therefore, there is a certain impact on the "Tenth Five-Year Plan", but not too much. And the favorable impact is greater than the adverse impact." Tenth Five-Year Plan" after the negative impact will increase, but because of the five-year digestion time, the Chinese market will be more perfect, Chinese enterprises after fierce competition will be completely to the market. Therefore, the increased negative impact will not affect the development of China's economy too much. Thereafter to 2015, China's economy will be fully integrated with the world economy, China's accession to the WTO will be fully realized the favorable aspects.

In short, China's accession to the WTO is more favorable than unfavorable to Shanghai. Shanghai should make full use of the opportunities brought about by WTO accession and meet the challenges.

The impact of China's bonded areas

Beneficial aspects

l) "WTO" forced China's bonded areas to GATT/WTO free zones formulated the basic principles of convergence, that is to say, does not yet have "inside the country, outside the country" characteristics of China's bonded areas must be abolished tariffs and other trade restrictions to really reach the "inside the country, outside the country," the basic positioning. Otherwise, China's bonded area will violate the WTO principle of trade liberalization, and become an unorthodox, there are many trade barriers to the expansion of the bonded warehouse area, which has no future for development. China's bonded area only completely transformed into a free trade zone will have comprehensive development and prosperity, the bonded area can be accurately positioned in the "inside the customs", and realize the goods from the domestic market into the bonded area as exports, and to give export tax rebates. With China's entry into the WTO, the qualitative positioning of China's bonded zones in line with the international free trade zones can be truly resolved in accordance with the WTO system and laws.

2)Due to the implementation of GATT Article 5 "Freedom of Transit" provisions, transit transport, that is, now the bonded area of the re-export trade will be more convenient to the transit transport in addition to the implementation of appropriate customs clearance, should not be subjected to unnecessary delays or restrictions, and exempted from tariffs, transit tax, or other costs related to transit, this preference is not limited to the bonded area, the general general area is also applicable, but due to the majority of the bonded area of China's free trade areas. Apply, but because most of the free trade zones are in the vicinity of the port, free trade zones in this regard, the advantages of the more prominent, more to promote the realization of the integration of free trade zones and ports of action.

3) "WTO", to implement one of the results of the Uruguay Round negotiations, "Rules of Origin Agreement", in order to prevent the production of goods through the lower tariffs member states duty-free to the higher tariffs member states of the phenomenon. As in the NAFTA agreement, a uniform certificate of origin will be issued within the United States, Canada and Mexico, and only by obtaining a certificate of origin will goods be exempted from duty and permitted to circulate freely among the member countries of the agreement. The following two categories of goods can be obtained certificate of origin: ① goods are all produced in the territory of the member states; ② a few contain raw materials outside the region of goods, if these raw materials are processed in one of the member states, enough to change the original tariff categories, you can also get the certificate of origin. In addition, the local production content must reach a certain percentage, such as the transaction value method, the local value of goods content of not less than 60%; if the net cost method, the local value of goods content of not less than 50%.

This shows that the implementation of the rules of origin, the free trade zone to carry out export processing trade is very favorable, in the free trade zone processing of export products must be more than 50% of the value of local content, in order to issue certificates of origin, enjoy the preferential treatment of the Generalized System of Preferences and other categories of tax rules. It is expected that after the "WTO accession", investment in processing trade projects in the Free Trade Zone will increase, and even a new round of investment boom.

4) Due to the reduction of tariffs on agricultural and industrial products, the full liberalization of the right to trade in industrial products and the right to distribution, the exclusion of intermediaries, so that foreign direct wholesale, retail, after-sales service, maintenance, transportation, etc., the majority of non-tariff barriers must be eliminated within three years; the service sector in three years to gradually abolish the restriction on the right to distribution and in the field of telecommunications, insurance, professional services and tourism services, and so on. With the opening up agreement reached, the import and export trade of goods and service trade will have a greater development in the Free Trade Zone, because foreign enterprises in the zone will no longer go through intermediaries but can directly do domestic trade, and the volume of trade through the Free Trade Zone will have a greater increase, and the service trade will have a more favorable environment for its survival and development in the Free Trade Zone, especially due to the abolition of the restriction on the right of distribution, which will better promote the development of distribution functions in the Free Trade Zone. Especially due to the abolition of the restriction on distribution right, it can promote the development of the distribution function of the Free Trade Zone, and it is expected that the distribution centers in the Free Trade Zone will have a great improvement in both quantity and quality. Although, there is still a three-year transition period, the momentum of development in this area is bound to be good.

References:

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Respondent: 0xinming - Assistant Level 2 6-2 09:30

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