Import tariff reductions and removal of quota restrictions

Like all WTO members , China has made commitments to remove or reduce 'border measures' such as import tariffs and import quotas. China's Schedule for goods provides details for this on a product-by-product basis for thousands of products. The table below provides an overview of these reductions in a number of specific sectors (which will themselves sometimes contain very many individual sub-products, each with separate and different tariff rates). The figures mentioned are averages calculated by the European Commission and the US authorities and need to be approached with some care as it is not always clear how these averages have been calculated. Furthermore, the use of averages can obscure important differences. When negotiating with China the other WTO members have concentrated on specific product categories that are of interest to their own exporters. For instance, at the request of the EU China has reduced its tariffs on five particular types of foot - wear from 25 per cent to 10 per cent. These five specific product categories account for more than 70 per cent of EU footwear exports to China. Thus, this reduction will have an important market opening effect for EU exporters although the average tariff reduction for all footwear categories may appear relatively limited.

Table 2.2.1 nevertheless provides an indication of the scope of the tariff reductions and highlights the sectors where the impact will be very significant, such as automobiles and alcoholic beverages. Furthermore it is important to note that even for sectors where the reduction is limited WTO accession provides an important advantage because it imposes a legal obligation on China to maintain (or 'bind') import tariffs at a specific and often low level. It will not be possible for China to increase these tariffs beyond that rate when importers become increasingly successful (China will only be able to do that using trade defence instruments such as anti- dumping and safeguard measures, but these are subject to strict conditions and offer only temporary protection). Thus WTO accession greatly increases legal certainty for importers.

Table 2.2.1: Target tariff rate reductions by sector
Products	Import tariffs and quota restrictions at the moment of WTO accession	Target reduction and target date
Agricultural equipment	Average of 8.2%	Average of 5.8% by 1 January 2003
Automobiles	80% to 100% Quotas in place	Reduction to 25% by 1 July 2006 Higher initial quota to be increased by 15% annually and phased out by 1 January 2005
Automobile parts	Average of 17.4%	Average of 9.5% by 1 July 2006
Beer	42%	Completely eliminated by 1 January 2005
Chemicals	Average of 8.8%	Average of 6.9% by 1 January 2008
Construction equipment	Average of 10.5%	Average of 6.5% by 1 January 2004
Cosmetics	Average of 23.5%	Average of 10.7% by 1 January 2008
Fish	Average of 16.6%	Average of 10.3%
Furniture	Average of 13.9%	Completely eliminated by 1 January 2005
Information technology Products	Average of 6.4%	Tariffs on three- quarters of information technology products will be eliminated by 1 January 2003. All tariffs will be eliminated by 1 January 2005
Medical equipment	Average of 6.5%	Average of 3.9% by 1 January 2005
Paper	Average of 15 “25%	Average of 5.4% by 1 January 2006
Pharmaceuticals	Average of 7%	Average of 4.7% by 1 January 2004
Spirits	Average of 65%	Average of 10% by 1 January 2005