- The Washington Times - Saturday, December 7, 2002

China's government is implementing new laws and regulations but also has to introduce new concepts and fundamentally change its mentality to comply with world trade rules, the communist nation's top trade official said yesterday.

Concepts of transparency and national treatment, for example, did not exist and are being written into Chinese law and adopted by the culture as the country fulfills World Trade Organization requirements, Long Yong-tu, China's vice minister for foreign trade and economic cooperation, said in a speech in Washington.

"This is a tremendous change in mentality," Mr. Long said.

"Transparency" describes a legal system that is publicly codified and understandable; "national treatment" means that foreign companies enjoy the same rights as domestic firms.

Industries and governments around the world are closely watching China and measuring its progress in complying with WTO standards one year after it joined the organization. The United States and China are two of the 144 WTO members that, through international treaty, set global trade and investment rules.

The Bush administration is scheduled to deliver a report to Congress on China's compliance, probably Wednesday, the one-year anniversary of China's WTO accession.

Expectations are mixed. China's WTO accession agreement runs more than 800 pages and is complex; monitoring the country poses many challenges.

"It is not easy to be monitored, even by the most sharp monitors from the U.S. trade representative and our agencies," Mr. Long said.

So far, official complaints have been limited. Businesses combine criticism and praise for China, along with some optimism for future market openings.

"We think that China's accession to the WTO is a huge change to the country. The move toward a rules- and law-based system is welcome," said Scott Miller, director of national government relations for household-products-maker Procter & Gamble Co. "It's a fairly long road, and right now we have no particular criticism."

Proctor & Gamble, which has operated in China since 1988, has six plants there.

Others see the WTO as a chance to start new investments.

"Because the barriers will be removed, that will help American business to get into other countries, especially China," said Howard H. Li, president of Waitex, a New York warehouse and distributor of consumer goods.

Mr. Li is anticipating falling U.S. textile tariffs and quotas, negotiated within the WTO, by investing $5 million in a garment factory about one hour from Beijing. The plant will make women's apparel for the U.S. and Chinese markets, he said.

"The WTO is breaking down barriers to trade," Mr. Li said. In the process, prices are falling and consumers are happier, he said.

Others see a darker picture, with China maintaining a protected market while taking U.S. jobs.

"Manufacturers looks at China not as a market for goods for 1.3 billion people, but as 1.3 billion workers," said Jock Nash, the Washington counsel for Milliken and Co., a South Carolina textiles and chemicals company. With China's disciplined, educated and low-paid work force, fewer countries including the United States will be able to compete with China as it grows as an economic power, he said.

Mr. Long said that, economically and politically, other nations should not worry.

"We pose no challenge, no threat, to any other countries," Mr. Long said.

Mr. Nash added that China is unlikely to comply with WTO rules, thereby undermining the organization.

"The bad news is China joining the WTO, and the good news is they'll probably destroy it," he said.

China has a mixed record on compliance.

The country has made extensive efforts and has achieved considerable progress on a number of fronts, especially with reducing tariffs, revising legislation and regulations, and training personnel, Robert A. Kapp, president of the U.S.-China Business Council, said in testimony to the U.S. Trade Representative's office.

But China is falling down in some areas.

"Our observations reflect a growing concern that patterns of regulatory and other behavior are emerging in China, which, if left unchallenged, will have the effect of compromising some of the most critical commitments imposed on China by the terms of China's WTO accession agreements," Mr. Kapp said.

Insufficient transparency, technical and procedural barriers that discriminate against non-Chinese entities or products, inadequate management of various quotas and tariff rate quotas, and uncertain policy and regulation in agricultural trade are prime concerns, he said.

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