- The Washington Times - Friday, July 5, 2002

U.S. businesses are reporting major problems with China's failure to live up to promises it made when it joined the World Trade Organization last year.
American companies say they are experiencing more difficulty in exporting to China than before it joined the 144-nation WTO in December. In particular, a dense web of Chinese regulations is inhibiting deliveries of pork, beef, poultry and grains to a market of 1.2 billion people, and a heavy tax is hampering computer-chip producers.
U.S. chip manufacturers are urging China to drop a value-added tax that favors Chinese-made computer-chip producers. China imposes a 17 percent tax on imported chips, but only a 3 percent tax on ones designed and manufactured in China.
Industry officials say they are disappointed that China has not complied with the terms of the detailed agreement it negotiated with the United States, but they are not spoiling for a showdown with China. WTO membership involves painful changes to China's economy, and U.S. companies want to see the current reform trend continue.
"We think they're working hard to try to comply with WTO rules, but they have so far to go," said Daryl Hatano, vice president of the Semiconductor Industry Association, a San Jose, Calif.-based trade association.
People who worked on the decade-long negotiation to bring China into the WTO said they anticipated difficulties in getting China to adhere to WTO rules. But Craig Thorn, a Clinton administration trade official, said agricultural producers have been caught off guard.
"I expected plenty of problems, though the Chinese have been pretty cynical about slowing down imports," he said.
The Bush administration has so far steered a nonconfrontational approach with the Chinese over trade agreements. U.S. Trade Representative Robert B. Zoellick, in an April speech during a trip to Beijing, said he would emphasize quiet diplomacy in trying to hammer out solutions to trade disputes.
"When problems arise, as they will, my preferred method will be to consult, to try to understand the Chinese perspective, and to make suggestions on how to proceed," Mr. Zoellick said.
So far, the United States has not used the WTO's arbitration procedures to resolve disputes with China. However, China has resorted to this tactic, as have several other countries, in challenging President Bush's March decision to slap 30 percent tariffs on steel imports.
American farmers and ranchers have faced a series of obstacles to getting their products into China.
A group of pork, poultry, beef and dairy producers wrote Mr. Zoellick on June 20 to complain that the deals China made to get into the WTO are not materializing.
Nicholas Giordano, vice president for trade at the National Pork Producers Council, an industry association, said China's arbitrary use of trade rules finally drove his group to write Mr. Zoellick. China, he said, is issuing import permits only for American products that Chinese ranchers do not sell, such as pork intestines.
"It's been an on-and-off situation that is really disrupting trade," Mr. Giordano said.
Last week, the two top senators for trade wrote China's ambassador in Washington, Yang Jiechi, to criticize new regulations for imported, genetically modified grains. Sens. Charles E. Grassley, Iowa Republican, and Max Baucus, Montana Democrat, said American growers will not be able to complete laborious testing procedures required under the rules before they go into effect in December.
"It is highly likely that trade in biotechnology-related products will end at that time," they wrote on June 28.
Chinese regulations also hit American farmers of soybeans and other commodities earlier this year. Chinese officials were supposed to allocate portions of import quotas to them by Jan. 1 but delayed for four months, effectively barring foreign sales in China for the first half of the year.


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