U.S. - China Bilateral WTO Agreement
November 15, 1999
I. AGREEMENT HIGHLIGHTS
The U.S.-China WTO agreement covers all agricultural products, all industrial goods, and all service areas.
China's industrial tariffs will fall from an overall average of 24.6% in 1997 to an overall average of 9.4% by 2005.
On U.S. priority industrial products, tariffs will fall to 7.1% with the majority of tariff cuts fully implemented by 2003. Tariffs will fall on a range of products including: wood, paper, chemicals, capital and medical equipment.
In information technology, tariffs on products such as computers, semiconductors, and all internet-related equipment, will fall from an average of 13.3% to 0% by 2005.
On U.S. priority agriculture products, tariffs will be reduced from an overall average of 31.5% to 14.5% by January 2004, at the latest.
China will expand access for of bulk agriculture commodities, on products including corn, cotton, wheat, rice, barely, soybean oil.
China will eliminate export subsidies -- this is especially critical for U. S. cotton and rice producers.
China will for the first time ever permit private trade (trade between private parties) in agriculture.
On industrial goods, China will for the first time permit the right to import and export without middle-men -- so-called trading rights -- as well as full rights of distribution including wholesale and retail and aftersale service, repair, maintenance, and transport.
The telecommunications, insurance, banking, securities, audio visual, and professional service sectors, to name a few, will all have expanded market access under the agreement.
II. RESOLUTION OF KEY UNRESOLVED ISSUES
Import Surge Mechanism. China has agreed to a special safeguard mechanism that will remain in place for 12 years following accession and that can be used to address rapid increases in imports from China that cause or threaten market disruption.
Anti-Dumping. The agreement ensures that the United States can continue to apply our current non-market economy methodology in antidumping cases involving imports from China for 15 years. China can, of course, request review under U.S. law of specific sectors or the economy as a whole to determine if it is market oriented and no longer subject to the special methodology.
Motion Pictures. A previously unresolved issue had been the degree to which China restricted imports of films. Prior to the agreement, China permitted a maximum of 10 foreign films. Under the agreement, China will quadruple imports to 40 films in the first year, and 50 by the third year of which 20 will be on a revenue-sharing basis.
Internet Access. Because of the enormous projected growth in internet access in China over the coming decade, a key priority of the U.S. was to ensure that China's telecom service commitment clearly included all aspects of internet service. The agreement ensures that Internet services will be liberalized at the same rate as other key telecommunications services.
Satellites. China has clarified that it will permit provision of telecommunications services via satellite.
Auto Financing. China has now made commitments for non-bank foreign financial institutions to be able to provide auto financing upon China's accession. This in combination with commitments regarding importation, distribution, sale, financing, and maintenance and repair of automobiles will help open up this key sector for U.S. industry.
Accelerated Auto Tariff Reduction. As part of the efforts to find "win-win" solutions to sensitive areas, China agreed to accelerated tariff reduction in exchange for a slightly longer phase-in period. This provides earlier market access with auto tariffs still being reduced from the current 100-80 percent to 25 percent by July 1, 2006.
Telecommunications. While the United States agreed to China's request to limit foreign equity participation in value-added and paging services to 50 percent, China agreed to both accelerate significantly the percentage of equity participation in the first two years and eliminate geographic restrictions on an accelerated basis. China had indicated it would allow 35% foreign ownership for value-added and paging services two years after accession and 51% four years after accession. China will now allow 49% foreign ownership in the first year of accession and 50% foreign ownership in the second year.
Life Insurance. While the United States agreed to China's request to limit foreign equity participation in life insurance to 50%, China agreed to significantly accelerate the elimination of geographic restrictions the percentage of equity participation in the first few years.
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