11
Jun
“By the end of this year, China will extend zero tariff treatment to 97 percent of tax items from all less-developed countries that have diplomatic ties with China”, announced Chinese President Xi Jinping during a recent Asian-African Summit held in Indonesia from 22-23 April.
Since 2010, China’s duty-free scheme covered 60 percent of LDC exports with the objective of extending zero-tariff treatment to 97 percent. (See previous Bridges Africa, 12 September, 2013)
“China will continue to provide assistance to developing countries without political conditions” stated President Xi.
“It is important to prod developed countries to earnestly deliver on their [overseas development aid] commitments and step up their support for developing countries with no political strings attached,” he added.
Following the 2005 Ministerial Conference in Hong Kong, developed countries, and developing-country members “declaring themselves in a position to do so”, agreed to implement duty-free and quota-free (DFQF) market access for products originating from LDCs. For WTO Members with difficulty meeting this requirement, the text included the option of providing DFQF access for 97 percent of LDC products, while working to progressively achieve full compliance.
The DFQF negotiations at the WTO have seen little substantial progress since then, with the debate largely focusing instead on the potential gains that could be achieved under a 97 percent DFQF scheme as opposed to full coverage, as well as on related rules of origin.
WTO members have struggled with multiple hurdles in trying to achieve a concrete outcome in this area. In fact, it has even proven divisive within the LDC Group itself, given that some members fear the possiblity of “preference erosion”.
The 2013 WTO Bali Ministerial further instructed members to report on the implementation of this decision at the next WTO Ministerial Conference in 2015.
Effectiveness under scrutiny?
As we go to press, exact details about which tariff lines will be covered by the extended Chinese preferential scheme have not yet been revealed.
Still, some observers remain sceptical about developing countries’ preferential schemes towards LDCs, arguing that the very design of it could constrain their effectiveness.
For example, studies conducted by ICTSD [publisher of Bridges Africa] show that while the Indian offer of a duty-free scheme for LDCs is a welcome initiative it excludes some products of key export interest to African LDCs – such as coffee, tea, some spices and oilseeds, milk and cream, onions, cashew nuts (shelled), tobacco, copper and related products. The study also finds that LDCs ought to build their productive and export capacities in order to effectively benefit from the scheme.
The Indian duty-free tariff preference (DFTP) scheme was launched in April 2008 and became fully operational in October 2012 when the tariff phase-down was completed. Following the scheme’s revision, duty concession was extended to 98 percent of tariff lines in April 2014.
In the case of China, some observers warn that the 3 percent tariff exclusion could limit the potential benefits of preference utilisation for LDCs.
Strengthening Sino-African ties
A new type of international relations underpinned by the principles of win-win cooperation, mutual benefit and common development goals should be the driving force of cross-regional cooperation, and the facilitation of trade and investment, urged the Chinese President.
Thus far, China has maintained an active presence on the African continent in view of supporting the achievement of Africa’s development goals. According to a previous ICTSD article, trade between China and Africa surpassed USD$200 billion in 2012.
However, critics have often pointed to the fact that China’s commercial engagement in Africa is characterised by a heavy concentration on natural resource imports, which, according to them, perpetuates the continent’s dependence on primary commdities.
For example, despite the strong growth in Africa – mainly driven by the Asian demand for commidities over the past decade – the continent has experienced a relative decline of African manufacturing.
Another possible threat underlined by some trade experts is related to the fact that China’s comparative advantage lies in the same low-skill, labour-intensive and low-technology sectors, such as clothing, furniture, and footwear, that offer the best chances for industrialisation in Africa. They argue that such a situation could damage the industrialisation potential of Africa.
ICTSD reporting. – “World leaders convene in Indonesia for Asian-African Summit”, CNTV English, 23 April 2015; “China announces 97 per cent DFQF treatment for LDC imports”, Esango, 23 April 2015;
Source: http://www.ictsd.org/bridges-news/bridges-africa/news/china-extends-97-percent-dfqf-treatment-for-ldc-imports