2002-10-22 10:50:00
WTO pledge spurs trade surge
  Author: PAUL NASH
  Nash: Some people are concerned China may have difficulty complying with its commitments under the World Trade Organization (WTO). What is your assessment of China's efforts to implement its commitments?

Huntsman: Well, it's too early to tell. China is only 10 months into the process, but I think in the relatively short period of time China has been a WTO member there has been reason to be hopeful.

The most encouraging sign of all seems to be the goodwill on both sides to work out the challenges between our two countries, and so far we have been successful in solving some major technical issues.

Currently, in Geneva, where the WTO is headquartered, there are many countries involved in a trade review.

So, while it is too early to give you any kind of grade ... if I were a teacher in a classroom, I'd have to say the early signs are hopeful.

Nash: How does your office monitor and evaluate China's implementation efforts?

Huntsman: We have the China office within the Office of the US Trade Representative that chairs what we call an inter-agency co-ordinating effort, which includes, among others, the State Department, the Commerce Department, the Agriculture Department and the Treasury Department.

They work very closely with our embassy in Beijing and our five consulates throughout China. In the embassy, there are now new officials who do nothing but focus on WTO matters; there are now people in the regional consulates who focus on the WTO; and, indeed, there are now people in the Commerce Department, and I've got some on my own staff as well, who focus exclusively on China's WTO obligations.

So, we're able to monitor and evaluate through their efforts as government agencies, both on the ground in China and in Washington.

We are also working very closely with the business community ... through the US Chamber of Commerce and the US-China Business Council.

We're able to sit down with them on a regular basis and get an up-to-date, real-time assessment of how things are going for their member companies.

Nash: What role does your office play in addressing any implementation problems that arise?

Huntsman: Now we work mostly on a bilateral basis, country-to-country, with the ministries and agencies that are involved with whatever the trade problem happens to be.

So, if it's an insurance issue, then we'll work directly with the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), or with China Insurance Regulatory Commission (CIRC), which is the agency that oversees the insurance industry, or with the People's Bank of China; on automobile issues, we'll work with a different group; on express-mail delivery problems, we'll work with another set of folks; on agriculture issues, for example, there are many government bodies that have an interest.

So, it really depends on the issue involved. But as of right now, we like to think most of the issues on our agenda during the first 10 months of China's WTO membership are issues we can resolve country-to-country ... which is sitting across the table from one another, raising the problems and finding ways to address them, instead of working through a more formal dispute-settlement process.

Nash: Of all the major reforms China has committed itself to, which do you believe are the most critical?

Huntsman: It would be hard for me to say, of all the important issues, which are the most critical.

But I would have to say among the more important would be China's commitment to trading and distribution rights, which would basically give foreign investors and traders the right to operate on their own with limited barriers.

These new rights will play out in the next two years, as I understand it in terms of the WTO commitments, in the way they will be phased in. We'll be watching that closely.

Nash: Many people believe China's membership in the WTO will help to encourage the rule of law in China. Have you seen any evidence of this occurring?

Huntsman: When you look at the accession documents, which represent all of the efforts made leading up to China's WTO membership, you see about 1,000 pages with about 600 different obligations.

About 300 of those are based on the rule of law ... requiring legal and regulatory changes. Some of those changes have already been made, while others are contemplated.

Nash: How have the terrorist attacks of September 11, 2001 affected trade between China and the United States?

Huntsman: I don't know that it has affected trade as much as it has affected our political relationship - the realization terrorism must be stopped.

We came together as two countries who feel very strongly about doing whatever is necessary to stop terrorism where it exists.

But in terms of overall trade flows, when I look at the investment flows, they are running higher than ever in China.

When I look at our bilateral trade numbers, I don't know that there has been a diminution at all in the level of activity as a result of the events of September 11.

Nash: How do you advise American companies to develop a successful strategy for the China market?

Huntsman: I think the first step is getting to know and understand the China market. That means investing time, and it means investing one's self, as a manager or a corporate leader in the fact you will be doing business together.

It means at some level one has to develop a lao pengyou (old friend) relationship, if you will. You've got to develop some level of guanxi (interpersonal relationship) as they call it, if you're to be taken seriously in China.

This takes time and sometimes unwestern-like patience. Regardless of which product you're looking to sell or market in China, an early step should be to develop relationships and establish yourself as a credible business representative.

Nash: We recently spoke with Siva Yam, president of the US-China Chamber of Commerce. Yam said for the US-China trade relationship to continue developing, more attention must be paid to American companies standing on the sidelines - predominantly small and medium-sized companies. What is your view?

Huntsman: I think traditionally small and medium-sized companies have had a more challenging time breaking into China's market.

I think the reason is because developing those early relationships with China is a time-intensive and resource-intensive exercise, and traditionally one that larger corporations are in a better position to make.

As China continues living up to its WTO obligations, there will be many, many opportunities.

There will be trading and distribution rights available to them that traditionally have not existed.

The system in China will become much more transparent and easier to understand, easier to break into for small and medium-sized corporations.

For small companies, just spending the time necessary to understand how business is done and transacted, and the sheer cost of travel to China, can be problematic.

Soon, companies of all sizes will need much less time to understand the marketplace and how the critical decisions are made affecting their industry because of greater transparency and fewer regulatory barriers.

That will then be a huge benefit.

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