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EU: Tariff change of little harm to Chinese exports
( 2003-07-05 09:14) (China Daily)

The removal of six categories of Chinese products from the European Union's Generalized System of Preferences (GSP) will have a minimum impact on Chinese exports given the good situation between the two economies, a European Commission official said on Friday.

Franz Jessen, minister-counsellor of the European Commission delegation in China, said the removal of the six categories will not affect the volume of China's exports to the European Union, as has been already proven by the removal in 1998 of nine other categories of Chinese products.

The EU said earlier that six categories of Chinese product would be removed from the GSP by May next year.

The six categories affected are edible products of animal origin, plastics and rubber, paper, optical products and clocks, electromechanical goods, and consumer electronic goods.

The GSP benefits developing countries by enabling qualified products to enter EU markets at reduced or zero rates of duty.

Many Chinese exporters have worried that the change will deal a severe blow to China's exports.

But Jessen said this would not happen. "According to our experience, most of the export flows are not hampered by the withdrawing of the tariff preference,'' he said.

In 1998, nine categories of Chinese products were removed from the GSP, including grain, fruit, leather, clothing, footwear, glass and ceramics.

However, all but one of the nine categories have seen their exports to the EU increase by between 29 per cent and 106 per cent in four years.

For example, Chinese clothing exports to the EU increased by 73 per cent between 1998 and last year. Exports of glass and ceramics jumped by 86.2 per cent in the same period.

Moreover, given that China-EU trade is prospering, Jessen said he believed Chinese exports to the EU will not be hampered by the GSP changes.

Some 80 per cent of Chinese products bought by the EU were not exported under the GSP.

Eighteen Chinese products will still benefit from the GSP even after the six categories are removed next year, Jessen said.

Bilateral trade between China and the EU is growing healthily, Jessen said.

According to Chinese statistics, Chinese exports to the EU increased by 48.6 per cent year on year between January and May this year. Imports from the EU grew by 38.2 per cent.

"The high growth rates are very impressive as the world economy is gloomy,'' Jessen said.

He said he expected China to replace Switzerland as the EU's second-biggest trading partner in about two years, next only to the United States.

China last year replaced Japan as the third-biggest trading partner of the EU.

The removal of the six product categories from the GSP will involve two steps. In November this year, 50 per cent of the tariff benefit will be cut. The remaining 50 per cent will be cut in May next year.

Jessen said the GSP benefits removed from China will be redistributed to other developing countries.

Some 175 economies currently benefit from the GSP. China ranks first, obtaining about 25 per cent of the benefits.

Jessen said the change reflects the fact that Chinese products have become very competitive in the EU market.

But he urged Chinese companies to produce more high-quality goods.

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