PUBLICATION of the US Foreign Trade Barriers action report last week puts into black-and-white what many traders and businesses have been grumbling over since late last year: that the world's biggest potential market is extremely hard to penetrate. The US feels it has a particular bone to pick: last year it notched up an US$18.3 billion trade deficit with the mainland, and negotiated two memorandums of understanding which, it claims, are not being fully honoured. The Special 301 investigation, aimed at tightening intellectual property rights protection, was concluded on January 17 last year. The Section 301 investigation to radically improve market access was sewn up in an eleventh-hour agreement during the euphoria generated by the 14th Party Congress on October 10. This second agreement took in the absence of transparency; import licensing requirements; import quotas, restrictions and controls; and standards and certification requirements. In practice, the report's author, the Office of US Trade Representative, finds US efforts to sell into the mainland are still frustrated by a complex network of bureaucracy, administrative controls and tariffs. Others would add bribery to the list of stumbling blocks. Citing certain observers, the report accuses China of collecting just five per cent of its tariffs based on the official, published rates. According to the report, China's commitment to the reform of significant parts of its import regime has broadly floundered. ''At present, China still uses an intricate system of tariff and non-tariff administrative control to implement its industrial and trade policies,'' it says. The US Trade Representative is equally unimpressed by the unscientific methods used to deduce the levels of non-tariff barriers which entail complex negotiations involving the central government and Chinese ministries, state corporations and trading companies. ''Through a process of negotiation and behind-the-scenes horse trading at the annual State Planning Conference, central government agencies determine the 'demand' for each product subject to import restrictions,'' the report says. On top of these generally quantity-restrictive controls come nationwide import licences - and the US Trade Representative says both can be used as virtual bans on products - plus complex regulation that can require as many as 15 chops or clearances from various ministries. The report says: ''China uses tariffs as one of several tools to protect its domestic industry and restrict imports. Tariff rates on many goods are prohibitively high. ''China has announced publicly that it will rely increasingly on tariffs as a barrier to imports as it phases out selected non-tariff barriers. ''China's import tariffs represent a major barrier to US commercial opportunities. Tariffs range from three per cent on promoted imports to 250 per cent on discouraged products for import such as automobiles.'' These charges don't stop at tariffs. There are industrial and commercial taxes and value-added taxes. The report says China adroitly mixes and piles up these charges to stamp out imports it regards as threatening to domestic industry. Other complaints include: Flexible customs valuation, varying from port to port, is open to corruption. Licensing requirements covering around 50 per cent of total imports by value. China's refusal to accept US certification of product quality, heaping more costs and uncertainty on to exporters and overly-strict rules on agricultural and veterinary hygiene standards. Indirect subsidies to promote China exports, including ''unpaid loans'' made to state companies. Service and investment barriers. Smuggling, and the blind eye turned to it, is also drawn into the attack. ''The rapid growth of smuggling, particularly in south China, and the lack of will on the part of the Chinese authorities to eliminate it, constitutes an increasingly formidable disincentive to import US and other foreign products,'' the report says. ''The obvious success that smugglers have - clearly, in south China, with official connivance - fuels corruption and further degrades China's already poor regulatory environment.''
