TDC report fails to get the facts straight

THE US Consulate General in Hong Kong read with surprise the Hong Kong Trade Development Council's report, Impact of China's Accession to GATT-WTO (South China Morning Post, October 5).

The report argued China should be allowed into GATT-WTO by the founding date of the new WTO, without regard to the quality or completeness of China's market-opening offers.

For your readers' sake, we would like to comment on several TDC statements that we found inaccurate or misleading. First, the TDC states that '. . . founding member status is a prerequisite for China to enjoy all the benefits concluded in the Uruguay Round, including both trade in goods and services.' This is simply not true. Whether China enters as a founding member or at a later date in no way affects its status or benefits within the GATT-WTO.

Second, the TDC made headlines by quoting a World Bank study that purports to show, using one economic yardstick (imports as a percentage of GDP), that China's market is more open than the US market. However, if one reads the World Bank report itself, one finds the Bank says the number cannot be trusted. Simple common sense would also argue against this assertion. After all, the US is the world's largest importer (US$580 billion in 1993) and for decades has been the primary overseas market for export-oriented nations such as the Asian tigers. Does any impartial observer really believe the Chinese market is a more open and easier place to do business than the US market? Finally, and most worryingly, the TDC report reveals a basic misunderstanding of the GATT-WTO rules to which China is trying to adhere. At the risk of oversimplifying, GATT rules generally require that a GATT member's trade laws be transparent, that they be applied equally to domestic and foreign goods and companies, and that the GATT member lower its tariffs and other trade barriers. While China has made remarkable progress in reforming its centrally-planned economy, a quick look at her trade regime - with its quotas, licences, monopolies and foreign trade restrictions - would indicate the amount of work that must be done to make its trade system compatible with GATT-WTO standards. Yet, the TDC ignores this entirely.

The US and the majority of GATT members staunchly support China's GATT-WTO entry. China must be willing to play by GATT rules and expand access to its market, but we have promised to be creative in reaching an agreement. Unfortunately, the TDC argues that politics should be put before economics and China should be allowed GATT membership no matter what its GATT-WTO offer looks like. This does a disservice to the TDC report's readers, who have come to expect higher quality analysis from the TDC. It also does a disservice to the TDC's core constituent, the Hong Kong entrepreneur, who has the most to gain from a more open Chinese trade regime.

Patrick Corcoran, Director United States Information Service