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New Business Trends  Eastern Trade
China’s WTO outcome may affect SA
A COMPLAINT brought before the World Trade Organisation (WTO) against China over incentives to its local manufacturers to boost the use of local content in domestic production may have far-reaching implications for SA.
The complaint involves China’s granting of tax refunds, reductions and exemptions to companies — many of them state controlled — that use local inputs in their production processes. Mexico contends the practice is incompatible with WTO regulations as it discriminates against foreign products beyond negotiated tariff concessions.
The measures also include conditions that enterprises meet certain export local performance criteria, which according to Mexico are tantamount to illegal subsidies.
With the Southern African Customs Union seeking a trade pact with China, this may see SA throwing open its market to subsidised products from China, with local manufacturers competing on an unequal footing.
Mexico last month requested consultations with China under the WTO’s rules and procedures governing the settlement of disputes — a precursor to action in the WTO trade court.
A bilateral free trade agreement between SA and China would grant China duty-free or partly duty-free access on a range of products that seem to be heavily subsidised in China, said Hilton Zunckel of trade consultancy Floor Incorporated.
The case may also put SA on the back foot over its Motor Industry Development Plan (MIDP), which had helped push the vehicle sector into becoming a major contributor to the economy.
It has long been held that the MIDP is a local content scheme, resembling the Chinese schemes which are now being challenged by Mexico.
Source : Business Day
new business trends  eastern trade |
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Jaqueline Martinez
Jaqueline studied Public Relations and Journalism at CPUT between 2001 and 2003. She completed Information Systems and Communication Science 101 at Unisa. She teethed on business journalism as a communication specialist with Old Mutual for several years. Jaqueline travelled to Asia and the US teaching English before returning to South Africa and finding her niche as an online editor and features writer with BizAssist Technologies and SA Guide to Business Opportunities.
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