Tuesday, April 13, 2010

The List of Zero-tariff Products is Now Here!

The tariff list is finally public. What is this list and why is this important?

In 2003, Chinese leader Wen Jiabao pledged to give tariff free access to an unspecified number of exports from Africa's least developed countries (LDCs). At first, 190 products were covered. In November 2006 (at the Forum on China Africa Cooperation Beijing summit) the Chinese promised to increase this list to 440. But it has been impossible for most people (like me) to get a list. Now Jeremy Stevens and Simon Freemantle at Standard Bank's Economic Research Group have published (courtesy of China's Ministry of Commerce and Beijing Axis) the full list of 454 product lines for which China is giving tariff-free access to African LDCs. (I received it as a pdf file, which I can't find a way to post here, but you should be able to get the list by registering at the Standard Bank site highlighted above.)

At least three-quarters of the products are industrial goods: vehicle spare parts, bicycles, soap, plastic products, leather wallets, cotton fabric and t-shirts, umbrellas, ball-point pens, table lamps, refined copper products, diesel generators, and fish hooks among them. There is a clear correspondence between these items, and China's domestic restructuring plans. As I note in The Dragon's Gift, China's government wants its companies at home to move up the value-chain. Just a few weeks ago Guangdong province announced that it was raising provincial level wages by 20 percent. The products on the list are mainly from entry-level industries that Chinese planners would like to move beyond.

African governments that want to foster manufacturing investment now have a list of products for which they might offer their own incentives. Some Chinese companies will be looking to relocate to Africa in order to export back to China, duty-free. Other Chinese firms in Africa are already producing products like sesame (Senegal) and plastics (Nigeria) and spun cotton/synthetics (Mauritius). Some have Chinese markets in mind. But African companies can equally benefit from strategic targeting of their products to the Chinese market. At the same time, it's clear that a lot of compromise went into this list and not all LDC African manufactured products are eligible. Decaf roasted coffee is on the list, but not regular processed coffee, for example. There are a few other surprise products, including dental fittings, electric alarm clocks, and bow ties.

9 comments:

  1. This is fantastic, Deborah, thanks for posting! I'm sure that the crocheted bow tie will be a best seller. As I look through the list, it strikes me that this adds up to a lot more than 454 product: Some of these items are very specific (safety pins, dry shark's fin, rear-view mirrors for vehicles, etc.), but others could encompass a large range of sub-products ("other plastic products", "baby clothing and accessories, synthetic", "sculpture and other decorative articles"). Do we know anything more about how the compromises were made and by whom? And is China using the UN's definition of LDC?
    Thanks!
    Lila

    ReplyDelete
  2. Dry shark's fin? That's no good!

    wei

    ReplyDelete
  3. Is China limiting its tariff-free access to African countries? I'm wondering specifically about Afghanistan, as China has an industrial interest there with their copper mines. Are raw materials on the list?

    ReplyDelete
  4. Good points all. This list was specifically for African LDCs. I think that China is using the UN definition of LDCs, but haven't seen a list of countries. Raw materials in many cases already come in tariff-free. There are some on this list, however. Others (like cotton) are notably missing, although fabrics/textiles/garments are included. I imagine most of the negotiations went on in Beijing, rather than in Africa. But this is a wide-open area for research! Adam Minson in South Africa has done some initial research.

    ReplyDelete
  5. It would be great to have a comparison of the zero-tariff products between China and other countries. What about US and EU's zero-tariff product list towards Africa?

    wei

    ReplyDelete
  6. Sounds like a great topic for a student paper!

    ReplyDelete
  7. Are you sure there's no other way to get ahold of this list? I'm carrying out an undergraduate Honors project on the TAZARA railway and Chinese engagement in Zambia and Tanzania, and StandardBank doesn't seem to keen on letting me get ahold of the list, as I'm not officially employed anywhere.

    ReplyDelete
  8. Tom, Send me an email and I will send you my copy.

    ReplyDelete
  9. Africa governments that are looking for to promote manufacturing investment decision now have a listing of products which is why they might provide their own bonuses. Some Chinese companies is going to be looking to transfer to The African continent in order to foreign trade back to Bangkok.

    ReplyDelete