• Liberalisation and textiles

Liberalisation and textiles

This paper talks about extending Chinese unilateral trade preferences to the least developing countries (LDCs) in Africa, which is the newest Chinese foreign policy tool. The paper explores the tool's design and assesses the difference it is likely to make to the economies of these countries.

Recently, China eliminated tariffs on 440 products exported by some LDCs in Africa. Preliminary analysis suggests that they are well-tailored to the export capacity of those LDCs. In fact, the full list of products covered has not been officially published in translation. However, it is clear that the Chinese step provides price advantages for the developing countries' exports, and it can stimulate sustained export-led growth. The date of implementation for these preferences is not known, so the paper assumes that the preferences will take effect by the end of 2009.

The paper highlights some possible obstacles that may impair LDCs’ benefits from preferential market access:

• China may make the same products for Africa available also to Asian economies, which would decrease the competitive advantage of the African LDCs
• the strict Chinese rules of origin, and other non-tariff barriers may pose a greater problem
• raw cotton is excluded from the duty-free list
• China may later impose import prohibitions against African LDCs on the basis of health and environmental concerns, given the animal nature and the law quality of the African exports
• considering that 90% of LDC exports enter China duty-free, it is difficult for China to craft a Chinese preference programme that is capable of making a dramatic impact on these economies

The paper states that African LDCs can devise policies that will improve their chances of earning the full value of, or even multiplying, the benefits accruing to local producers. Therefore, it presents the following recommendations:

• African governments are advised to work with the local Chinese embassies to publish and explain the list of 440 products and the applicable rules of origin to domestic producers and exporters
• they need to open discussions with the Chinese ministry of commerce on similar preferential treatment for other commodities
• it is important to ensure that Chinese projects target those industries and activities that are eligible for preferential treatment
• cotton exporters should seek Chinese investment in the domestic processing of raw African cotton to promote vertical integration in African economies
• non-tariff barriers must be minimised and supply-side constraints should be addressed

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