Standards-Related Barriers to Trade in Chinese ICT Market

Abstract

Do Standards and Conformity Assessment Constitute Barriers to Trade in General? Although the low response rate of OECD survey is insufficient to answer this question, in most cases, there is no doubt that in the global market, standards and conformity assessment can pose barriers to trade. How Standards and Conformity Assessment Constitute Barriers to Trade in Chinese ICT market? And How Much They Would Cost? When it comes to the economic analysis, in China's ICT market, some facts are: preliminary development stage of Chinese ICT industry, fast growing value of ICT market, challenges such as unevenness of ICT penetration, price and promotion competition, perceived regulatory risk, and low quality of higher education with inadequate relevancy to market needs. At the same time, standards and conformity assessment schemes are gradually being established to fulfill China's WTO accession commitment. In terms of the importance of this issue in ICT imports and exports, once erected, Chinese mandatory ICT standards and conformity assessment may result in significant barriers to trade in terms of economic value. To further understand the major stakeholder in China's ICT market - Chinese government - the policy analysis demonstrates that the focus of national development has shifted from quantitative economic growth to qualitative improvement such as the development of countryside, energy efficiency, and environmental enhancement. ICT policy highlighted by the Indigenous Innovation strategy intend to build the bridge between investment in technology research and development and technology innovation, which could be matched with the completed and on-going Chinese ICT standards initiatives. Under this circumstance, ICT standards could be perceived as a tool to protect domestic industry and to promote innovation in ICT sector, thus act as a trade barrier to foreign ICT companies. How to Deal with this Issue from Legal and Institutional Perspective? The key legal document this issue can refer to is the WTO TBT Agreement. The TBT Agreement was supposed to lay down the rules for preparation, adoption and application of technical regulations, standards, and conformity assessment procedures. After the analysis of the legal provisions, the number of cases brought into the dispute resolution, and concerns addressed in the TBT committee, it is obvious that the TBT Agreement was not designed to provide stringent check on the distortive use of conformity assessment with technical regulation. When it comes to the institutional and legal analysis in China, though a lot of progresses have been made in reviewing the Standardization Law, improving transparency in the standardization process, reforming the conformity assessment regulatory bodies and cumbersome conformity assessment procedures (such as CCC mark and CPCS regulatory system), China's laws and regulations on the issue are not yet mature enough to be instrumental in addressing the possible standards-related barriers to trade. Thus, in the fast growing ICT market in China, led by the indigenous innovation strategy, there is a growing risk in the ICT market that Chinese leadership will adopt mandatory Chinese IPR based-standards and over-stringent conformity assessment procedures, which may erect barriers to international trade and raise costs for foreign ICT companies. How to Address This Issue from US Government's Stand Point? Essentially, this issue is deeply rooted in business community and can be more effectively addressed by American companies rather than US government or WTO legal system. Consequently, this research suggests that US government should encourage and enhance the integration between American and Chinese ICT business communities by strengthening the linkage between American ICT companies and Chinese subsidiaries and contractors; bring more advanced ICT products and research to the Chinese market; engage Chinese academic institutes into their research and development projects. US government should also expand the scope of current training and exchanging programs to Chinese officials and industry in the ICT standards-related field in order to change the top-down mental and institutional structure of China's ICT policy. In addition, it is helpful to expand the cross-culture training to American standards officials and encourage the education of standards issue in higher education system. Other suggestions include establish more embassy presences and standards offices China and expand MDCP.