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June 1, 2003
By Pulp & Paper Canada

China eliminates vat and tariffs for pulp and newsprintBEIJING, CHINA — In response to lobbying efforts by a number of governments, including Canada, China has officially removed all “border trade” v…

China eliminates vat and tariffs for pulp and newsprint

BEIJING, CHINA — In response to lobbying efforts by a number of governments, including Canada, China has officially removed all “border trade” value-added tax (VAT) and tariff preferences for a number of goods including pulp and newsprint, effective June 1, 2003.

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WTO provisions allow a government to take measures to facilitate “frontier traffic”. However, since China has used this provision to justify providing tariff and tax preferences to certain Russian goods, a number of foreign governments have complained that China’s interpretation of this provision was unreasonably broad. What this means to Canadian pulp exporters is that Russian pulp producers will no longer be able to avoid the 17% VAT payable by other importers to China, which has provided Russian pulp with an unfair competitive advantage.

This is an important success for Canadian pulp exporters. China has become the largest destination in the world for pulp imports. According to China Customs, China imported almost $3 billion US of pulp in 2002 and this figure continues to grow quickly in 2003. Canadian exports totalled almost $500 million US in 2002, while Russia supplied over $350 million US — a figure that has more than tripled since 1998.

Canadian Embassy in Beijing is optimistic that this change in Chinese government policy will create new opportunities for Canadian pulp exporters. The Embassy’s Commercial Section looks forward to responding to any questions or concerns that exporters may have.#text2#


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