Wed | Jul 18, 2018

Study: China tariffs holding back Caribbean exports

Published:Friday | September 30, 2016 | 12:00 AM

A new study by the Inter-American Development Bank (IDB) has found that agricultural exports from Latin America and the Caribbean (LAC) to China could increase by nearly 10 per cent if the Asian country reduces its tariffs by more than 50 per cent.

And manufacturing goods could jump by 37 per cent if Beijing's import tariffs were reduced to the levels of the Paris-based Organisation for Economic Co-operation and Development (OECD), whose average is 3.6 per cent.

The study, titled Uncovering the Barriers of the China-Latin America and Caribbean Trade, finds that China's median tariff is about twice that of the OECD for agricultural goods and more than three times for manufacturing goods. After expanding at an annual average rate of 31.2 per cent between 2000 and 2011, the growth of China-LAC trade decelerated sharply and turned negative in 2014, on the back of marked and intertwined slowdowns in the growth of China and LAC.

Despite this recent loss of dynamism, the study notes that China remains LAC's second-largest trade partner - accounting for 13.7 per cent of the region's trade in 2015 - and that the most likely medium- to long-term scenario for its demand for LAC commodities is one of a robust growth, though not as epic as in the last decade.

Principal economic adviser at the IDB's Integration and Trade Sector and author of the report, Mauricio Mesquita Moreira, said regional governments and the private sector will have to invest in trade intelligence to remove barriers and maximise the potential gains from trade with China.

"To carry out this agenda effectively, negotiations must be, as much as possible, isolated from the political and ideological considerations that have characterised the relationship in the past," said Mesquita Moreira.

Another important finding is that the Chinese tariff structure tends to discriminate against the imports of consumer goods, which represents a challenge for LAC exporters looking to sell their products directly to Chinese consumers.