China and WTO liberalization: Imports, tariffs and non-tariff barriers

- We investigate the effectiveness of both tariff and non-tariff barriers (NTBs) on product-level imports in China.
- Manufacturing imports mainly increase because of tariff cuts; agricultural imports grow due to the elimination of licenses.
- Both tariff and license liberalizations lead to larger number of countries (firms) and average imports per country (firm).
- Quota removal implies imports from more countries; tendering liberalization entails reallocation from OECD to non-OECD area.
- NTB protection is found to be complementary to tariff protection and discriminating against foreign-owned firms.

This paper explores the effectiveness of different trade policy instruments on product-level Chinese imports over the period of 2000-2006. More specifically, in addition to the declines in tariffs, we investigate the impact on imports of the gradual removal of non-tariff barriers (NTBs) as agreed within the WTO's accession protocol in 2001 (such as import quotas, licenses and tendering requirements). We document that while manufacturing imports mainly increase because of tariff cuts, agricultural imports grow due to the elimination of import licenses. However, we provide evidence that quota elimination is associated with a redistribution of imports along a larger range of countries, whereas tendering liberalization is connected to an import reallocation from OECD to non-OECD countries. Finally, we also find that NTB protection is complementary to tariff protection and discriminating against foreign-owned manufacturing firms.