DEMARCHE TO CHINA ON TAFT GOODS PROPOSAL

UNCLAS BEIJING 000548 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/CM, EBB/TPP/MTA/RHEE AND SCHEIBE STATE PASS USTR NORTON/WEISS/STRATFORD/WINTER/MAIN USDOC FOR BRZYTWA E.O. 12958: N/A TAGS: ETRD WTRO ECON CH SUBJECT: DEMARCHE TO CHINA ON TAFT GOODS PROPOSAL REF: STATE 12905 ¶1. (SBU) On February 15, Econ M/C together with EU's Counselor for Trade and Investment Olivier Micol, jointly demarched China on labeling for textile, apparel, footwear, and travel (TAFT) goods (reftel) through China's Ministry of Commerce (MOFCOM) WTO Director General Zhang Xiangchen. Zhang's response was that, he could see some benefits in this kind of proposal, and would like to see China co- sponsor the TAFT Proposal provided two of China's specific concerns could be addressed. First, China wants to make sure it would still be able to add Chinese required information relating to size on permanent labels. Second, China was concerned that countries would be able to add unlimited requirements to non-permanent labels. -------------- Size Does Matter -------------- ¶2. (SBU) Zhang said that MOFCOM officials are familiar with the text of the TAFT Proposal and that this is not a new topic for them. He shared the U.S./EC objective that technical barriers to trade (TBT) resulting from labeling requirements should be reduced. He said MOFCOM had discussed this issue with Administration for Quality Supervision, Inspection and Quarantine (AQSIQ),which was concerned that the current U.S./EC Proposal would prohibit China from complying with its own domestic regulations that require manufacturers to include size specific information based on Chinese standards on labels. He noted that maybe one way to accommodate this concern would be to expand the "legitimate objectives" under Article 2.2 of the WTO Agreement on Technical Barriers to Trade (TBT). -------------- Labeling Loophole? -------------- ¶3. (SBU) Second, China was concerned that the U.S./EC Proposal was too broad with respect to what may actually result in the creation of more rather than fewer technical barriers to trade with respect to labeling. His concern stemmed from the fact that there was no clear limitation on what could be included on non-permanent labels. He specifically mentioned concerns that the U.S./EC Proposal may not prevent countries from requiring environmental and labor standards on non-permanent labels. Econ M/C and EU Counselor explained that Article 3 on non-permanent labels would not change the application of the TBT Agreement Article 2.2 to all requirements other than those listed in Article 2, and that the intent of the TAFT Proposal was to restrict not expand the use of TBTs. ¶4. (SBU) Zhang said that, if these two concerns could be addressed, MOFCOM would like China to join as co-sponsor of the U.S./EC TAFT Proposal. He indicated he would discuss this again with AQSIQ and get back to us. ¶5. (SBU) Comment: It was apparent in the course of the demarche that MOFCOM is very familiar with the text of the TAFT Proposal and would be more willing to consider joining as co-sponsor if the above concerns are addressed. End Comment. PICCUTA