From: David Hickmott [DHickmott@uli-atl.com]

Sent: Monday, June 25, 2007 10:44 AM

To: David Hickmott

Cc: David Hickmott; David Hickmott

Subject: FW: China slashes export rebates

Dear Valued Unique Customer,

The below article is from the JOC.  With the changes in export rebates starting July 1, the bookings for this week have been extremely heavy.  Kindly note the below as it will likely have an impact on pricing of products from vendors in china if the “export rebate” was used in calculating the FOB price to the end customer.

Thank you for your support of Unique Logistics International (ATL).

David Hickmott

Executive Vice President

Office:  404-767-0500 ext 306

Cell#678-478-6604

E-Mail:  dhickmott@uli-atl.com

Website:  www.uli-atl.com

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China slashes export rebates
Updated June 22, 2007 9:52:18 AM
William Armbruster / Shipping Digest
 
 
China announced a series of measures designed to reduce its burgeoning
trade surplus by cutting subsidies for Chinese exports and by temporarily
reducing tariffs on certain imported goods.
 
The most dramatic steps involve adjustments to export tax rebates on more
than 2,800 products. Beijing is eliminating rebates on 553 products that
are deemed to be "resource- and energy-intensive and highly polluting,"
such as fertilizers, leather and cement.
 
In addition, it is reducing rebates on 2,268 products that "easily cause
trade frictions," including toys, apparel, furniture, paper and plastics.
The rebates on those products will be lowered to five to 11 percent.
 
The changes take effect July 1.
 
The rebate adjustments affect roughly 37 percent of all export product
types, according to China’s Ministry of Finance and the State
Administration of Taxation, which announced the changes on June 19.
 
The United States China Business Council informed its members of the
changes in an alert on Wednesday.
 
“Lots of companies are complaining because the government didn’t give
advance warning,” said Hu Huang, director of logistics and customs
compliance for Kichler Lighting, a Cleveland-based importer of lighting
fixtures.
 
China decided against providing a grace period because a similar transition
before a series of rebates last September led to many problems, including
the use of fraudulent contracts to secure prior rebate rates, according to
the council.
 
The tax rebates in effect constitute a form of government subsidy by
allowing exporters, including U.S. and other foreign companies operating in
China, to sell their products more cheaply in overseas markets.
Nonetheless, the rebates do not violate World Trade Organization rules,
said John Frisbie, the council’s president.
 
In a second move, Beijing is temporarily lowering import duties on a
variety of goods. The tariffs on imports such as coal and fuel oil will not
exceed 3 percent. The tariff on components for television sets,
refrigerators and other products will be lowered to between two and 6
percent, according to Hu. Those tariffs previously were more than 10
percent, she said.
 
Also, duties on home appliances, kitchenware, and construction material,
will be reduced to between six and 17 percent.
 
In a third step, China will impose five- to 10-percent export tariffs on
steel products and 142 “low-end resource products,” Hu said.
 
Information on the changes had been gleaned from postings on Chinese
government Web sites. As of late Thursday, the measures had not yet been
translated into English.
 
The Ministry of Finance said the latest adjustments are aimed at reining in
China's trade surplus and alleviating trade tensions, according to the U.S.
China Business Council. Chinese exports through the first five months of
this year were up 27.8 percent in comparison to the previous year, the
council said, citing figures provided by China’s General Administration of
Customs. With imports rising only 19.1 percent, China's trade surplus
totaled $85.7 million, an 83-percent increase over the first five months of
last year.
 
Frisbie said the huge increase in the surplus may have been the result of
Chinese exporters trying to beat the deadline before the adjusted rebates
took effect. There were indications as early as March that the government
was going to act, he said.
 
Frisbie said it was too early to tell what impact the measures would have
on the trade balance. The Chinese surplus has continued to soar despite the
8-percent increase in the value of the Chinese currency since July of 2005,
he noted.
 
The announcements of the trade-adjustment measures came just a month after
a high-level delegation of Chinese officials, led by Vice Premier Wu Yi,
visited Washington for discussions with top U.S. officials. The talks made
no progress, however, on U.S. efforts to convince the Chinese to allow the
yuan to appreciate in line with trade flows.
 
In the aftermath of the talks, two bills were introduced in the Senate that
would impose sanctions if the Chinese did not revalue the yuan
substantially. That would make U.S. exports more competitive in China, but
it would also make Chinese imports in the U.S. more expensive.

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