Report On China’s Wool Industry

Report On China’s Wool Industry Executive Summary Introduction Entering the WTO marks an important further step in China’s integration with the world economy, although WTO accession represents a continuation of its successful 25-year reform journey, rather than a major turning point. Most visibly, China committed to further cutting trade barriers and significantly improving access for foreign direct investors, particularly in manufacturing, providing many new opportunities for Australian wool industry. The Australian wool industry knows the way in which China has implemented many changes as a result of its accession to the WTO. This includes tariff reduction, the implementation of the “first come first serve” approach to quota allocation and cessation of the process of splitting wool import quota allocation between domestic trade and the re-exporting trade. The Australian wool industry also endorses the gradual reduction in China’s Designated Trader system for wool buyers in China. As a result, there are more buyers in China who can deal directly with Australian wool suppliers and the quality of Chinese wool products made from Australian wool will increase. The Australian industry would like to facilitate further improvements in this process. On one hand, the Australian wool industry strongly supports the China-Australia Trade and Economic Framework signed in October 2003 and has been working with the Australian and Chinese governments towards establishment of a free trade agreement. As the world’s largest supplier of fine wool, Australia has strong interest in maintaining the position of wool in China’s market. China is the world’s dominant maker of textiles and apparel, which means that Australia definitely has a special relationship with China to ensure that the Chinese industry is satisfied with Australian wool. However, the price of wool is greater than competitor fibers. This is due to the cost and seasonality of wool production, the complexity of wool processing and the length of the supply pipeline. Therefore, the goal of the Australian wool industry is to work with its Chinese counterpart to eliminate additional and unnecessary cost in all stages of the wool pipeline. This will be to the mutual long-term benefit of both countries. On the other hand, as the biggest spinning industry, the biggest textile exporter and the third largest wool product manufacturer in the world, China is one of the biggest wool import country. China imports wool by 35% to 40% from Australia each year, bringing Australia a total income of about 12.3 hundred million AUD. Soaring domestic consumption of wool in China has driven the country’s textile industry to its best ever results, said Du YuZhou, president of the China National Federation of Textile Industry Monday (29 August)