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China defends procurement rules

BEIJING, Dec 15 – China on Tuesday defended rules that foreign companies claim lock them out of the multibillion dollar market for selling computers and office equipment to government departments.

Beijing stipulates that sellers of high-tech goods must have them accredited based on "indigenous innovation" — meaning they must contain Chinese intellectual property — to be included in a government procurement catalogue.

Accredited products will be favoured, according to the policy, which foreign firms say effectively excludes them from the process.

"The indigenous innovative product accreditation project is in line with … international rules," foreign ministry spokeswoman Jiang Yu said in a fax to AFP.

The measure "abides by and accords with relevant WTO (World Trade Organization) rules" and "treats both domestic and foreign invested enterprises equally and without discrimination."

More than 30 industry groups from the United States, Canada, Europe, Japan and South Korea last week lodged a protest with the ministries responsible for the measures, claiming they were "restrictive and discriminatory".

The rules "impose onerous and discriminatory requirements on companies seeking to sell into the Chinese government procurement market and contravene multiple commitments of China\’s leadership to resist trade and investment protectionism," the groups said in a letter dated December 10.

"The very restrictive and discriminatory programme criteria would make it virtually impossible for any non-Chinese supplier to participate — even those non-Chinese companies that have made substantial long-term investments in China."

The letter was addressed to the heads of the science and technology ministry, finance ministry and the National Development and Reform Commission, which jointly issued the rule.

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A separate letter sent by the European Union Chamber of Commerce in China on Monday called on Beijing to delay the introduction of the rule to allow for "expert dialogue on its implications".

"There is particular concern regarding the lack of transparency in the drafting process of this accreditation system, as well as the impossibly short application period," the letter said.

The deadline for filing an application for accreditation was December 10 — less than a month after the rule was posted on the science and technology ministry\’s website.

Government procurement was worth 599.1 billion yuan (87.7 billion dollars) in 2008, up 28.5 percent from the previous year, according to official data.

The dispute comes amid growing concerns about protectionism as the world recovers from its worst economic crisis in decades.

China has accused its trading partners, including the United States, of using protectionist measures against its products.

The foreign ministry said the new high-tech policy "encourages all enterprises in China to carry out innovative activity and supports enterprises to increase their investment in research and development".

"All products that meet the conditions can be accredited. Enterprises of all kinds will be treated equally," said spokeswoman Jiang.

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