What`s Wrong With Trade Agreements

Economist Paul Krugman echoed this argument in „Protectionism and the Great Depression“ in 2009, writing: „Because China`s legal and tax professions are effectively divided, few law firms are aware of China`s free trade agreements and therefore ignore them when structuring foreign investment in the country. This is problematic because the identification and possibility of using existing free trade agreements should often be taken into account in law – and should be negotiated in advance with relevant customs and tax officials in China. Failure to do so can result in tax overheads that are well above what they should have ever been. It is also known that some advisors intentionally withhold such data to prevent an investor from taking an interest in markets outside the PRC and losing the client in another country that might be better suited to the client`s needs. Many Chinese consultants are simply unaware of the importance of China`s free trade agreements or even the post-incorporation process for registering a Chinese company with local customs – which includes the intention to assert treaty status under an applicable free trade agreement. If this does not happen with the Chinese customs registration, the company may lose all the contractual benefits to which it is actually entitled. The rule of law alone is not enough. Laws can be written to protect the powerful at the expense of the weak. Laws may enshrine discrimination as opposed to equality of opportunity. Even progressive laws can be neutralized without enforcement. Singapore, with its wealth of financial and other services, also has a free trade agreement with China.

Signed in 2009, this agreement focuses on the service industry in addition to the tax benefits of individuals. Singapore intends to increase its population by an additional 2 million people, and many of them are expected to be wealthy mainland Chinese nationals. Benefits for businesses include reduced source deductions on a variety of services, including eligible royalties. .