USTR Reports Progress And Problems With China Trade

In its annual report to Congress on China’s compliance with its World Trade Organization (WTO)
commitments, the Office of the U.S. Trade Representative (USTR) cites what it calls “many
impressive steps,” but also says much more needs to be done.

The report says the Obama administration has been working to increase benefits from China
trade for the American people by focusing on “outcome oriented” dialogue, and at the same time has
been taking steps to enforce China’s adherence to its WTO obligations.  It mentions China’s
efforts to reduce tariffs and non-tariff barriers, greater market access for products from the
United States and other nations, steps to protect intellectual property rights, and greater
transparency. While viewing that progress as a measure of success, the report expresses concern
over the fact that progress has been slowing down in recent months.”

China has yet to fully implement important commitments,” the report says. “This can be traced
to the fact that China continues to pursue industrial policies that rely on excessive
trade-distorting government intervention to protect China’s domestic industries.”

The USTR cites some specific examples of problems pointed to by U.S. companies, including:

•    the continued and incrementally more restrictive use of export quotas and
export duties on a large number of raw material inputs;

•    the selective use of other border measures such as value-added-tax
rebates and discouraging imports of particular products;

•    the setting and enforcement of unique Chinese national standards; and

•    use of government procurement practices that promote “Buy China”

Looking to the future, the USTR report says that in 2010, it will continue to pursue benefits
from China trade through diplomatic means and enforcement measures. In that regard, the USTR says
it will place particular emphasis on reducing the Chinese government’s intrusion into the market.
It says that on several occasions when bilateral dialogue has not been successful in resolving
China’s WTO issues related to concerns of the United States, the U.S. government has not hesitated
to invoke the dispute mechanism of the WTO, and it will not hesitate to do so again.

January 12, 2010