China uses intimidation in trade, violates WTO rules – US

01 December 2011 18:46  [Source: ICIS news]

WASHINGTON (ICIS)--China uses intimidation to threaten foreign firms and has failed to meet a wide range of obligations as a member of the World Trade Organization (WTO), a top US trade official charged in remarks made available on Thursday.

In what amounts to a broad indictment of Beijing’s trade policies, US ambassador to the WTO Michael Punke said that while China at first moved toward trade liberalisation and transparency in the first five years after being admitted to the WTO in 2001, it has since renewed wide use of trade-distorting policies.

“In fact,” Punke told a WTO meeting in Geneva, Switzerland, “China seems to be embracing state capitalism more strongly each year, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership.”

“This is a troubling development, and the United States urges the Chinese government to reconsider the path it is on,” Punke said.

China was admitted to the WTO under special circumstances because by 2001 Beijing had yet to revise all of its trade-related laws and regulations, and China’s commitment to make those changes and otherwise comply with WTO requirements was subject to special annual reviews for the first ten years of its membership.

Speaking at the tenth annual review session in Geneva, Punke said that while China initially “took impressive steps to implement a sweeping set of commitments  almost all of these steps took place in the first five years after China’s WTO accession”.

In the last five years, Punke charged, Beijing has shown “a troubling trend toward intensified state intervention in the Chinese economy”.

He said that China lately has pursued “industrial policies that rely on trade-distorting government actions to promote or protect China’s state-owned enterprises and domestic industries”.

Punke cited a broad range of what he said were continuing and in some cases accelerating Chinese restrictive policies, including prohibited subsidies, discriminatory tax treatment, local content requirements, export restraints, product “dumping” in foreign markets and ongoing failure to enforce intellectual property rights (IPR).

Beijing also continues to pursue “an array of other industrial policies that raises serious concerns”, Punke said, naming burdensome and capricious licensing and operating requirements that in particular have frustrated foreign suppliers of services – banking, insurance, law and telecommunications – seeking business in China.

In addition, he said that there is a perception among WTO member countries “that Chinese government authorities at times use intimidation as a trade tool”.

“China’s trading partners have heard from their enterprises on too many occasions that Chinese regulatory authorities threaten to withhold necessary approvals or take other retaliatory actions against foreign enterprises,” he said.

He said that foreign firms had been threatened by Chinese officials with retaliation if they spoke out against Beijing’s trade policies or co-operated with their host countries’ efforts to challenge China’s restrictive trade practices.

Despite the many allegations and charges, Punke indicated that the US would not seek to challenge China’s continuing membership in the WTO.

“However, the developments I have described indicate that essential work remains ahead to reduce market access barriers, to increase rule of law, including transparency and predictability, and to fully institutionalise market mechanisms in China,” he said.

China’s trade and currency policies have come under increasing criticism by the Obama administration and among both Republican and Democrat members of Congress.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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