US And China Discuss Trade Relations

by Mike Godfrey, Tax-News.com, Washington

30 April 2009

US Trade Representative Ron Kirk has held his first meeting with the Chinese Commerce Minister, Chen Deming and exchanged views on a range of bilateral and multilateral trade issues.

Kirk and Chen discussed the importance of avoiding protectionism and of utilizing cooperative mechanisms such as the Joint Commission on Commerce and Trade to resolve bilateral trade issues whenever possible. They also discussed the World Trade Organization (WTO) Doha Round and the importance of achieving a successful outcome to the negotiations.

“Particularly during the current difficult global economic circumstances, both the United States and China have a tremendous stake in maintaining a vibrant, open international trading system to revive and sustain growth,” Kirk said. “With the size and importance of our bilateral trade flows, we also have a shared interest in ensuring that our bilateral trade relationship is fair, sustainable and mutually beneficial. I look forward to working with Minister Chen to put the Doha Round on a path to success."

China is the United States’ 2nd largest goods trading partner with USD409bn in two-way goods trade in 2008, a 6% increase over 2007. China was the third largest market for US exports in 2008. Exports to China totaled USD71.5bn in 2008, up 9.5% from the previous year.

However, the trading relationship between the two economic powerhouses has not been plain sailing in recent years, with the US, along with the European Union and other major trading nations, having referred multiple complaints about Chinese trade practices to the WTO, especially in the area of taxation and intellectual property.

Last December the WTO Appellate Body confirmed that China breached its WTO obligations by creating a system of registration and taxation of imported car parts that promoted the use of domestic components over imported car parts.

Then, in March, the WTO formally ruled that several aspects of China’s legal regime for protecting and enforcing intellectual property rights were inconsistent with China’s obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

The April 27 meeting between Kirk and Chen fell on the same day as the US Chamber of Commerce's hosting of the US-China Trade Cooperation Forum, which served to highlight the signing of over 30 contracts with Chinese business partners, worth more than USD10bn. The Chamber said that event also underlined the importance of free and unfettered trade between the US and China on America's economic recovery prospects.

“We are in favor of expanding business relationships, but deals alone are not enough," said Myron Brilliant, the Chamber's Senior Vice President of International Affairs. "We need to see genuine progress made by China as well as by the United States in reducing existing barriers to trade and investment that restrict market access and the ability of foreign companies to compete against domestic players."

“Our countries should lead by example and take significant steps to expand trade and investment flows, and thereby contribute to the global economic recovery,” he added.

Among the companies that signed business deals at the signing ceremony were: Alcatel-Lucent, Amway, Cisco, Dell, Emerson, EMC, Ford, Freescale, Hewlett-Packard, Hitachi Global Storage Technologies, IBM, Juniper, Microsoft, Motorola, Oracle, Revstone Industries, Seagate, The Shaw Group, Sun Microsystems, Western Digital, and Westinghouse.

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