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USTR Releases Report On China's WTO Compliance

by Mike Godfrey, Tax-News.com, Washington

29 December 2010


As required by the United States Congress under the US-China Relations Act of 2000, the office of the US Trade Representative (USTR) has presented the ninth annual report on China's compliance with its World Trade Organization (WTO) obligations.

The USTR reports that, for the first four years after joining the WTO in December 2001, China implemented a set of sweeping WTO accession commitments, including reducing tariff rates, eliminating non-tariff barriers that denied national treatment and market access for goods and services imported from the United States and other WTO members, and making legal improvements in intellectual property protections and in transparency.

However, it continues, in some areas, it appears that China has yet to fully implement important commitments. A tendency toward increased government intervention seemed to emerge in 2006, as China’s progress toward further market liberalization began to slow.

“In 2010,” the USTR adds, “the prevalence of interventionist policies and practices, coupled with the large role of state-owned enterprises in China’s economy, continued to generate concerns among US stakeholders about the direction of China’s reform. Major issues included China’s indigenous innovation policies, serious problems with intellectual property rights enforcement, as well as continued market access barriers and discrimination against foreign enterprises in many sectors of China’s economy.”

However, despite what the report calls “the many challenges that remain,” China’s WTO membership has continued to provide substantial ongoing benefits to the US. Bilateral trade has expanded dramatically, and China is now the US’s largest goods export market outside of North America.

It is emphasized by the USTR that China has timely implemented its tariff commitments for industrial goods each year. During its negotiations with interested WTO members leading up to its accession, China agreed to greatly increase market access for US and other foreign companies by reducing tariff rates. As in prior years, China has implemented its scheduled tariff reductions for 2010 on schedule. However, these reductions, made on January 1, involved only a few products, as almost all of China’s tariff reductions took place during the first five years of its WTO membership.

The USTR points out that the US’s intensive dialogue with China during the past year has generated positive outcomes on a number of contentious issues. At the same time, the US has aggressively pursued WTO dispute settlement on issues left unresolved by dialogue, filing three important new cases, and continuing active pursuit of a case filed in 2009. The US also successfully defended its use of trade remedies in two WTO cases brought by China.

On the bilateral front, the US and China have pursued formal and informal meetings and dialogues over the last year, including numerous working groups and high-level meetings under the auspices of the US-China Strategic and Economic Dialogue and the US-China Joint Commission on Commerce and Trade.

Such bilateral engagement is said to have produced concrete results in 2010. In particular, for example, China agreed to take a series of steps to systemically improve the enforcement of intellectual property rights in China. China has agreed to expand and enhance its software legalization programme, both for government agencies and state-owned enterprises, to take steps to eradicate piracy of online academic journals, and to adopt more effective rules for addressing intermediate liability for internet.

TAGS: compliance | tax | tax compliance | law | intellectual property | tariffs | World Trade Organisation (WTO) | China | United States | regulation | trade

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