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China’s Compliance with WTO Accession Commitments Subject of Annual USTR Report

Wednesday, December 14, 2011
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative recently issued its tenth annual report on China’s compliance with the bilateral and multilateral commitments it made in connection with its accession to the World Trade Organization. This report identifies areas where progress has been achieved and underscores areas of concern, examines developments in 2011 and previews areas of emphasis in 2012.

2011 Achievements. The report cites as “significant progress” the following trade-related developments in 2011.

• China established a new, permanent vice-premier led intellectual property enforcement structure that will allow much better government coordination of IP enforcement efforts and stronger outcomes on the ground.

• China committed to increased resources and further efforts to improve the effectiveness of its government software legalization program as well as further work to promote the use of licensed software in enterprises.

• China committed to sever the link between its innovation policies and government procurement preferences, including through the elimination of all indigenous innovation government procurement catalogues and the issuance of a State Council measure mandating that by Dec. 1, 2011, provincial and local governments must eliminate any policies that are inconsistent with the de-linking commitment.

• China confirmed that it will not require foreign automakers to transfer technology to Chinese enterprises or establish Chinese brands in order to invest and sell electric vehicles in China.

• China confirmed that foreign-invested enterprises are eligible on an equal basis for subsidies and other incentive programs for electric vehicles.

• China committed to provide a fair and level playing field for all companies in its strategic, newly emerging industries, including high-end equipment manufacturing, energy-saving and environmentally friendly technologies, biotechnologies, new generation information technologies, alternative energy, advanced materials and new energy vehicles.

• China committed to actively study and push forward the opening of the mandatory third-party liability auto insurance market to foreign-invested insurance companies.

• China committed to issue in 2011 a measure to implement the requirement that all proposed trade- and economic-related administrative regulations and departmental rules are to be posted on the Web site of China’s State Council for a public comment period of not less than 30 days.

Priority Issues. The USTR report echoes the major challenges raised recently in a WTO trade policy review and a report from the U.S.-China Economic and Security Review Commission. It also states that the U.S. will continue to pursue discussions on priority issues including investment, innovation, intellectual property rights, industrial policies (especially as they relate to state-owned enterprises), trading rights and distribution services, agriculture, transparency, standards development, conformity assessment procedures, financial services, telecommunications, express delivery services, pharmaceuticals and medical devices.

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