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IPR, Industrial Policies, Services, Agriculture Among Key U.S. Concerns with China

Tuesday, December 29, 2015
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative’s annual report on China's compliance with its World Trade Organization obligations finds that, as in past years, the overall picture presented by China’s WTO membership remains complex despite some positive results.

The report finds that since China joined the WTO in December 2001 there has been a dramatic expansion in trade and investment among China and its trading partners, including the U.S. In 2014 U.S. exports of goods to China totaled $124 billion, up 545 percent since 2001, while U.S. services exports to China reached $43 billion, an increase of 733 percent. Services supplied through majority U.S.-invested companies in China also have been increasing dramatically, totaling an additional $43 billion in 2013, the latest year for which data is available.

Nevertheless, a wide range of Chinese policies and practices continued to generate significant concerns among U.S. stakeholders in 2015, many of which can be traced to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy. The report states that in 2016 the U.S. will continue to work to resolve these concerns, focusing on the following.

- protection and enforcement of intellectual property rights, including trade secrets, pharmaceutical patents and media copyrights

- industrial policies that seek to limit market access for imported goods, foreign manufacturers and foreign service suppliers in favor of SOEs (e.g., technology transfer, export restraints and VAT rebates)

- services, including discriminatory regulatory processes, informal bans on entry and expansion, and overly burdensome licensing and operating requirements

- agriculture, including uneven enforcement of regulations and selective intervention in the market by regulatory authorities, seemingly capricious practices by customs and quarantine agencies that delay or halt imports of agricultural products, sanitary and phytosanitary measures with questionable scientific bases, a generally opaque regulatory regime, insufficient implementation of market access promised through the tariff-rate quota system, and steadily increasing domestic support for key commodities

- transparency, particularly with respect to publication of trade-related laws, regulations and other measures

- China’s legal framework, including administrative licensing, competition policy, the treatment of non-governmental organizations, commercial dispute resolution, labor laws, laws governing land use, and corruption among government officials

The report notes that China’s leaders have begun to pursue further economic reform and that the U.S. will continue to work with China to help make it a reality, including through “robust engagement with China at all levels of government.” However, the report also warns that the U.S. will continue to use the WTO dispute settlement mechanism as necessary, noting that the U.S. has brought a total of 17 WTO cases against China, more than twice as many as any other WTO member, since its accession.

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