China breaches and abuses WTO rules, USA says

China WTOWashington has issued a blistering attack on China for persistent breaches of world trade rules and abuse of industrial secrets, accusing Beijing of failing to abide by treaty obligations.

China is still flouting World Trade Organisation rules 11 years after it first joined, misusing the complaints machinery for tit-for-tat retaliation, said US Trade Repesentative Ron Kirk.

“China’s trade policies and practices in several specific areas cause particular concern for the United States,” said Mr Kirk in his year-end report to Congress.

“China’s regulatory authorities at times seem to pursue anti-dumping and countervailing duty investigations and impose duties for the purpose of striking back at trading partners that have exercised their WTO rights in a way that displeases China,” said the report.

A range of policies raised “increasing concerns that China has not yet fully embraced the key WTO principles of market access, non-discrimination and transparency. China’s incomplete adoption of the rule of law has exacerbated this situation.”

The report accused Chinese officials of running rough-shod over foreign firms, forcing them to give up trade secrets in clear violation of WTO rules.

The harsh language will infuriate Beijing at a time when tensions are already high over maritime disputes on the Pacific Rim, where the US is increasingly embroiled as the region’s guarantor. Washington’s so-called “Asian Pivot” is viewed with deep mistrust by China’s Politburo as the start of an encirclement strategy.

The trade frictions are in stark contrast with growing US support for a sweeping trans-Atlantic trade deal with Europe, aimed at eliminating tariffs. It would be the most ambitious deal of its kind ever attempted.

Talks are expected to begin in early 2013 as the US warms to the theme on hopes that Europe will lift curbs on US farm goods and genetically modified crops — though France and Spain are certain to fight hard to defend their farmers.

The US has filed fifteen cases against China at the WTO, the most recent alleging unfair duties on US vehicles and car parts. Washington won a panel dispute over steel duties in September. China in turn has a clutch of cases claiming illegal use of anti-dumping measures by the US.

The US trade report marks a switch away from griping about China’s currency — less clearly undervalued after years of wage inflation — towards a closer focus on disguised protectionism.

It targeted a wide range of alleged abuses, including subsidies, attempts to keep out foreign imports and companies, and failure to enforce intellectual property rights.

Washington said restraints on exports of rare earth metals, tungsten, molybdenum, and other raw materials, as well as manipulation of export rebates, were leading to “tremendous disruption” worldwide.

The report said the root problem is the “heavy state role in the economy” and the top-down structure of industial planning, though it noted “positive signs”. Beijing’s Development Research Centre has issued a clarion call for reform, warning that China will be left behind in the “middle income trap” unless it ditches its obsolete growth model and embraces the free market.

For all the complaints, China has become America’s biggest export market, worth $131bn in 2011. Its current account surplus has fallen from 10pc of GDP five years ago to 2.6pc this year.

Source: The Telegraph “US lambasts China for breaches of trade rules”


Categories: Trade & Investment

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