By Bridget Hunter
IIP Staff Writer
27 December 2013
On December 24 the USTR presented to Congress its 2013 annual report on China’s compliance with its World Trade Organization (WTO) obligations. The legally mandated report highlights the status of China’s policies and practices in areas such as intellectual property rights, industrial policies, services, agriculture and transparency.
When China joined the World Trade Organization in December 2001, it agreed to implement many specific commitments over time. Since then, trade and investment have expanded dramatically between China and its many trading partners, including the United States.
Despite that remarkable expansion, the overall picture presented by China’s WTO membership remains complex, “largely due to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises in China’s economy,” according to the USTR.
The United States, recognizing the tremendous potential of the U.S.-China trade relationship for both nations, in 2013 continued to urge China to reinvigorate the economic reform that drove its accession to the WTO.
“If China is going to deal successfully with its economic challenges at home, it must reduce the role of the state in planning the economy, reform state-owned enterprises, eliminate preferences for domestic national champions, and remove market access barriers currently confronting foreign goods and services,” the report said.
Addressing these challenges is critical to the success of China’s enterprises in expanding abroad, the report said, adding that “a healthier and more balanced Chinese economy will lead to increased U.S.-China trade and help drive global economic growth.”
Throughout the year, the United States focused on outcome-oriented dialogue at all levels of engagement with China, while also taking concrete steps to enforce U.S. rights at the WTO as appropriate in areas where dialogue had not resolved U.S. concerns.
Both nations were able to make significant progress on key trade issues through their bilateral engagement in 2013. Highlights included:
• China committed to negotiate a high-standard bilateral investment treaty that will embrace the principles of openness, nondiscrimination and transparency, and provide national treatment at all phases of investment.
• China committed to cooperate with and seriously consider in 2014 the U.S. views on proposals to amend China’s trade secrets law as well as on related legislative and policy issues.• China pledged to adopt and publish an action plan on trade secret protection and enforcement for 2014, including enforcement actions, improvement of public awareness about trade secret infringement, and requirements for strict compliance with all legal measures for trade secret protection and enforcement.
• China affirmed that its existing patent requirements and procedures ensure initial applications for pharmaceutical inventions filed early in the testing process can be supplemented with data developed later and also extend patent protection to pharmaceutical inventions during examinations and before China’s courts.
• The United States and China agreed to intensify their discussions of detailed approaches for fostering sales of legitimate intellectual property–intensive goods and services in China.
Despite that progress, many issues of concern remain, according to the report.
In 2014, the United States plans to continue engaging China on important issues in the areas of investment restrictions, innovation, intellectual property rights, technology localization, industrial policies, state-owned enterprises, government subsidization, excess production capacity, administrative licensing, government procurement, taxation, standards development, express delivery services, financial services, telecommunications services, Internet-related services, legal services, pharmaceuticals, medical devices and transparency.
Regarding agriculture, the two sides have agreed to continue discussions on U.S. beef products, with the shared goal of resuming market access by July 2014. The United States also will continue to seek improvements in China’s biotechnology approval system.
CONCLUSIONS ABOUT CHINA’S WTO COMPLIANCE EFFORTS
In the report, the USTR outlines the next steps the Obama administration intends to pursue to improve the trade relationship and emphasizes that an important element will be the administration’s continued focus on “productive, outcome-oriented dialogue in both bilateral and multilateral settings, as well as the vigorous use of enforcement mechanisms, where
The USTR says that “the United States looks forward to working with China during its upcoming APEC host year in order to produce outcomes on trade and investment issues.”
Key goals are ensuring the benefits of China’s WTO commitments are fully realized by all WTO members and effectively resolving any trade frictions that arise in the U.S.-China trade relationship.
The full text of the 2013 Report to Congress on China’s WTO Compliance (PDF, 1.8MB) is available on the USTR website.