Trade Policy Review Of The People’s Republic Of China-Day 2
Statement delivered by Terrence McCartin
United States Trade Representative for China Affairs
Thank you, Chair.
Today we would like to make a few observations in light of the discussions that took place on Wednesday and today, and then we will explain the concerns that underlie some of our more important follow-up questions, which we submitted earlier today.
As we listened on Wednesday and today, we heard one overarching theme from a large number of Members. Looking back over the twenty years since China’s accession to the WTO, these Members noted that China and its economy have greatly benefited from China’s WTO membership, but China has not taken the anticipated steps to transform its state-led, non-market approach to trade and the economy. These Members therefore called once again for China to embrace open, market-oriented policies.
We also heard Members identify a number of specific problems with China’s trade regime. These problems included: Industrial policies that skew the playing field against the foreign competition and create systemic problems for global trade;
o Severe and persistent excess capacity, especially in the steel and aluminum sectors;
o Preferential treatment for state-owned enterprises that contributes to the un-level playing field for the foreign competition;
o Forced technology transfer;
o Inadequate enforcement of intellectual property rights;
o Restrictions on foreign investment in key sectors;
o Inadequate regulatory transparency;
o An overly broad cybersecurity regime that seems designed to serve protectionist purposes;
o Cross-border data restrictions and data localization requirements;
o China’s use of forced labor in several sectors;
o China’s use of its Anti-Monopoly Law for industrial policy purposes; and
o A variety of problematic sanitary and phytosanitary (SPS) measures.
That is a very long list of problems that have been identified with China’s trade regime, and all of these problems are serious ones. We hold out hope that China will take the initiative to address each of these problems.
We note, however, that almost all of these same problems were identified during China’s Trade Policy Review three years ago, yet they persist.
On Wednesday and today, we also heard Members raise concerns about China’s approach here at the WTO.
Several Members urged China to take on responsibilities at the WTO commensurate with its economic weight and its stature as one of the world’s largest traders, including by refraining from claiming benefits that would correspond to a developing country in ongoing negotiations.
Consistent with the Secretariat’s report, many Members also raised concerns about China’s inadequate adherence to its transparency obligations. In this regard, these Members drew special attention to China’s poor record of submitting timely and complete WTO notifications, especially in the areas of industrial subsidies, state trading, agricultural domestic support and fisheries subsidies.
The United States fully supports these sentiments.
Finally, let me highlight some of our follow-up questions.
We have asked several follow-up questions about China’s prolific use of government guidance funds as a means to provide massive financial support to Chinese industries. The Secretariat’s report also highlighted this issue. China’s brief response to numerous U.S. questions about these government guidance funds was simply to say that the state has no role in them. We note that China’s response appears to be inconsistent with publicly available information, and it is not responsive to most of the questions asked by the United States.
We have also asked a number of follow-up questions relating to the fisheries sector, including with regard to subsidies, illegal, unreported and unregulated (IUU) fishing and distant water fishing.
Our remaining follow-up questions concern a variety of topics, including the Made in China 2025 industrial plan, excess capacity, state-owned enterprises, export credits, value-added tax export rebates, export duties, recycling materials, SPS measures, China’s Foreign Investment Negative List, services market access and the Belt and Road Initiative, among other topics.
We look forward to China’s responses to all of these follow-up questions.
Thank you, Chair. That concludes our comments.