World Trade Organisation (WTO)

US support for China’s 2001 WTO entry a mistake, Trump administration says

Accession terms not enough to ensure Beijing pursued open, market-focused change, according to White House report

PUBLISHED : Saturday, 20 January, 2018, 12:56pm
UPDATED : Wednesday, 01 August, 2018, 4:07pm

The United States mistakenly supported China’s membership of the World Trade Organisation in 2001 on terms that have failed to force Beijing to open its economy, the Trump administration said on Friday as it prepares to clamp down on Chinese trade.

“It seems clear that the United States erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-oriented trade regime,” the administration said in an annual report to Congress on China’s compliance with WTO commitments.

“It is now clear that the WTO rules are not sufficient to constrain China’s market-distorting behaviour.”

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While the annual report from the US Trade Representative’s office has long taken China to task for unfair trade practices, the first such review under US President Donald Trump takes a harsher tone against Beijing.

It comes amid worsening trade tensions between the world’s two biggest economies and as the administration prepares actions to curb China’s alleged theft of intellectual property. A decision in “Section 301” investigation is expected in the coming weeks.

The report also points at Russia’s behaviour, saying Moscow had no intention of complying with its WTO obligations, a trend the administration said was “very troubling”.

Donald Trump warns Xi Jinping US-China trade deficit not sustainable

A White House official said that despite consultations with China, it had failed to follow through on promises of moving more toward a market-oriented economy and playing by international trading rules.

“The president and his principal adviser are united in the belief that this is a problem that has gone on for too long and needs to be addressed,” the official said.

“In the past, conversations have focused more on discreet opening for discreet products, and what we’re saying is systematically we’re not going to tolerate broad-based policy that attempts to promote state-led enterprises.”

Trump said this week he was considering a big “fine” against China for forcing US companies to transfer their intellectual property to China as a cost of doing business there.

While the administration was also looking at whether imports of steel, aluminium, washing machines and solar panels were harming US businesses, China’s alleged theft of intellectual property was a particular concern to Trump because it affected a large swathe of American firms, the official said.

IMF says China should ‘look at its own barriers’ to trade if it truly wants globalisation

Trump did not specify what he meant by a “fine” against China, but the 1974 trade law that authorised an investigation into China’s alleged theft of US intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

In Beijing, many experts believe Washington is unwilling to pay the heavy economic price needed to upset prevailing trade dynamics between the two countries.

In the report released on Friday, Trump’s trade envoy, Robert Lighthizer, said the global economy was threatened by major economies who undermined the global trading system.

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“The global trading system is threatened by major economies who do not intend to open their markets to trade and participate fairly,” Lighthizer said. “This practice is incompatible with the market-based approach expressly envisioned by WTO members and contrary to the fundamental principles of the WTO.”

The Trump administration has already pledged to transform 164-member trade body and has blocked WTO judicial appointments in a move to win WTO reforms.

“What we want to do is see countries behave responsibly within the international trading system,” the White House official said.