Published: January 07, 2009

U.S. Trade Agency Concerned That Beijing May Retreat to Trade Restrictions

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U.S.-China Trade Relations Improve Incrementally, Report Says

Washington - In 2008, the United States and China resolved more contentious trade issues than during the year before thanks to more active bilateral engagement, according to a U.S. trade agency.

A December 2008 report to Congress on China's compliance with World Trade Organization (WTO) rules cites examples of positive results in numerous areas.

The report, issued by the Office of the U.S. Trade Representative (USTR), praises China's leadership for an increased willingness to work constructively and cooperatively with Washington. One example came in late 2008 when the U.S. Food and Drug Administration opened offices in three Chinese cities, bolstering food safety cooperation between the two countries. (See "United States Opens Food-Safety Offices in China ( www.america.gov).")

However, the USTR expressed concern about the possibility of China moving toward a more restrictive trade regime, a trend that would signify a retreat from what the report calls "the substantial progress" made by China since it joined the WTO in 2001.

In 2008, U.S. companies reported some evidence of such a trend, including protectionist government procurement practices, new restrictions on foreign investment and unique national standards that could lead to the extraction of technology or intellectual property from the foreign holders of such rights.

The report says that questions about China's adherence to WTO obligations often are related to the country's industrial policies, which rely on "excessive, trade-distorting government intervention intended to promote or protect China's domestic industries." Inadequate protection of intellectual property rights, restrictions on trading rights and distribution services, and regulatory and other uncertainties regarding agriculture and services are sources of concern for U.S. industries, according to the report.

In 2009, the USTR will work on contentious trade issues in the priority areas - intellectual property rights, industrial policies, trading rights and distribution services, agriculture, transparency, and services - through comprehensive diplomatic efforts and, when necessary, through the dispute settlement mechanism at the WTO or through U.S. trade remedy action, the report says. In 2008, the United States brought two new WTO cases against China, one of which was resolved and the other still pending. Of four other active cases in 2008, China lost one and settled another, with two still pending.

However, based on the positive 2008 experience, the United States is "optimistic that significant progress is obtainable in 2009," the report says.

President-elect Barack Obama has not called for any radical shifts in U.S.-China trade relations, although his transition Web site ( http://change.gov/agenda/foreign_policy_agenda/ ) says that the incoming administration will "work to ensure that China plays by international rules."

The full text of the report ( http://www.ustr.gov/assets/Document_Library/Reports_Publications/2008/asset_upload_file192_15258.pdf ) (PDF, 1.04 MB) is available at the USTR Web site.

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)