“China has not moved to embrace the market-oriented principles on which the WTO and its rules are based,” said US Trade Representative Katherine Tai.
WASHINGTON, USA – US needs to pursue new strategies and update its domestic trading tools to deal with China‘s “state-led, non-market policies and practices,” the U.S. Trade Representative (USTR)’s office said Wednesday, Feb. 16, in a new appraisal report.
USTR said in its annual report on China’s compliance with World Trade Organization (WTO) rules to “Phase 1” trade agreement signed by the Trump administration two years ago failed to address fundamental U.S. concerns with China’s industrial and support policiesincluding “massive financial resources.”
It said that such aid, which includes favorable regulatory support for Chinese industry and limited market access for imported goods and services, is often targeted at specific capacity, production and market share targets.
It follows final trade data for 2021 showing Beijing’s non-compliance promised two-year goals for the purchase of US goods, services and energy under the Phase 1 Agreement, which facilitated one customs war between the world’s two largest economies.
“China has not moved to embrace the market-oriented principles on which the WTO and its rules are based, despite the statements it made when it took office 20 years ago,” Tai said in a statement. “Instead, China has maintained and expanded its state-led, non-market approach to economics and trade.”
The USTR report said the US needs to update its domestic trade law tools to reflect the current realities of China’s trade policies “to ensure more equal terms for US workers and businesses.”
A comprehensive Chinese competition law passed by the US House of Representatives and under consideration in the Senate will expand the use of anti-subsidy tariffs to target cross-border subsidies to Chinese companies investing in offshore production to avoid US tariffs.
“It is also clear that existing trading tools need to be strengthened and new trading tools need to be forged,” the USTR said in the report. “China is pursuing unfair policies and practices that were not considered when many of the U.S. trade laws were drafted decades ago, and we are therefore exploring ways in which we can update our trade tools to address them.”
The report said the United States is still pursuing bilateral commitment “to hold China accountable for its existing commitments”, including under the Phase 1 agreement.
It also said that China had not fulfilled other Phase 1 commitments. These include regulatory approvals for U.S. agricultural biotechnology and a risk assessment of the use of ractopamine, a feed additive used to produce lean pork and beef in the United States. – Rappler.com