US needs new trade tools to counter China’s state-run trade

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China has not fulfilled its phase 1 commitments


February 16, 2022

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The United States must pursue new strategies and update domestic trade tools to deal with China’s “state-directed non-trade policies and practices”, the Office of the United States Trade Representative (USTR) said on Wednesday. in a new valuation report.

The USTR stated in its annual report on China Compliance with World Trade Organization rules that the ‘Phase 1’ trade deal signed by the Trump administration two years ago failed to address core US concerns about industrial policies and China’s supportive policies, including “massive financial resources”.

He said such support, which includes favorable regulatory support for Chinese industry and limited market access for imported goods and services, often targets specific capacity, production and market share targets.

The report, delivered annually to Congress since China joined the WTO in 2001, is the first to be published under the leadership of U.S. Trade Representative Katherine Tai and reflects her trade strategy with China, Reuters reported.

It follows final 2021 trade data showing Beijing fell short of promised two-year targets for buying American goods, services and energy under the Phase 1 deal, which has facilitated a tariff war between the world’s two largest economies.

“China has not embraced the market-oriented principles on which the WTO and its rules are based, despite statements it made when it joined 20 years ago,” Tai said in a statement. . “China has instead retained and expanded its state-led, non-market approach to the economy and trade.”

The USTR report says the United States must update its domestic trade law tools to reflect the current realities of China’s trade policies “to ensure a fairer level playing field for workers and businesses.” Americans”.

A sweeping China competition bill passed by the U.S. House of Representatives and pending in the Senate would expand the use of anti-subsidy tariffs to target cross-border subsidies for Chinese companies investing in offshore production to circumvent US duties.

“It is also evident that existing business tools need to be strengthened and new business tools must be forged,” the USTR said in the report. “China pursues unfair policies and practices that were not contemplated when many US trade laws were written decades ago, and so we are exploring ways to update our trade tools to counter them.”

The report said the United States is still pursuing bilateral engagement “to hold China accountable to its existing commitments,” including under the Phase 1 deal.

He also said China has failed to meet other Phase 1 commitments. These include regulatory approvals for US agricultural biotechnology and a risk assessment on the use of ractopamine, a food additive used to produce leaner pork and beef in the United States.

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