Trade Policy Review of the United States
Check Against Delivery
Trade Policy Review of the United States
June 9 and 11, 2008
Statement by the People’s Republic of China
Thank you, Chair. At the outset, please allow me to join the previous speakers in welcoming the delegation of the United States headed by XXX and thank him for his overview of the US macro-economic development and trade policy and practices during the period under review. China appreciates the Policy Statement prepared by the US government for this review and tremendous amount of work devoted by the Secretariat, especially in compiling such a comprehensive and detailed Report on the US trade regime for our easy reference. China also thanks Ambassador XXX for his/her insightful introductory remarks and in depth analysis of the US trade policy and practices.
WTO Trade Policy Review Mechanism helps to improve trade policy transparency and promote healthy development of the multilateral trading system. It also serves as a platform for Members to deepen mutual understanding and enhance communications, as well as help to identify areas for improvement in their trade policy regime with a view to promoting development. As one of the most open and transparent economies in the world, the US enjoys an economic system that is mature and dynamic, and has been performing as an important engine of the world economy. During the past two years, the US economy registered an annual growth rate of nearly 3%; and its active participation in bilateral and regional trade arrangements has brought vitality not only to the US itself, but also to the America region as a whole; Its overall tariff has been maintained at a low level and trade liberalized further… All these remarkable achievements are truly commendable. However, despite of this, some alarming problems have emerged in the US economic and trade sectors causing some concerns.
First among them is the continuous depreciation of the US dollars. As both the Secretariat Report and the US’s own policy statement have pointed out that the US has experienced an economic slowdown since late 2007 mainly due to the sub-prime crisis which is different from previous financial crisis with more profound and wide-ranging spill-over effect rippling cross multiple sectors. China has noted that the adoption of continuous downward adjustment to interest rates and the expansionary fiscal policy to curtail the crisis has compounded the continued depreciation of the dollar, aggravated the inflation pressure worldwide and further added fuel to the fire when the crude oil and food prices are at record high, putting those developing countries highly dependent on the imports of these commodities under heavier inflation pressure and making them bear greater economic losses. As a major currency for international settlement, the dollar depreciation will seriously affect the exports of other countries especially those vulnerable and export-oriented developing countries, undermining their ability to development and bringing about unemployment and other social problems. As a major currency for international reserve, the dramatic depreciation of the dollar has made the national reserve of many countries shrink and their social welfare reduced. This reminds me of what the former US Secretary of Treasury John Connally once said to his European colleagues and I quote: “it may be our currency, but it is your problem.” In this connection, China hopes that the United States, as a responsible super power and a bellwether of the world’s economy, could take quick and targeted actions to stabilize the currency value of the US dollars.
With regard to trade, a more disturbing phenomena has been featured by the rising protectionism in the United States. Its economic fatigue has led to a significant retrogression in domestic attitude towards multilateral trade liberalization, an outcry for protection of domestic industries, and rejection to further market openings and trade liberalization. The Congress’ veto to renew or grant a new trade promotion authority has resulted in a lack of political will and no substantial contribution of the US in the Doha negotiations, sending a negative signal to other Members. Furthermore, the US has not fully complied to the WTO rules with frequent use of unilateral actions and abuse of trade remedy measures. (quote the report: trade remedy is used as a main policy instrument. Average duration is as long as 11 years, and duties are as high as 280%....) The protectionism in the US constitutes an obvious contradiction to its status as the biggest beneficiary and the most active advocator for the multilateral trade liberalization. China therefore is very much concerned that if we let this tendency of protectionism grow at its will, it may become the most dangerous threat to the global trade.
Mr./Ms. Chair, the bilateral trade relation between China and the US has kept an accelerating momentum in the last 2 years, with trade volume totaling 262.68 billion and 302.08 billion USD in 2006 and 2007, increasing by 24.1% and 15% respectively (according to the Chinese statistics). The US and China are the second largest trading partners to each other. China has halved its tariffs within 7 years after its WTO Accession, making it the destination of the US fastest growing export. By now, China has become one of the largest consumers of the US goods, services and agricultural products, bringing closer economic ties and increasing trade interdependencies between the two countries.
The US and China differ in trade structure and respective role in the international division of trade and this has premised the two countries to be highly complementary in their trade patterns. Therefore, maintaining a healthy trade relation and deepening mutual cooperation will promote the economic development and people’s welfare of both countries, and contribute to the economic growth of the whole world. In this respect, I would like to highlight the following concerns:
Firstly, China noted a growing tendency of protectionism in the US trade with China. In 2007, the US Congress introduced 52 bills in regard to its trade with China and most of these bills request the US Administration to increase pressure on China either through restrictions or influence over bilateral trade. China is especially concerned that such bills are more and more manipulated by non-economic factors, which is a dangerous sign.
Secondly, China noted a sharp increase in the number of trade remedies and DSB cases against China. In 2007 alone, the US initiated 7 joint AD/CV investigations, 5 independent AD investigations and 17 Section 337 investigations, reaching the highest number in recent years. The CV investigations against China have broken the conventional rule of the US of the last 20 years that no CV investigation shall be initiated against the so-called “non-market economies”. And the US showed a strong arbitrary in its investigations and rulings, including extending the scope of investigation at discretion and conducted unfair treatments to Chinese firms, some of which were self-conflicting and even contradictory. For instance，in the joint AD/CV investigation, the US on one hand calculated on basis of the data from Chinese enterprises to suit the CV investigation, but on the other hand used the data of a third country to suit the AD investigation. Such practices are obviously cases of self-contradictions. Another example is that while refusing to recognize China as a “market economy” and imposing AD duties based on discriminative calculations, the U.S took CV measures simultaneously, resulting in double counting which violated the WTO rules against double counting. Besides, in the AD investigation the U.S acted arbitrarily in selecting surrogating country, refusing to recognize Chinese market-oriented industries and adopting zero-in methodology in the reviews. Also, discretionary and discriminative practices were widely complained in the section 337 investigations. All these have seriously damaged the lawful rights of Chinese industries and brought great uncertainty to the bilateral trade. This might also set adverse examples in international trade.
Thirdly, China noted that while requesting China to further open its market, the US still maintained restrictions and controls on the export of high tech products for civilian use. In fact, the comparative advantages of China and the US determines that their trade are mutual complementary: China exported mainly labor and capital intensive products, while the US strongly advantaged in exporting technology intensive products and services. Restrictions on the export of civilian high-tech products will undermine a balanced development of the bilateral trade relations.
The above are China’s general concerns for which China has also submitted written questions to the US and hope to receive comprehensive replies as soon as possible. In addition, China would like to take this opportunity to express some concerns regarding specific trade sectors.
With regard to trade in goods, though the overall tariff level of the US is relatively low, quite a number of tariff peaks, tariff escalations and high out-of-quota tariffs has been nevertheless maintained, creating serious impediment to trade. High tariff rates remained in several sectors, especially in those of export interest to developing countries, such as food, textile, plastic, dishware, chinaware and trucks. The long existing tariff escalations and irrational trade patterns restricted the import of semi-manufactured or manufactured goods with high added value. The tariff quotas and quantitative restrictions the US maintained on some agricultural products had been aimed at protecting the interests of domestic industries. The exceptional high tariff rate applied to their out-of-quota imports also constituted serious discrimination to foreign products.
Agriculture remained an issue at core. (quote Secretariat Report ) The US has been providing large amount of subsidies to its agriculture for quite a long time, distorting the production and prices in the international market, forcing many developing Members out of competition, and leaving the livelihood and food security of billions of farmers at threat. Since 2005, the US began to subsidize the development of corn-based biofuel that has quickly driven up prices of food and other major commodities worldwide causing great sufferings to many developing Members, especially those of vulnerable economies depending heavily on imported food with huge losses.
Now the DDA negotiation is in a crucial stage, and Members look to the US to play a leading role and make substantial reductions in agricultural subsidies. Currently the prices of agricultural products are soaring worldwide, providing a best opportunity for the US to reduce its subsidies. However, it is to our regret that the US Congress has just passed a new agriculture bill, maintaining its agriculture subsidies at a high level and increasing its direct payment to 15 products. These actions have ignored the voices of many developing Members and violated the rulings of the DSB, casting a shadow over the possibility to successfully conclude DDA negotiation.
With regard to non-tariff barriers to trade, such as border measures and TBT/SPS measures adopted by the US, they are far short of members’ expectations. As the Secretariat Report pointed out, the US customs newly added a number of extreme requirements, including 100% scanning and “10+2 port documents” requirements for “national security reasons”. These measures have increased the time and economic costs of importers, and constituted barriers to free flow of trade. (quote the Report) The TBT/SPS measures without sound rationale are perplex and redundant, and many of them are inconsistent with international standards, and are de facto obstacles undermining import. China has expressed concerns in its questions submitted to the US, and is expecting feedbacks as soon as possible. Here, China would like to stress one important issue. Article 733 of the Agricultural Allocation Bill for the Fiscal Year 2008 passed at the end of 2007 stipulates that the appropriation under this bill shall not be used to “design or implement” policies allowing the import of cooked poultry from China. While on bilateral occasions the US has stated several times that there are no “technical problems” in the import of Chinese cooked poultry products and that this issue will be solved as soon as possible, domestically it has kept using administrative measures to intervene trade. Evidently, the US is applying trade measures of protectionism in nature and violates the WTO principles of fair trade. China would like to urge the US to terminate this stipulation as soon as possible.
China noted that the US has tightened its control on cross sector foreign investment. As the Secretariat Report indicated that the US has modified its laws on foreign investment and national security, granting the authority the power of investigation with little restrain, which have added uncertainties for foreign investors. Sectors such as banking, insurance, power generation and distribution, natural gas and communication are more strictly regulated at the state level. Government interventions on foreign investment have been exercised with excessive examination and supervision procedures.
Concerning transparency, China noted some reversal in recent years (quote the Report, re. notification). The US has made several trade-related policies without sufficient consultation with interested parties or notification to the WTO. Besides, too many local regulations and rules make the legal framework of the US complex and opaque, and create de facto barriers for foreign investors, especially in the service sectors and TBT/SPS fields.
With regard to the service sector, though the market access of the US is broad in general, the US seems to be reluctant to open several key sectors such as banking, insurance and telecommunication. Equity cap, restrictions in types of services or business scope, excessive qualification requirements and exceptions in MFN treatment are still maintained at the state level, seriously avoiding its commitments in practice. China noted that the US is particularly conservative in Mold 4 and in sectors such as maritime transportation and launching of civilian satellites, and maintains several discriminative measures inconsistent with the WTO rules.
Mr./Ms. Chair, the healthy development of the multilateral trading system requires a more open, fair and transparent policy framework. Promoting the DDA negotiation will serve the best interests of all Members, especially in the current stage when the world economy is facing mounting uncertainties. China is keenly aware that the DDA, which has been going on for 7 years, is now at a crucial stage. Whether we can break the deadlock and reach a conclusion before the end of the year depends very much on the outcome of the agriculture negotiation. China urges the US, as the greatest beneficiary and most active advocator of the multilateral trading system, to play a leading role and make an offer in substantially reducing the domestic support in agriculture to break the ice. As Chinese saying goes: “it is the locomotive that pulls the train.” It is China’s sincere hope that only when the US and other developed Members exercise due leadership and give strong push and through joint efforts of all can a successful conclusion of DDA be achieved within reach.
Thank you, Chair. China also thanks the US Delegation and is looking forward to your prompt reply.
Trade Policy Review of the United States
June 9 and 11, 2008
Statement by the People’s Republic of China
Thank you, Chair. At the outset, please allow me to join the previous speakers in welcoming the delegation of the United States headed by XXX and thank him for his overview of the US macro-economic development and trade policy and practices during the period under review. China appreciates the Policy Statement prepared by the US government for this review and tremendous amount of work devoted by the Secretariat, especially in compiling such a comprehensive and detailed Report on the US trade regime for our easy reference. China also thanks Ambassador XXX for his/her insightful introductory remarks and in depth analysis of the US trade policy and practices.
WTO Trade Policy Review Mechanism helps to improve trade policy transparency and promote healthy development of the multilateral trading system. It also serves as a platform for Members to deepen mutual understanding and enhance communications, as well as help to identify areas for improvement in their trade policy regime with a view to promoting development. As one of the most open and transparent economies in the world, the US enjoys an economic system that is mature and dynamic, and has been performing as an important engine of the world economy. During the past two years, the US economy registered an annual growth rate of nearly 3%; and its active participation in bilateral and regional trade arrangements has brought vitality not only to the US itself, but also to the America region as a whole; Its overall tariff has been maintained at a low level and trade liberalized further… All these remarkable achievements are truly commendable. However, despite of this, some alarming problems have emerged in the US economic and trade sectors causing some concerns.
First among them is the continuous depreciation of the US dollars. As both the Secretariat Report and the US’s own policy statement have pointed out that the US has experienced an economic slowdown since late 2007 mainly due to the sub-prime crisis which is different from previous financial crisis with more profound and wide-ranging spill-over effect rippling cross multiple sectors. China has noted that the adoption of continuous downward adjustment to interest rates and the expansionary fiscal policy to curtail the crisis has compounded the continued depreciation of the dollar, aggravated the inflation pressure worldwide and further added fuel to the fire when the crude oil and food prices are at record high, putting those developing countries highly dependent on the imports of these commodities under heavier inflation pressure and making them bear greater economic losses. As a major currency for international settlement, the dollar depreciation will seriously affect the exports of other countries especially those vulnerable and export-oriented developing countries, undermining their ability to development and bringing about unemployment and other social problems. As a major currency for international reserve, the dramatic depreciation of the dollar has made the national reserve of many countries shrink and their social welfare reduced. This reminds me of what the former US Secretary of Treasury John Connally once said to his European colleagues and I quote: “it may be our currency, but it is your problem.” In this connection, China hopes that the United States, as a responsible super power and a bellwether of the world’s economy, could take quick and targeted actions to stabilize the currency value of the US dollars.
With regard to trade, a more disturbing phenomena has been featured by the rising protectionism in the United States. Its economic fatigue has led to a significant retrogression in domestic attitude towards multilateral trade liberalization, an outcry for protection of domestic industries, and rejection to further market openings and trade liberalization. The Congress’ veto to renew or grant a new trade promotion authority has resulted in a lack of political will and no substantial contribution of the US in the Doha negotiations, sending a negative signal to other Members. Furthermore, the US has not fully complied to the WTO rules with frequent use of unilateral actions and abuse of trade remedy measures. (quote the report: trade remedy is used as a main policy instrument. Average duration is as long as 11 years, and duties are as high as 280%....) The protectionism in the US constitutes an obvious contradiction to its status as the biggest beneficiary and the most active advocator for the multilateral trade liberalization. China therefore is very much concerned that if we let this tendency of protectionism grow at its will, it may become the most dangerous threat to the global trade.
Mr./Ms. Chair, the bilateral trade relation between China and the US has kept an accelerating momentum in the last 2 years, with trade volume totaling 262.68 billion and 302.08 billion USD in 2006 and 2007, increasing by 24.1% and 15% respectively (according to the Chinese statistics). The US and China are the second largest trading partners to each other. China has halved its tariffs within 7 years after its WTO Accession, making it the destination of the US fastest growing export. By now, China has become one of the largest consumers of the US goods, services and agricultural products, bringing closer economic ties and increasing trade interdependencies between the two countries.
The US and China differ in trade structure and respective role in the international division of trade and this has premised the two countries to be highly complementary in their trade patterns. Therefore, maintaining a healthy trade relation and deepening mutual cooperation will promote the economic development and people’s welfare of both countries, and contribute to the economic growth of the whole world. In this respect, I would like to highlight the following concerns:
Firstly, China noted a growing tendency of protectionism in the US trade with China. In 2007, the US Congress introduced 52 bills in regard to its trade with China and most of these bills request the US Administration to increase pressure on China either through restrictions or influence over bilateral trade. China is especially concerned that such bills are more and more manipulated by non-economic factors, which is a dangerous sign.
Secondly, China noted a sharp increase in the number of trade remedies and DSB cases against China. In 2007 alone, the US initiated 7 joint AD/CV investigations, 5 independent AD investigations and 17 Section 337 investigations, reaching the highest number in recent years. The CV investigations against China have broken the conventional rule of the US of the last 20 years that no CV investigation shall be initiated against the so-called “non-market economies”. And the US showed a strong arbitrary in its investigations and rulings, including extending the scope of investigation at discretion and conducted unfair treatments to Chinese firms, some of which were self-conflicting and even contradictory. For instance，in the joint AD/CV investigation, the US on one hand calculated on basis of the data from Chinese enterprises to suit the CV investigation, but on the other hand used the data of a third country to suit the AD investigation. Such practices are obviously cases of self-contradictions. Another example is that while refusing to recognize China as a “market economy” and imposing AD duties based on discriminative calculations, the U.S took CV measures simultaneously, resulting in double counting which violated the WTO rules against double counting. Besides, in the AD investigation the U.S acted arbitrarily in selecting surrogating country, refusing to recognize Chinese market-oriented industries and adopting zero-in methodology in the reviews. Also, discretionary and discriminative practices were widely complained in the section 337 investigations. All these have seriously damaged the lawful rights of Chinese industries and brought great uncertainty to the bilateral trade. This might also set adverse examples in international trade.
Thirdly, China noted that while requesting China to further open its market, the US still maintained restrictions and controls on the export of high tech products for civilian use. In fact, the comparative advantages of China and the US determines that their trade are mutual complementary: China exported mainly labor and capital intensive products, while the US strongly advantaged in exporting technology intensive products and services. Restrictions on the export of civilian high-tech products will undermine a balanced development of the bilateral trade relations.
The above are China’s general concerns for which China has also submitted written questions to the US and hope to receive comprehensive replies as soon as possible. In addition, China would like to take this opportunity to express some concerns regarding specific trade sectors.
With regard to trade in goods, though the overall tariff level of the US is relatively low, quite a number of tariff peaks, tariff escalations and high out-of-quota tariffs has been nevertheless maintained, creating serious impediment to trade. High tariff rates remained in several sectors, especially in those of export interest to developing countries, such as food, textile, plastic, dishware, chinaware and trucks. The long existing tariff escalations and irrational trade patterns restricted the import of semi-manufactured or manufactured goods with high added value. The tariff quotas and quantitative restrictions the US maintained on some agricultural products had been aimed at protecting the interests of domestic industries. The exceptional high tariff rate applied to their out-of-quota imports also constituted serious discrimination to foreign products.
Agriculture remained an issue at core. (quote Secretariat Report ) The US has been providing large amount of subsidies to its agriculture for quite a long time, distorting the production and prices in the international market, forcing many developing Members out of competition, and leaving the livelihood and food security of billions of farmers at threat. Since 2005, the US began to subsidize the development of corn-based biofuel that has quickly driven up prices of food and other major commodities worldwide causing great sufferings to many developing Members, especially those of vulnerable economies depending heavily on imported food with huge losses.
Now the DDA negotiation is in a crucial stage, and Members look to the US to play a leading role and make substantial reductions in agricultural subsidies. Currently the prices of agricultural products are soaring worldwide, providing a best opportunity for the US to reduce its subsidies. However, it is to our regret that the US Congress has just passed a new agriculture bill, maintaining its agriculture subsidies at a high level and increasing its direct payment to 15 products. These actions have ignored the voices of many developing Members and violated the rulings of the DSB, casting a shadow over the possibility to successfully conclude DDA negotiation.
With regard to non-tariff barriers to trade, such as border measures and TBT/SPS measures adopted by the US, they are far short of members’ expectations. As the Secretariat Report pointed out, the US customs newly added a number of extreme requirements, including 100% scanning and “10+2 port documents” requirements for “national security reasons”. These measures have increased the time and economic costs of importers, and constituted barriers to free flow of trade. (quote the Report) The TBT/SPS measures without sound rationale are perplex and redundant, and many of them are inconsistent with international standards, and are de facto obstacles undermining import. China has expressed concerns in its questions submitted to the US, and is expecting feedbacks as soon as possible. Here, China would like to stress one important issue. Article 733 of the Agricultural Allocation Bill for the Fiscal Year 2008 passed at the end of 2007 stipulates that the appropriation under this bill shall not be used to “design or implement” policies allowing the import of cooked poultry from China. While on bilateral occasions the US has stated several times that there are no “technical problems” in the import of Chinese cooked poultry products and that this issue will be solved as soon as possible, domestically it has kept using administrative measures to intervene trade. Evidently, the US is applying trade measures of protectionism in nature and violates the WTO principles of fair trade. China would like to urge the US to terminate this stipulation as soon as possible.
China noted that the US has tightened its control on cross sector foreign investment. As the Secretariat Report indicated that the US has modified its laws on foreign investment and national security, granting the authority the power of investigation with little restrain, which have added uncertainties for foreign investors. Sectors such as banking, insurance, power generation and distribution, natural gas and communication are more strictly regulated at the state level. Government interventions on foreign investment have been exercised with excessive examination and supervision procedures.
Concerning transparency, China noted some reversal in recent years (quote the Report, re. notification). The US has made several trade-related policies without sufficient consultation with interested parties or notification to the WTO. Besides, too many local regulations and rules make the legal framework of the US complex and opaque, and create de facto barriers for foreign investors, especially in the service sectors and TBT/SPS fields.
With regard to the service sector, though the market access of the US is broad in general, the US seems to be reluctant to open several key sectors such as banking, insurance and telecommunication. Equity cap, restrictions in types of services or business scope, excessive qualification requirements and exceptions in MFN treatment are still maintained at the state level, seriously avoiding its commitments in practice. China noted that the US is particularly conservative in Mold 4 and in sectors such as maritime transportation and launching of civilian satellites, and maintains several discriminative measures inconsistent with the WTO rules.
Mr./Ms. Chair, the healthy development of the multilateral trading system requires a more open, fair and transparent policy framework. Promoting the DDA negotiation will serve the best interests of all Members, especially in the current stage when the world economy is facing mounting uncertainties. China is keenly aware that the DDA, which has been going on for 7 years, is now at a crucial stage. Whether we can break the deadlock and reach a conclusion before the end of the year depends very much on the outcome of the agriculture negotiation. China urges the US, as the greatest beneficiary and most active advocator of the multilateral trading system, to play a leading role and make an offer in substantially reducing the domestic support in agriculture to break the ice. As Chinese saying goes: “it is the locomotive that pulls the train.” It is China’s sincere hope that only when the US and other developed Members exercise due leadership and give strong push and through joint efforts of all can a successful conclusion of DDA be achieved within reach.
Thank you, Chair. China also thanks the US Delegation and is looking forward to your prompt reply.
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