US Signals Trade Row With China

US Signals Trade Row With China

US Signals Trade Row With China

by Staff Writers
by Donna Borak
UPI Business Correspondent
Washington (UPI) Feb 20, 2006 The United States signaled its intent to seek "trade measures" against China if Beijing does not take steps to adequately open its market to U.S. companies.

Deputy U.S. Trade Representative Karan Bhatia told the BBC's The World This Weekend the United States was "perfectly prepared" to use trade sanctions and retaliatory force to coerce Beijing into granting U.S. companies more access to China's domestic market.

While China has vigorously warned that trade sanctions by the United States would cause damage to both countries, the United States has contended that Beijing has "benefited enormously" from gaining access to U.S. markets and should be held accountable to its World Trade Organization obligations.

While Bhatia said the United States would work to ensure that Beijing treated U.S. companies fairly by offering a level playing field, he added that Washington would not directly restrict Chinese companies from accessing the U.S. market.

"We are not going to resort to protectionism. The answer is not going to be to shut down U.S. markets or to build up walls around our border," said Bhatia.

The United States indicated last week that it would be revising its strategy with China after the release of its "top-to-bottom" review of U.S. trade policies with Beijing.

"As a mature trading partner, China should be held accountable for its actions and required to live up to its responsibilities, including enforcing intellectual property rights, allowing market forces to drive economic development and opening its markets," said Rob Portman, U.S. Trade Representative at a news conference last week. "We will use all options available to meet this challenge."

Portman, who described Washington's trade relationship with Beijing as "out-of-balance," said the United States would pursue a new strategy with its Chinese counterparts, especially as Beijing edges closer to an imminent deadline to complete its accession agreement to the World Trade Organization. China acceded to the WTO in 2001. At the end of this year, it is expected to move out of its transition period and will be required to come into compliance with all WTO trading rules.

The Bush administration's new strategy will include increasing monitoring enforcement of intellectual property rights and setting up a task force headed by a new chief counsel for China.

While the administration has been criticized by Congress for its lax enforcement policies with China, the administration asserted last week that it would be willing to pursue WTO cases and other domestic enforcement practices to hold China responsible to its trade commitments.

Congressional members also voiced strong concern last week during both the House Ways and Means and Senate Finance committee hearings over the United States' handling of intellectual property rights enforcement, China's currency manipulation and the growing bilateral trade deficit.

According to figures by the U.S. Department of Commerce released earlier this month, the U.S.-Sino trade deficit reached an all-time high of $201.6 billion last year. While the Bush administration has defended its trade policy, arguing that the growing bilateral trade deficit has been the result of macroeconomic factors like the U.S. savings rate compared to China's savings rate, congressional members called on the administration to take serious action.

"The key point is that China must live up to its commitments and to its responsibilities as a major beneficiary of the global trading system," said Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance committee, during a hearing last Thursday.

Grassley expressed growing frustration over the lack of progress made on China's currency, as well as, Beijing's efforts to comply on intellectual property rights and trade enforcement. The Republican senator, who has refrained from pursuing any legislation against the Chinese government for its unfair trading practices, said he would be seeking to introduce legislation soon to address the current problems in U.S.-Sino trade relations.

Aside from the growing trade deficit, trade relations between Washington and Beijing have been strained due to Beijing's unwillingness to show flexibility in its current exchange policy. U.S. pressure by the administration has been low-key since July when China agreed to revalue its currency by 2 percent, breaking its decade-long peg to the U.S. dollar.

U.S. Secretary of Treasury John Snow said last week that his department is likely to accuse China formally of being a "currency manipulator" in its next report on trade and exchange rates, arguing Beijing's reformed currency regime introduced last summer has not led to greater flexibility. The U.S. Treasury report is due out next month.

Source: United Press International

related report

U.S. Revamps China Trade Policy
Washington (UPI) Feb 14 - With Beijing edging closer to an imminent deadline to complete its accession agreement to the World Trade Organization by the end of this year, the Bush administration signaled Tuesday a new phase in its trade relationship with China.

"As a mature trading partner, China should be held accountable for its actions and required to live up to its responsibilities, including enforcing intellectual property rights, allowing market forces to drive economic development and opening its markets," Rob Portman, U.S. Trade Representative, told reporters at a news conference. "We will use all options available to meet this challenge."

Portman, who pledged nearly nine months ago during his nomination hearings to give a "top-to-bottom" review of U.S. trade policies with China, said the administration would be revising its trade policy with Beijing in order to level the playing field and create further market openings for U.S. businesses.

The administration unveiled a 26-page report, which was sent to members of Congress and the Chinese government, detailing its upcoming strategy which would include stepping up efforts to monitor enforcement of intellectual property rights, setting up a task force headed by a new chief counsel for China, strengthening Washington's information collection on enforcement and expanding trade negotiating capacity in Beijing.

"As China nears the end of its transition period as a new WTO member, we are entering a new phase in our bilateral trade relationship, and we must readjust our trade priorities and resources accordingly," wrote Portman, in a letter to the chairman and ranking members of the Senate Finance committee and House Ways and Means committee.

China acceded to the WTO in 2001. At the end of this year, it is expected to move out of its transition period and will be held accountable by all WTO trading rules.

Members of Congress have launched a heated debate over U.S. trade policies with China, citing a burgeoning trade deficit, which reached a record high of $725.8 billion last week and a $201.6 billion trade imbalance with China, the largest in history.

Ranking members have been calling for legislative action to force China to float its currency, enforce intellectual property rights and force China to make economic reforms in order to lower the trade deficit, which they claim has resulted in a massive job loss for the U.S. manufacturing industry.

However, the administration argues that with three consecutive years of growing U.S. exports to China averaging 20 percent and a slight decrease in the U.S.-Sino trade gap from 54 percent to 47 percent, according to numbers prepared by the administration, the U.S. trade deficit cannot solely be blamed on Washington's trade policies with Beijing without accounting for macroeconomic factors.

While Portman attempted to disavow the link between U.S. practices in China to the trade deficit, he also cautioned that the gap in the trade imbalance was in part due to China's failure to abide by its WTO commitments on intellectual property, market access and protection of domestic industries.

House Democrats were critical of the administration's top-to-bottom review. Rep. Sander Levin, D-Mich. said the administration's report was missing "hard-headed analysis" on why the U.S.-Sino trade relationship had become "so one-sided."

Rep. Benjamin Cardin, D-Md., ranking Democrat for the subcommittee on trade for the House Ways and Means committee described the administration's report as more promises by the White House, rather than a strategy to tackle China trade issues.

"The administration promises no new enforcement of trade laws, no new action in the WTO, and no further steps to combat China's unfair practices. The time for monitoring and bureaucracy has passed, we need to take action to stand up for American workers," said Cardin, in a released statement.

Portman, who described Washington's trade relationship with Beijing as "out-of-balance" and in need of more cooperation and more efficient enforcement, said he would work expeditiously on WTO cases, if it was in the best interest of the United States.

The administration was criticized last week for its lax enforcement practices and a drop in the number of WTO cases pursued. However, it asserted Tuesday it would pursue cases and other domestic enforcement practices to hold China accountable to its WTO commitments.

"If China does not take affirmative steps to address other outstanding issues, including its inadequate protection of intellectual property rights and its rules that discriminate against imported auto parts, we are prepared to pursue legal options in those cases as well," said Portman.

Source: United Press International