Witnesses at USTR Hearing Say China Ramping Up Its Protectionism

Witnesses from the United States Council for International Business, the Aluminum Association and the International Intellectual Property Alliance say that China is not living up to its World Trade Organization commitments on many fronts, even as there are some signs of movement away from practices that damage foreign competitors.

Eva Hampl, who leads USCIB's work on China, said that China's anti-monopoly law, discrimination against foreign firms, licensing barriers, subsidies to domestic players, export subsidies and other practices all put U.S. firms at a disadvantage in trading relationships. In response to questions about agriculture at a hearing Oct. 3 at an office of the U.S. Trade Representative, she said that "the approval process for agricultural biotechnology products in China is not predictable, transparent or in line with international standards," and, as a result, there's less access for grains and oilseed farmers using the latest advances in technology. She cited a study from a pesticide manufacturers and seed sellers trade group that said barriers in China to approving new GMO seeds meant a loss of $5 billion in farm income from 2011 to 2016. "The situation has not improved," Hampl said.

She pointed to the new problem of tighter standards on scrap material imports (see 1805040054), and said there's a proposed law in China that would ban all imports of recyclable material. The U.S. exports $5 billion a year in scrap plastics and metal to China, she said. "The health of the U.S. recycling industry depends on international trade," she said, and nearly 40 percent of those exports had gone to China before the new standards. She said China is not enforcing the same purity standards for domestic scrap.

But, she said, there are some "encouraging trends," including the anti-unfair competition law. Even with many complaints about China, USCIB opposes the tariffs imposed on Chinese imports because of USTR's Section 301 investigation. Lauren Wilk, a vice president of the Aluminum Association who testified on China's aluminum overproduction at the hearing, was silent on Section 232 tariffs on aluminum and those tariffs' effects on China, instead praising antidumping and countervailing duty cases on aluminum foil and common alloy aluminum sheet. Wilk talked about Chinese subsidies and tax policy that give Chinese aluminum producers the ability to sell below the costs they would face in a free market environment. She recommended that the U.S. spearhead a global forum on aluminum overcapacity.

Terry McCartin, acting assistant USTR for China Affairs, asked her why she believes that would be effective, given how resistant China has been to sharing information about its steel sector in the Global Forum on Steel. "We recognize that achieving progress in the global steel forum has been a challenge," Wilk replied, but she said forming an equivalent commission on aluminum should still happen "to see if progress can be made even though it's elusive. The participation of China might be possible. They've expressed a willingness to close some of their inefficient facilities. So I think there's room to build on statements and actions we've seen China nominally adopt. We're not suggesting that it's an easy path to go down."