Companies, Trade Groups Will Tell USTR China Has Ways to Go in WTO Compliance

More than a dozen companies and business groups have submitted comments ahead of an Oct. 2 hearing on how China is complying with World Trade Organization protocols -- and they all agree China has work to do.

The National Association of Manufacturers had one of the more nuanced submissions, talking about how China has implemented many of its commitments fully, how China is doing better on intellectual property enforcement, and how many of the cases the U.S. has prosecuted at the WTO when China broke rules have resolved "the underlying distortions," naming rare export restraints, raw material export restraints and auto parts.

However, NAM also said "overcapacity is a problem" in steel, aluminum, chemicals, concrete, fertilizer, agricultural processing and semiconductors. "More broadly, Chinese government agencies continue to utilize a variety of export policies, particularly export restraints and subsidies, to promote or restrict the growth and export of priority products and sectors to provide an advantage to Chinese producers reliant on various metals and raw materials. While the United States has brought and won WTO cases on some of these policies and have used U.S. countervailing duty law to apply other remedies, other subsidy programs continue to pop up."

The U.S. Chamber of Commerce and the American Chamber of Commerce in China submitted a joint paper detailing how China has violated WTO obligations on fair and open markets, enforcing IP, and restricting digital services and data flows. The Chambers want China to pass a comprehensive stand-alone trade secrets law; eliminate tech transfer; end regulatory discrimination against foreign companies, including in patents; and crack down on the counterfeit economy.

They say China should eliminate market distortions with a public Communist Party proclamation with timelines, and create a bankruptcy process for firms that are not economically viable in sectors where overcapacity has been a government policy.

The U.S. Council for International Business said the Section 301 tariffs have not "resolved the underlying issues identified by the United States," so negotiations must continue at high levels. USCIB said China has done a lot to meet its obligations, but still is not complying in IP, discriminating against foreign firms, state-owned enterprises and anti-monopoly law.

"Certain industry sectors face particular problems, including agricultural biotechnology, audiovisual, chemicals, electronic payment access, express delivery services (EDS), recoverable materials, software, and telecommunications," the submission said.

The International Intellectual Property Alliance said Chinese companies continue to pirate academic textbooks, music CDs and consumer and trade books. Some of these are exported, or sold on international e-commerce sites.

Global Tungsten & Powders complained about how China bans the export of tungsten-containing ores, so that tungsten producers have to locate in China "where they are subject to intellectual property theft and forced technology transfer." The company said it thinks tungsten production is subsidized, "but is unable to accurately determine the scope of these subsidies due to the opacity of the Chinese system."

The China Chamber of International Commerce will testify for the first time, and will defend China's record on compliance. It said China fulfilled all of its accession commitments in 2010, and has a process to review compliance established five years ago.

"Besides, we are not convinced by the conclusions reached in the Compliance Report of 2018," the Chinese Chamber's submission says (see 1801220052). The Office of the U.S. Trade Representative "should distinguish the obligations assumed and commitments made by China under the WTO from those which China has not."