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WTO members blast China during 20th anniversary trade policy review

POLITICO
POLITICO
 2021-10-21
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A worker walks next to a tractor during planting of a cotton field in western China's Xinjiang Uyghur Autonomous Region, where the Chinese government has been accused of forced labor and other abuses of the largely Muslim Uyghur ethnic group. | Mark Schiefelbein/AP Photo

The United States and other countries on Wednesday accused China of undermining the rules-based global trading system through its massive use of industrial subsidies and other practices, as the world's second-largest economy approaches the 20th anniversary of its entry into the World Trade Organization.

“China has used the imprimatur of WTO membership to become the WTO’s largest trader, while doubling down on its state-led, non-market approach to trade, to the detriment of workers and businesses in the United States and other countries,” said David Bisbee, charge d’affaires at the U.S. permanent mission to the WTO, during the institution's eighth review of China's trade policy since it became a member on Dec. 11, 2001.

Dashed hopes: Bisbee said the U.S. and other countries expected that the terms they negotiated to allow China into the WTO would permanently dismantle Chinese policies and practices that were incompatible with an international trading system based on open, market-oriented policies.

“But those expectations have not been realized, and it appears that China has no inclination to change,” Bisbee said. “We also cannot ignore reports of China’s use of forced labor in several sectors.”

The harsh critique follows a similar speech from U.S. Trade Representative Katherine Tai earlier this month, in which she announced plans to resume talks with Beijing on its implementation of the Phase One trade deal signed by the Trump administration that has also fallen short of expectations.

Close to 50 delegations took the floor to mostly criticize China's performance over the past two decades. The first day of the two-day review began with a summary of the WTO Secretariat's report on China's economy, followed by a virtual presentation by Chinese Commerce Minister Wang Wentao, who participated from Beijing .

The secretariat's report, which is neutral in tone, notes that China's economy has been a major driver of global growth since it's last trade policy review in 2018. It also recounts the long-term structural changes in China's economy, away from agriculture and industry toward services, and the progress that China has made in reducing poverty as a result of its high GDP growth and market-oriented reforms.

China's defense: Wang defended China's role as a WTO member, consistent with the report Beijing prepared for the review, a Geneva trade official said. China said it received more than 1,600 written questions from 40 WTO members, most of which it had already answered in writing, the Geneva official said.

Wang also said that China supports reform of the WTO with the aim of improving its rules, strengthening the multilateral trading system and defending the rights of developing members, the Geneva official said.

In a nod toward a major U.S. concern, Wang also said that China is willing to be pragmatic regarding its insistence on maintaining the right to claim the “special and differential treatment” that is accorded to developing countries under WTO rules, the Geneva official recounted.

Those rules allow China, and any other member, to self-designate as a developing country, entitling them to take on less-onerous trade commitments in new WTO agreements. The U.S. has pressed China to give up its claim to special and differential treatment, given its huge role in the international trade system.

The view from the Indo-Pacific: Among the other delegations that spoke early on Wednesday, Australia joined the U.S. in offering some of the harshest criticism. Australia has faced a number of aggressive China trade actions over the past 18 months, after it called for an international investigation into the causes of the Covid-19 pandemic.

The Australian representative said China has increasingly tested global trade rules and norms by engaging in practices that are inconsistent with WTO commitments. The speaker also urged Beijing to play a more constructive leadership role in the WTO, including by relinquishing its access to special and differential treatment, the Geneva official relayed.

Australia also asserts that the implications of China's actions against its exporters highlight the risk and uncertainty of China's market for the global business community, the Geneva official said.

Bisbee backed up the Australia speaker on that point.

“If another WTO member speaks out against or otherwise offends China, China’s response increasingly has been to use its economic clout to pressure the offending country to ‘correct its mistakes,’” Bisbee said.

Japan urged China to take further action to maintain and strengthen the multilateral trading system, starting by addressing issues that impact markets, such as trade-distorting measures, state-owned enterprises, and the lack of clarity in laws and regulations in this respect, the Geneva official said.

South Korea complained that abusive practices regarding trademark registration and reviews persist in China despite the country's improvement of its legal framework for intellectual property rights, the Geneva official said.

Seoul's representative also urged China to complete its negotiation to join the WTO's Government Procurement Agreement to further liberalize its services and investment sectors.

India expressed frustration with its growing trade deficit with China, and complained in particular about a number of Chinese barriers to Indian agricultural products, the Geneva official said.

The view from Europe, U.K., Canada: The European Union, the United Kingdom and Canada echoed many of the concerns expressed by the United States.

EU Ambassador João Aguiar Machado said China has benefited greatly from its decision to join the WTO, but has not lived up to expectations in terms of liberalizing its economy.

"We were looking forward to the reform process and opening up continuing at high speed," Machado said . "But the degree to which China has reformed and opened today is not commensurate with its weight in the global economy, or comparable to the access which China has to the markets of other WTO Members."

He also complained that China's state-run economic system distorts worldwide markets, leading to systemic problems for global trade.

The U.K.’s Ambassador to the WTO, Simon Manley, said his government is among those "concerned about the centrality of state-owned enterprises to China’s industrial strategies, and the opacity of their operations."

“For us, the onus is on China to be much more transparent in demonstrating that such enterprises do operate as normal market actors," Manley said.

Canada also complained about China's preferential treatment for its state-owned enterprises and its extensive use of industrial subsidies that lead to trade distortions and overcapacity, the Geneva trade official said.

What's next: China will have another chance to speak when the two-day review concludes Friday.

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