U.S. Says China Failed to Implement WTO Commitments, May File Complaint
Dec. 23 (Bloomberg) -- Jagdish Bhagwati, a professor of economics at Columbia University, talks about global trade policy and U.S. relations with China and India. He speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
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The U.S. said China failed to implement “important commitments” under its obligations to the World Trade Organization, and said it may file a complaint over that nation’s restraints on exports of rare earths.
China is using “excessive, trade-distorting government intervention” to the disadvantage of American companies, the U.S. Trade Representative’s office said today in its annual report on China’s compliance with WTO rules.
Trade tensions have increased as China reported a record $153.3 billion of exports for November and U.S. lawmakers called for legislation on Chinese imports to combat any advantages from what they say is an undervalued yuan. The U.S. filed a WTO complaint against China yesterday, contending that favoritism toward domestic-made wind turbines is an unfair trade barrier.
Among issues highlighted today were China’s export constraints on minerals such as magnesium, silicon, zinc and rare earths.
“These types of export restraints can significantly distort trade, and for that reason WTO rules,” the trade office said in its report. “In the case of China, the trade-distortive impact can be exacerbated because of the size of China’s production capacity.”
Rare Earths
Rare-earth minerals are used in electric cars, wind turbines and weapons, and at least 90 percent are produced in China.
The U.S. said it pressed China to remove any limit on the export of rare earths before a meeting of trade officials from both nations this month. No agreement was announced.
“The United States will continue these efforts in 2011 while also considering other options for addressing China’s use of export restraints, including WTO dispute settlement, if appropriate,” the trade office said.
The U.S. issued the report less than a month before Chinese President Hu Jintao is scheduled to visit President Barack Obama at the White House. U.S. businesses have grown increasingly critical of a series of Chinese policies aimed at boosting research and innovation among its domestic companies.
“China continued to pursue industrial policies in 2010 that seek to limit market access for non-Chinese origin goods and foreign suppliers of services, while offering substantial government resources to support Chinese industries,” the trade office said in the report. “The principal beneficiaries of these policies are less competitive state-owned enterprises.”
China is the third-largest U.S. export market with $69.5 billion of sales in 2009. Sales of goods and services by U.S. companies in China reached $98.4 billion, more than a fourfold jump from 2000, according to the U.S.-China Business Council, a Washington-based group that represents companies such as Wal- Mart Stores Inc. and Citigroup Inc.
“Despite the many challenges that remain, China’s WTO membership has continued to provide substantial ongoing benefits to the United States,” the trade office said in its 124-page report.
To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net
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