USTR Report on China’s Non-Compliance of its WTO Obligations

USTR released an exclusive report on latest assessment of China’s WTO compliance, following its accession to multilateral trade body in 2001. The release of report just two days before the 13th WTO Ministerial Conference (MC13) appears to be a strategic move by the USA, who is facing lot of flak for not allowing appointment of members to WTO Appellate Body. US seems to be turning the table by bringing attention towards China’s non-compliance of several of its commitment made during the access to WTO.

USTR Katherine Tai in her formal customary statement delivered at MC13 reiterated that addressing the massive disruptions from non-market policies and practices is a new challenge for the WTO. She urged fellow WTO members the need to restore transparency, a precondition to ensure fairness and accountability and every WTO Member has the responsibility to let others know of their laws and regulations affecting trade. Both the issues are clearly directed towards China.

The findings of the report reveal the unique and very serious challenge that China’s state-led, non-market approach to the economy and trade continues to pose for the global trading community. When China acceded to the WTO in 2001, it voluntarily agreed to embrace the WTO’s open, market-oriented approach and to embed in its economic and trading system and institutions. China also agreed to take on the obligations set forth in existing WTO rules, while also making numerous other specific commitments. However, China’s record of compliance with these terms has been poor. The report further highlights China’s poor record of adhering to WTO transparency obligations.

The report lists several common non-market policies and practices across sectors that China currently deploys to secure dominant market shares for Chinese businesses domestically and globally. These include - deploying massive and frequently non-transparent subsidies, transferring risk to the state through loan guarantees and loan rollovers in targeted industries, allowing government regulatory authorities to exercise their authority in a discriminatory manner by treating Chinese enterprises more favourably than foreign or foreign-invested enterprises amongst others.

These unfair business practices of China contributed to the serious excess capacity problems in industries like steel, aluminum, solar panels, and fishing, which have been devastating foreign competitors. Similar results can be expected in other industries now being targeted by China for dominance.

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However, for India the situation is very tricky. While these unfair practices of China are hurting Indian industry across sectors, but it refrains from joining hands with USA at WTO on this. Since India and USA have divergent views on several issues with USA on China-centric issues.?

Piyush Goyal Piyush Goyal Office Ministry of Commerce and Industry, Government of India Department for Promotion of Industry and Internal Trade #globaleconomy #China #India #wto #ustr #mc13 #trade #internationaltrade #tradepolicy