Annual report by U.S. Trade Representative goes heavy on China
This week, the Office of the U.S. Trade Representative (USTR) issued its annual report to Congress on trade barriers. The section on trade with China clocked in at 41 pages, a hefty chunk of the 401-page report.
Key concerns on China include continued restriction on market access for U.S. producers of autos, steel and beef, as well as inadequate protections on intellectual-property rights.
Two key problem areas:
AUTO PARTS: Because China only allows foreign automobile manufacturers to operate in China through joint ventures with Chinese enterprises, and because none of these joint ventures can be majority foreign-owned, this raised serious concerns that these policies could compel the transfer of foreign automotive manufacturers’ core NEV technologies to their Chinese domestic joint venture partners. There were also widespread reports that China would require all NEVs manufactured in China to be sold under Chinese, rather than foreign, brands.
STEEL: China’s 2005 Steel and Iron Industry Development Policy (Steel Policy) includes a host of objectives and guidelines that raise serious concerns. For example, the Steel Policy requires that foreign enterprises seeking to invest in Chinese iron and steel enterprises possess proprietary technology or intellectual property in the processing of steel. These provisions appear to remain in effect. Given that foreign investors are not allowed to have a controlling share in steel and iron enterprises in China, this requirement could be regarded as a de facto technology transfer requirement. The Steel Policy also appears to discriminate against foreign equipment and technology imports, encouraging the use of local content by calling for a variety of government financial supports for steel and iron projects using newly developed domestic equipment. Even more troubling, the policy calls for the use of domestically produced steel manufacturing equipment and domestic technologies whenever domestic suppliers exist – raising serious concerns given China’s commitment under its Protocol of Accession to the WTO not to condition importation on whether competing domestic suppliers exist.
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