US blasts China's harmful industrial policies in WTO review

GENEVA (BLOOMBERG) – The US blasted China’s trade policy, accusing its closest economic rival of failing to play by the rules of international commerce for two decades.

When China joined the World Trade Organisation (WTO) 20 years ago, nations broadly expected Beijing to dismantle its existing policies and practices that did not comply with the WTO’s rulebook, said David Bisbee, the chargé d’affaires at the US mission in Geneva.

But “those expectations have not been realised, and “it appears that China has no inclination to change”, he said on Wednesday (Oct 20).

“Instead, 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,” Bisbee said in prepared remarks obtained by Bloomberg News.

The US will continue to use “all available tools in an effort to persuade China to make needed changes,” Bisbee said.

Despite making some progress through the 2019 phase one US-China trade agreement, America’s “most fundamental concerns with China’s trade regime remain unaddressed”, Bisbee said.

The friction centres on Beijing’s harmful industrial policies including market access limitations, investment restrictions, massive subsidies that lead to excess capacity, and preferential treatment for state-owned enterprises.

State support

“China’s industrial policies skew the playing field against imported goods and services and foreign manufacturers and services suppliers through an array of supporting measures,” Bisbee said.

“China uses these measures to secure dominance in global markets, which undermines US economic interests.”

Bisbee made his remarks during the WTO’s periodic trade policy review, which said that China has not been fully transparent about its government subsidy programmes – particularly related to aluminium, electric vehicles, glass, shipbuilding, semiconductors, or steel.

In fact, China has not provided the WTO with any information about its domestic support programmes from the past three years, the report said.

Multiple US administrations have tried to encourage China to adopt WTO norms and market-oriented policies, but those efforts yielded only modest changes, and China often failed to follow through on its commitments, according to Bisbee.

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The WTO’s dispute settlement system has been insufficient in rectifying China’s harmful trade practices, he said.

Since 2001, the US won 27 WTO dispute settlement cases against China, but China “often did not change the underlying policies, and meaningful reforms by China remained elusive”.

The US also criticised China’s use of “economic coercion” to pressure smaller nations to act in accordance to Beijing’s wishes.

“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.

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Australia’s ambassador to the WTO George Mina said his country is concerned about Chinese trade behaviour that may be motivated by “political considerations”.

“Over the past 18 months, China has increasingly implemented trade disruptive measures targeting a wide range of Australian products,” Mina said in prepared remarks.

“Such measures have severely limited or ended Australia’s trade with China across more than a dozen commodities, including barley, coal, cotton, hay, logs, meat, rock lobsters and wine.”

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