By Todd Bullock
Washington File Staff Writer

Washington - Despite three consecutive years of growing U.S. exports to China, the trade relationship between the two countries today “lacks equity, durability and balance” in the opportunities it provides, U.S. Trade Representative (USTR) Rob Portman says.

"This disparity is due in part to China's failure to honor certain commitments, including its failure to enforce intellectual property rights, its protection and support for certain domestic industries, and its refusal to fulfill certain market opening commitments," Portman said at a February 14 press conference where he released the results of a USTR review of U.S.-China trade relations.

The report, U.S.-China Trade Relations: Entering a New Phase of Greater Accountability and Enforcement, is the first comprehensive statement of U.S. trade policy toward China since China joined the World Trade Organization (WTO) in 2001.  It assesses U.S.-China trade ties following China's first four years of membership in the WTO and reflects input from private China experts, industry, Congress and U.S. government agencies.

"China has benefited from its access to the world economy," Portman said.  "But in order to sustain that growth, both economically and politically, China must play its part in addressing the global imbalances that have arisen during the past four years of rapid global growth."

According to trade figures released by the Commerce Department February 10, the U.S. trade deficit with China in 2005 was $201.6 billion.

IMPROVING TRADE COMPLIANCE, ENCOURAGING REGULATORY REFORM

Portman stressed the need to monitor China's adherence to international and bilateral trade obligations and "secure full implementation and compliance."

To this end, the report calls for the creation of a China Enforcement Task Force at USTR, to be headed by a chief counsel for China trade enforcement.

"Although unprecedented at USTR, I believe this kind of dedicated, country-specific enforcement team is needed to improve China's compliance with its obligations," Portman said.

The USTR also referred to the report's recommendation to expand U.S. negotiating capacity in China by stationing a U.S. trade negotiator in Beijing.

"This is a person who would be in constant communication with U.S. business and Chinese officials, and who would be in a position to strengthen trade enforcement and compliance efforts," Portman said.

The trade representative cited the need to work with China's government on the development of standards and an anti-monopoly law.  The United States also plans to increase efforts to promote regulatory reform in China through deepening high-level dialogue with China's economic planners, will broaden and intensify its assessment of Chinese subsidies and continue pressure on the Chinese government to comply with subsidy-related obligations under the WTO, he said.

ENHANCING COOPERATION WITH TRADING PARTNERS

The United States is working closely with other trading partners to address common concerns, according to the USTR.

Portman cited U.S. cooperation with Japan and Switzerland to seek evidence through the WTO regarding China's intellectual property rights enforcement as well as with the European Union regarding discriminatory tariffs China has imposed on auto parts.

"As a mature trading partner, China should be held accountable for its actions and required to live up to its responsibilities, including enforcing intellectual property rights, allowing market forces to drive economic development and opening its markets.   We will use all options available to meet this challenge," he said.

Portman urged China to "take on responsibilities commensurate with its economic heft and the benefits it currently derives from the global trade system," including playing a larger role in the Doha Round of trade negotiations and joining the WTO Government Procurement Agreement and the World Intellectual Property Organization Internet Treaties. (See Focus on Intellectual Property Rights:  A Short Guide to International IPR Treaties.)

The USTR also called for deeper trade relationships with other Asian countries.

"We must proactively engage economies like Singapore, Thailand,

Korea, India, Vietnam and Malaysia, as well as working with regional organizations like ASEAN [the Association for Southeast Asian Nations] and APEC [the Asia-Pacific Economic Cooperation forum], to help maintain a robust U.S. economic presence in this critical region," he said.

For additional information on U.S. policies, see The United States and China and Trade and Economics.

The full text of the report (PDF, 29 pages) and Portman's prepared remarks are available on the USTR Web site.