In releasing its annual National Trade Assessment on Wednesday (March 31), the U.S. government noted that the Chinese Communist authorities have imposed interventions and subsidies on the market to achieve their economic development ambitions, not only crowding out international businesses but also creating global overcapacity in industries such as steel, aluminum and solar energy, and that the U.S. will take further action to “address these harmful trade practices “.
The statement from the Office of the U.S. Trade Representative (USTR), part of its massive annual National Trade Estimate Report on Foreign Trade Barriers, includes a section on China that runs more than 30 pages.
In the report, the U.S. Trade Representative affirmed the importance of the Trump administration’s “Phase I Agreement” on U.S.-China trade with China, saying it “establishes a robust dispute resolution system that ensures prompt and effective implementation and enforcement. Since the first phase of the agreement took effect last February, the report said, “the United States has continued to engage with China as issues have arisen and has continued to closely monitor developments.”
The report indicates that Washington will continue to challenge Chinese Communist Party trade barriers or regulatory hurdles and deal with policies by Communist authorities that restrict access to U.S. companies.
USTR said, “Significant barriers present significant policy challenges that have implications for future U.S. growth opportunities, as well as for the fairness of the global economy.”
In the press release, USTR said, “China’s state-led economy and approach to trade has made it the world’s chief offender in creating uneconomic capacity, as evidenced by severe and persistent overcapacity in a number of industries, including steel, aluminum, and solar energy.”
The report also criticizes the Communist Party’s Made in China 2025 plan, saying it “is creating severe overcapacity in other industries.”
Made in China 2025, a major 10-year plan released in 2015, lays out the Communist authorities’ industrial policy vision, which includes a series of state interventions and subsidies and imposes restrictions and discrimination on foreign companies, the report reads.
USTR said the Chinese Communist authorities support Chinese companies by doling out hundreds of billions of dollars, requiring them to reach the Made in China 2025 industrial plan at the expense of import volumes and requiring them to achieve stated goals targeting Chinese and global market share.
“Even if China fails to fully achieve the industrial policy goals set forth in Made in China 2025, it could still create or exacerbate market distortions and create significant overcapacity in many targeted industries,” said USTR, “It could also cause long-term damage to U.S. interests because Chinese government-backed companies will increase their market share at the expense of U.S. companies in that industry.”
The report makes clear that U.S. Trade Representative Katherine Tai will take a tough stance on foreign trade policies that impede U.S. exports.
“USTR will continue its bilateral and multilateral efforts to address these harmful trade practices.” The statement said the U.S. is working with the European Union and Japan to identify further effective actions.
The 570-page report examines 65 trading partners and country groups that account for 99 percent of U.S. trade in goods and 87 percent of trade in services. The report was compiled from public comments submitted by industry groups and other interested parties.
The report also expresses concern about data restrictions imposed by India, China, South Korea, Vietnam and Turkey, software requirements in Russia, tariffs on digital products in Indonesia, and discriminatory tax measures in Austria, India, Italy, Spain, Turkey and the United Kingdom.
The report also cites barriers to trade in agriculture, including “non-science-based regulatory measures, non-transparent approval processes for agricultural biotechnology products, burdensome import licensing and certification requirements,” and more.
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