US attacks China for flouting trade laws

The US has attacked China for regularly ignoring world trade rules and abusing trade secrets.

The recent Washington report says Chinese officials employed heavy-handed tactics with foreign firms, forcing them to give up industrial secrets in clear violation of WTO laws.

China joined the WTO 11 years ago and has flouted its rule ever since, said US Trade Repesentative Ron Kirk. It also misuses complaints machinery for tit-for-tat retaliation.

Mr Kirk said in the report: “China’s trade policies and practices in several specific areas cause particular concern for the United States. China’s regulatory authorities at times seem to pursue anti-dumping and countervailing duty investigations and impose duties for the purpose of striking back at trading partners that have exercised their WTO rights in a way that displeases China.”

The report also said that a range of policies raised “increasing concerns that China has not yet fully embraced the key WTO principles of market access, non-discrimination and transparency. China’s incomplete adoption of the rule of law has exacerbated this situation.”

Adding to tensions

The directness of the report will not please Beijing. Tensions are already high over Pacific Rim maritime disputes, where the US is increasingly involved as the region’s guarantor. China views the strategy with deep mistrust, believing it the start of an encirclement initiative.

The US has brought 15 cases against China at the WTO. The most recent of these alleges unfair duties on US vehicles and car parts in which Washington won a panel dispute over steel duties in September. China in turn has filed a number of cases claiming illegal use of anti-dumping measures by the US.

The US trade report signifies a turn away from dissatisfaction at China’s currency, which is less clearly undervalued after years of wage inflation, towards a closer focus on disguised protectionism.

Alleged abuses the report targeted included attempts to keep out foreign imports and companies, subsidies, and failure to enforce intellectual property rights.

Exports restrained

The report said exports of rare earth metals, tungsten, molybdenum, and other raw materials, were being restrained, as well as export rebates. this was leading to “tremendous disruption” worldwide.

Washington said the major problem is the “heavy state role in the economy” and the top-down structure of industrial planning. It did however say that there were some positive signs. This includes a clarion call for reform from Beijing’s Development Research Centre, which warns that China will be left behind in the “middle income trap” unless it ditches its obsolete growth model and embraces the free market.

Despite the criticism, China has become America’s biggest export market, worth $131bn in 2011. Its current account surplus has fallen from 10pc of GDP five years ago to 2.6pc this year.