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Trade Barriers Lessen, But Still Problematic

China and India took steps to lower trade impediments last year, but many barriers remain despite years of consultations and diplomatic pressure.

WASHINGTON — China and India took some steps to lower impediments to trade last year, but many barriers remain despite years of consultations and diplomatic pressure.

The Office of the U.S. Trade Representative said in its annual report on foreign trade barriers released Wednesday that China, India and Egypt still maintain some of the highest hurdles on imported apparel and textile products, as well as burdensome business laws on retailing and distribution.

The USTR’s 2005 report, mandated by Congress, lists barriers to U.S. exports of goods, services and farm products from 61 trading partners in each region of the world and profiles policies restricting market access. In the case of China, USTR noted “serious challenges still remain, and many U.S. businesses are still not able to maximize their opportunities in the Chinese market.”

The report highlighted four areas where significant problems still exist: intellectual property rights, services, agriculture and industrial policies.

“Overall, while China has a more open and competitive economy than 25 years ago, and China’s [World Trade Organization] accession has led to the removal of many trade barriers, there are still substantial barriers to trade that have yet to be dismantled,” the agency said in the report.

As part of its WTO commitments, China changed its laws in December to allow foreign companies to open wholly owned retail operations within the country, but foreign firms still face a plethora of regulations from local governments that can slow their entry into the market.

Counterfeiting in China is another issue that has reached “epidemic levels and caused serious economic harm to U.S. businesses,” the report stated.

The U.S. has been pressing the Chinese government to improve intellectual property rights enforcement and Vice Premier Wu Yi presented an “action plan” in April 2004 calling for improved legal measures and increased criminal prosecution of IPR violations, as well as increased enforcement.

The report said, “The United States will take whatever action is necessary at the conclusion of the out-of-cycle review to ensure that China develops and implements an effective system for IPR enforcement.”

Meanwhile, India’s tariffs remain “remarkably high,” the USTR said.

“According to the U.S. textile industry, India continues to maintain numerous textile trade barriers, and India remains one of the most heavily protected textile markets in the world,” the report noted.

A U.S. trade official who briefed reporters in a teleconference call said the U.S. remains committed to pressuring countries like India and Egypt to lower tariff and nontariff barriers, such as burdensome licensing requirements.

“I think at this point we can say we are engaged in an ongoing dialogue with all of those countries and other countries facing textile problems,” the trade official said. “We are seeking to address the problems identified in this report.”

He also noted that U.S. trade officials are “deliberating internally on the [textile trade barriers],” but would not elaborate on any future action the U.S. might take, such as filing a case at the WTO.