China Taken to Task at WTO

Major trading powers criticized China in a WTO forum over the country’s failure to notify the WTO with details on many key aspects of its trade regime.

GENEVA — Major trading powers led by the U.S. and European Union criticized China in a World Trade Organization forum over the country’s failure to notify the WTO with details on many key aspects of its trade regime, such as subsidies and incentives provided to domestic firms, for its latest bi-annual review.


“We are struck by the obstacles that the [WTO] secretariat encountered in trying to put together the required analysis of China’s trade and investment regime,” said Chris Wilson, deputy chief of the U.S. mission to the WTO, during a two-day review of China’s trade regime that ended Thursday. “Many of these obstacles seem unique to China. It has been our experience that many aspects of China’s trade and investment policies and practices seem to remain hidden away in unpublished measures, internal instructions, oral directives and confidential documents.”

Wilson also stressed China’s state-owned enterprises, which account for a major part of the economy, “are largely shielded from view by mechanisms such as unpublished government budgets, infrequent WTO notifications and a law that  can treat commercial information as a state secret.”

The WTO secretariat report prepared for the review noted that full identification of support programs “was not possible for the secretariat in the context of the current review,” and also stipulated that “no information was provided to the secretariat” with regards to specific programs to state-owned enterprises or China’s industrial policies that supported different areas of the economy.

Angelos Pangratis, EU ambassador to the WTO, said, “The fact that the secretariat has not been able to obtain key documents is striking. The EU considers that this key accession commitment has not been fulfilled and recommends that China promptly remedies this situation.”

The EU official also called on China to “promptly improve its record” of notifications to the WTO.

Joakim Reiter, Sweden’s WTO ambassador, said given China’s size and importance, “the interference of the government in the economy may very well affect the allocation of resources and competitive conditions of companies in markets outside China, thereby casting a shadow over China’s quest for open and fair trade.”

Wang Shouwen, China’s assistant minister of commerce, said China today is the largest trading partner for over 120 countries and regions, and with a total import and export value of $4.2 trillion in 2013, became the world’s largest merchandise trader.

Wang admitted, “It is fair to say that subsidy notification is the most challenging task for China in fulfilling its WTO notification commitments.”

Wilson said China’s notifications have been “seriously incomplete,” and pointed out that China has “never notified any sub-central government subsidies, even though hundreds have been the subject of WTO disputes.”

The U.S. official also highlighted China has failed to notify any agricultural support provided after 2008, even though it appears China has sharply increased its subsidies in many farm products in recent years, including what appear to be the world’s largest subsidies in the area of cotton.

Canada also weighed in and argued that the lack of transparency in important areas of China’s trade regime and the often vague and insufficient information available publicly, and inconsistencies in policy interpretation and implementation at the local level, “create significant delays and cost for foreign companies.”

Trading partners also took China to task in a host of other areas, including enforcement of intellectual property rights, problems related to foreign investment and customs clearance procedures.

South Korea said despite efforts by Chinese authorities to combat IPR infringement, enforcement continues to be a major challenge and noted for instance, “damages caused by malicious preregistration of foreign trademarks and counterfeit cosmetics are still heavily reported.”

Similarly, the U.S. said an enormous amount of work remains if China is to close the loopholes in its (IPR) legal framework and reduce the “unacceptably high” infringement levels.