HANGZHOU, China — The United States and China diffused some trade tensions during high-level talks held here this week, but new rifts emerged just as quickly to take their place.

This story first appeared in the October 30, 2009 issue of WWD. Subscribe Today.

Top trade officials from both sides met in this coastal city for the 20th meeting of the U.S.-China Joint Commission on Trade and Commerce, where on Thursday they unveiled new breakthroughs on sticky two-way trade tensions involving poultry and pork.

Chinese Minister of Commerce Chen Deming pledged China would soon lift the ban it had placed on American pork imports in May after the emergence of the H1N1 flu virus in North America. In turn, the Chinese government hopes the U.S. Congress will follow through with a recent proposal to end the 2007 prohibition on Chinese chicken imports to America.

Yet even as the two sides met to go over a long list of specifics and agree on several areas, new trade frictions emerged. The U.S. said earlier in the week it had decided to impose preliminary antidumping tariffs on Chinese-made steel wire, while China confirmed it was investigating charges the U.S. government has given unfair subsidies to the auto industry.

“The relevant Chinese authorities have to protect Chinese companies and Chinese markets based on WTO rules,” Deming said during a news conference at the end of the JCCT talks. “As long as it’s a company operating in China…as long as there is evidence it is involved in dumping, we have the right and reason to investigate.”

U.S. Trade Representative Ron Kirk expressed some puzzlement over the auto investigation, but said, overall, the talks had been meaningful and fruitful. Kirk said he supported China’s 2001 entry into the World Trade Organization, and the bilateral trade relationship it helped create.

“We realized extraordinary benefits would accrue to the United States and China by being involved in a global, rules-based trade relationship,” said Kirk. “There will inevitably be disputes. The good news is that now we have a way to resolve it.”

Kirk, along with Commerce Secretary Gary Locke and Agriculture Secretary Tom Vilsack, raised U.S. issues at the meetings, including intellectual property rights protection and pushing China to open its markets to American goods and services. The meeting came just two weeks before President Obama is scheduled to make his first official visit to China.

Locke, in particular, pushed the intellectual property rights issue. He traveled to southern China earlier this week to talk about the importance of protecting ideas and inventions as this country attempts to move away from its heavy reliance on a manufacturing-based economy.

“If innovators fear that their inventions or ideas will be stolen, then one of two things will happen — they’ll either stop inventing, or they’ll decide to create their inventions elsewhere,” Locke said in Guangzhou earlier in the week.

Locke said he was pleased with the Chinese announcement that the government would issue new directives on protecting medical and academic journals, while launching a four-month crackdown on Internet piracy.

The two sides on Thursday signed a series of technical agreements on issues including clean energy, joint ventures and government contracts in China, and technical assistance for an airport project. They also signed an agreement to encourage two-way tourism between Chinese provinces and the U.S.

But while large issues like currency valuation and dumping charges on both sides loom ahead of Obama’s visit, Chinese and American trade chiefs said they were pleased with the progress made so far.

“To sum up, we made very significant progress on a number of issues,” said Locke.

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