As explained here, China's eighth WTO Trade Policy Review is taking place on October 20 and 22 and China has already provided its policy statement. As part of this review, other WTO Members also have an opportunity to comment on China's trade policies. We offer highlights of several of these in this piece: the United States, the United Kingdom, the European Union and Australia.
Starting with the United States, the U.S. statement says that "[w]hen China acceded to the WTO 20 years ago, WTO Members expected that the terms set forth in China’s Protocol of Accession would permanently dismantle existing Chinese policies and practices that were incompatible with an international trading system expressly based on open, market-oriented policies." However, the United States contends, "those expectations have not been realized, and it appears that China has no inclination to change."
The U.S. statement then says that its "most fundamental concerns with China’s trade regime involve China’s industrial policies." On this issue, "[w]hile other WTO Members also seek to help their industries develop, China’s approach is materially different," as its industrial policies "go well beyond guiding and supporting domestic industries." Rather, they "skew the playing field against imported goods and services and foreign manufacturers and services suppliers through an array of supporting measures."
The specific industrial policies about which the United States is concerned are: "market access limitations, investment restrictions and massive subsidies that lead to severe and persistent excess capacity"; "preferential treatment for state-owned enterprises and other favored Chinese companies, discriminatory regulatory requirements, unique national standards, data restrictions, inadequate enforcement of intellectual property rights, cyber theft and the use of competition law enforcement for industrial policy purposes." According to the United States, "China uses these measures to secure dominance in global markets, which undermines U.S. economic interests."
The U.S. statement also mentions "reports of China’s use of forced labor in several sectors" and "economic coercion."
The United States emphasizes that it has made "extensive efforts to encourage China to comply with and internalize WTO rules and norms and make other market-oriented changes," and "convened numerous high-level bilateral dialogues with China," with only limited success. Nonetheless, the United States "has pursued and will continue to pursue all available tools in an effort to persuade China to make needed changes."
It concludes by saying that "[t]he United States is not the only WTO Member whose workers and businesses are being harmed by China’s unfair trade practices, and we will be more successful in building truly fair international trade that enables healthy competition if we work together, and speak up"; and that "the best solution remains for China to take the initiative to fully and effectively embrace open, market-oriented policies, and that is what we continue to urge China to do."
The UK statement begins by noting that the increase in trade since China joined the WTO has been "a major contributor to China’s growth and has helped lift millions out of poverty," and the UK congratulates China "for that significant achievement."
Turning to specific substantive issues, the UK says that "in the context of the fisheries subsidies negotiations ... we have heard China say that it does not intend to take up wide-ranging Special and Differential Treatment," and "[w]e very much welcome that direction of travel and we look forward to seeing how that commitment is made concrete through the negotiations and indeed wider discussions here at the WTO." The UK also recognizes "the recent progress China has made to open its markets to international trade and investment" and "welcome[d] China’s engagement with plurilateral initiatives such as the JSI on investment facilitation, E-Commerce and domestic regulation, as well as the Trade and Health Initiative, the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics."
The UK then indicates that "[t]he success of that economic development means China has reached a point where the pace, scale and implementation of its market opening needs to accelerate," and highlights several areas that it believes "require China’s attention and action":
- "Chinese firms continue to enjoy much higher levels of access in overseas markets than their foreign counterparts enjoy within China."
- "the centrality of state-owned enterprises to China’s industrial strategies, and the opacity of their operations"; their "market dominance and the way such SOEs operate, disadvantages both domestic private firms and foreign investors."
- "we call on the Chinese Government to commit to publishing all materials related to its three-year reform plan for its state-owned enterprises, so that it is clear what is and what is not being directed by government"; and "we also share the concerns raised by other Members about China’s continued lack of compliance with transparency obligations under the Agreement on Subsidies and Countervailing Measures."
- "we closely monitor reports of China’s trade actions being deliberately targeted against goods of some countries for political reasons"; "in the long term, such actions undermine market confidence that China does indeed want the open, rules-based, transparent, and non-discriminatory system, ... "
- "forced labour, wherever and whenever it occurs, is unacceptable," so "we call on China to ratify and effectively implement the ILO Forced Labour Convention including the 2014 Protocol and the Abolition of Forced Labour Convention."
The EU statement says that "China’s WTO membership had created expectations of further liberalisation and of movement towards a full market-based economy," but "the degree to which China has reformed and opened today is not commensurate with its weight in the global economy, or comparable to the access which China has to the markets of other WTO Members." Moreover, "the influence exerted by the state on China’s economic environment generates competitive distortions worldwide, leading to systemic problems for global trade." According to the EU, "China should re-engage an opening up effort and adopt further market reforms. It should also assume its responsibility and play a role in the WTO that matches its economic weight."
Elaborating on these points, the EU says that "China should step up its commitment in a number of ways":
- "One way for China to show leadership would be by refraining from claiming benefits that would correspond to a developing country in ongoing negotiations."
- "Another area ... is the need to improve compliance with notification obligations across the board, including on industrial subsidies and agricultural support."
- "The EU also reminds China of its commitment, in the context of its GPA accession bid, to implement a transparent and non-discriminatory public procurement framework."
- "A long-standing EU concern is the competition distortions caused by the activities of State-owned enterprises. ... EU calls on China to fully observe its WTO accession commitments by improving transparency and by eliminating these distortions."
- Other "worrying policy trends from China that are intensifying are": "investment restrictions remain in a range of sectors, and EU IP right holders continue facing difficulties for effective enforcement"; "the increasing politicisation of China’s business environment"; "expansive use of an excessively broad concept of national security"; "China’s stringent Covid-19-related restrictions"; and China’s new "dual circulation" strategy "will lead to further reversal of economic reform and market opening and aggravate global imbalances."
The EU then states that "[i]t has become increasingly clear that such distortions cannot be sufficiently addressed by current WTO rules. The EU believes that in addition to China’s individual responsibility, a collective effort towards modernizing the WTO rulebook is necessary."
Australia's statement says that it "has welcomed China's growth for the better economic outcomes and standard of living it delivers to the people of China, across the Indo-Pacific region and around the globe," and "is pleased to have
played a role in China's economic development." Australia "also recognises China's efforts to engage actively in WTO rulemaking," including "the participation of China in all Joint Statement Initiatives."
However, Australia notes that "China's contribution to WTO rulemaking and reform efforts is not yet commensurate with its economic weight" and Australia "encourage[s] China to play a more constructive leadership role in the WTO, including by relinquishing its access to special and differential treatment." Unfortunately, Australia says, "since its last Review, China has increasingly tested global trade rules and norms by engaging in practices that are inconsistent with its WTO commitments."
According to Australia, "[o]ver the past 18 months, China has increasingly implemented trade disruptive measures targeting a wide range of Australian products," which has "severely limited or ended Australia's trade with China across more than a dozen commodities." While China may say that these actions reflect legitimate trade concerns, "there is a growing body of information that demonstrates China's actions are motivated by political considerations." In this regard, Australia says, "there are credible reports that Chinese authorities have instructed importers not to purchase certain Australian products," and "[s]everal official Chinese statements have directly linked these trade actions to wider issues in our bilateral relationship."
Australia also expresses concern that "market-oriented reforms have not progressed since Australia raised its concerns during China's 2018 Review, including the need to embrace market-oriented principles to ensure exporters, consumers and domestic producers can fully benefit from the multilateral trading system."
Finally, Australia encourages China "to comply fully with the letter and spirit of its transparency commitments."