GAO Report Examines U.S. Government's Efforts to Ensure China's Compliance With WTO Commitments
The U.S. Government Accountability Office (GAO) has issued a report to Congressional requesters that reviews how the U.S. Trade Representative (USTR), the Departments of Commerce and Agriculture (DOC and USDA), and the State Department pursued China's World Trade Organization (WTO) compliance in 2003.
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The GAO states that China has successfully implemented many of its numerous WTO commitments, but the USTR reported that over 100 separate compliance problems arose in 2002 and 2003. These problems ranged from specific, relatively simple issues to broader, more systemic concerns. Most problems continued from 2002 to 2003, an indication that China was able to address the more easily resolvable problems, while the more complex issues persisted.
GAO Report Highlights China's Successes and Remaining Problems
Among other features of its report, the GAO discusses China's successes and problems in complying with its WTO commitments:
Overview of implementation successes. According to the GAO, the USTR has noted several areas in which China has successfully implemented its commitments since joining the WTO in December 2001. In 2002, the USTR reported that China reviewed more than 2,500 trade-related laws and regulations for WTO consistency, repealed or amended nearly half of these, and issued many new laws and regulations. China also restructured government ministries with a role in overseeing trade, embarked on an extensive education campaign on the benefits of WTO membership, and made required tariff reductions.
The USTR also reported that, in 2003, China took steps to correct systematic problems in its tariff-rate quota (TRQ) regime for bulk agricultural commodities, reduced capitalization requirements in certain financial sectors, and opened up the motor vehicle financing sector. During this period of reform in China, U.S. exports to China rose 48% between China's WTO accession in 2001 and 2003.
Examples of compliance problems. The GAO's report also cites the following compliance problems in each area of China's trade regime, as of December 2003 (partial list):
Import Regulation - 24 compliance problems, including:
Chinese customs officials inappropriately added royalty and software fees to dutiable value;
Fertilizer TRQ regulations issued late; and
Certain key provisions omitted in countervailing (CV) duty regulations.
Internal policies affecting trade - 16 compliance problems, including:
Application of value-added tax rebate for domestic producers of semiconductors violated WTO national treatment principle;
Comment periods for technical barriers to trade regulations unacceptably brief; and
Inconsistent application and duplication in certification requirements.
Agriculture - 18 compliance problems, including:
TRQs for bulk agricultural commodities were issued late;
Application of standards for raw poultry and meat were not based on scientific evidence; and
Selective enforcement of inspection-related requirements.
Intellectual property rights - 13 problems, including:
Intent to sell was difficult to prove in administrative enforcement;
Criminal liability thresholds were high and rarely met; and
Chinese laws were unclear as to whether a case warrants civil or criminal enforcement.
GAO Report (GAO-05-53, dated October 2004) available at http://searching.gao.gov/cs.html?url=http%3A//www.gao.gov/new.items/d0553.pdf&qt=gao-05-53&col=&n=2