US Trade Representative Susan Schwab
© AFP/File Mandel NganWASHINGTON (AFP) - Days before top-level Sino-US economic talks in Beijing, an annual report by the US Trade Representative's office highlighted numerous complaints including "rampant" piracy of US goods.
The 100-page report warned that the United States stands ready to sue China at the World Trade Organization to protect its interests, if bilateral consultations fail to make headway.
The appraisal, issued five years to the day since China's WTO accession, stressed that the country appears to be going backwards in some pivotal areas.
That could fuel criticism of China's trade policies, including its currency regime, as the Democrats prepare to retake control of Congress next month.
USTR Susan Schwab said she would press the point home when she joins Treasury Secretary Henry Paulson and other top officials in Beijing for the launch on Thursday and Friday of the new "strategic economic dialogue."
"China has taken many important steps to implement its WTO obligations, but on the fifth anniversary of its WTO membership, China's overall record is decidedly mixed," Schwab said.
Since 2001, US exports to China have grown by nearly 200 percent and China has gone from being the United States' 15th to fourth largest export market.
A shop owner with counterfeit jackets in Beijing
© AFP/File"At the same time, certain industries face frustrating barriers to doing business in China, and there are worrisome signs that China's market liberalization efforts have slowed in the last year," Schwab said.
"With five years of WTO membership experience under its belt, we believe it is fair to expect China to be implementing the letter and spirit of its WTO obligations in full."
The annual USTR report is mandated by Congress and is Washington's fullest annual examination of how far China is opening up its fast-growing economy.
The report said that in 2007, the administration would "continue its relentless efforts" to ensure China plays fair as a WTO member.
It stressed that copyright abuses, the bete noir of US companies in China, remain "unacceptably high and cause serious economic harm to US businesses in virtually every sector of the economy."
China routinely fines copyright violators rather than prosecuting them, often issuing token penalties instead of jail time, the US report complained.
As in other trade spheres, the US government prefers dialogue with China to resolve frictions, it said.
But when these efforts fail, the administration "will not hesitate to use the range of tools available, including WTO dispute settlement procedures and the application of US trade laws" to bring China to heel, Schwab said.
Software was one area where progress was noted, with China now requiring all personal computer makers to install legal programs. But losses to US software companies still came to 1.27 billion dollars in 2005, the report said.
On industrial policy, China continues to resort to policies that "limit market access for non-Chinese origin goods ... and that provide substantial government resources to support Chinese industries and increase exports."
In a potential sign of things to come, the United States, Canada and European Union have joined forces to sue China at the WTO over trade in auto parts.
US agricultural exports to China have surged, particularly in wheat, cotton and soybeans, to total more than five billion dollars.
But they remain prey to "capricious practices" by Chinese inspectors, as well as "questionable" scientific standards, the report said.
©AFP