U.S. Government Report Blames China For Unfair Trade Practice

According to a report by the Financial Times, an annual report on trade barriers faced by exports from the U.S., which is produced by the U.S. trade representative’s office, has blamed China for unfair trade practices that keep foreign companies operating in China at a disadvantage. Although the report mentions that China has reduced official quotas and tariffs, it says that the country is still using other measures such as putting restrictions on trade rights, supporting Chinese companies by tilting government procurement towards them, and stashing raw materials for internal use.

The report says, “Eight years after China’s WTO accession, many US industries complain that they face significant non-tariff barriers to trade. These barriers include, for example, regulations that set high thresholds for entry into service sectors such as banking, insurance and telecommunications . . . and the use of questionable sanitary and phytosanitary measures to control import volumes.” Citing an example, the report says that the nation’s officials for agriculture and quarantine regime have been given too much discretion, which has resulted in the officials very often slowing down shipments without issuing any warning.

The U.S. has been gunning for China for a while, blaming the country for its massive trade deficit. Officials in the U.S. say that China has kept its currency artificially low to support exports, which has resulted in U.S. amassing a massive trade deficit and China a massive surplus. There have been calls in Washington to brand China a “currency manipulator.” On Wednesday, U.S. Treasury Secretary, Timothy Geithner had said that he expected China to be more flexible on its currency. Geithner said, “I am very confident that they are going to decide it is in their interest to move on currency reforms.”

Previously, the U.S. has used the litigation alternative against several of its trading partners to force them to drop unfair rules, which leaves foreign companies at a disadvantage against local firms. Walter Spak, the head of international trade practice at White & Case, a law firm, says, “The listing of trade barriers to US exports is only an initial step related to enforcement of trade rights. Trying to eliminate such practices is the difficult part. Even if this can be done, it will take time.” There is growing concern in the U.S. now about unfair trade practices used by some of its trading partners. Many believe that such trade practices have resulted in global imbalances.