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Oral Testimony by Deputy United States Trade Representative Demetrios J. Marantis before the House Committee on Ways and Means

Ambassador Demetrios J. Marantis
Deputy United States Trade Representative

Oral Testimony before the House Committee on Ways and Means
Washington, D.C.
October 25, 2011

**As Prepared For Delivery**

“Chairman Camp, Ranking Member Levin, members of the committee, thank you for the opportunity to testify.

“Since China joined the World Trade Organization in 2001, U.S. goods exports, including semiconductors, aircraft, and chemicals, have quadrupled. Agriculture exports are up 800 percent led by soybeans and cotton. Services exports are up nearly 300 percent on growing sales of business, education, and financial services. And American job-creating investment in China has grown 400 percent.

“America’s trade relationship with China has tangible benefits. But just as real are the persistent concerns that threaten to undermine the potential of this relationship.

“Intellectual property theft in China costs U.S. companies $48 billion every year. China’s industrial polices, like ‘indigenous innovation,’ discriminate against U.S. products, services, innovators, and investors. China’s subsidies raise deep concerns and can lead to unfairly traded imports that affect our trade deficit. Investment restrictions limit the ability of U.S. companies to compete effectively in China and to create jobs here at home. Unfair barriers to U.S. agricultural imports hurt our beef, poultry, and pork producers. Weak enforcement and lack of transparency undermine U.S. exporters and investors.

“President Obama is determined to make our relationship with China work better for working Americans – to tap its potential to support American jobs and grow our economy. This Administration’s coordinated approach is focused on vigorous enforcement, results-oriented dialogue, and strengthening global trade rules.

“First, enforcement. In the WTO, the Obama Administration has initiated five strategic and systemic disputes against China. We challenged China’s export restraints on industrial raw materials, in a case unprecedented in size and importance. For the first time since China joined the WTO, we accepted a Section 301 petition, which brought China to the WTO to answer for prohibited wind power equipment subsidies. We have challenged China’s regulation of electronic payment services to address the apparent creation of a home-grown monopoly that blocks competition. We brought two WTO cases to address the apparent misuse of trade remedy investigations to restrict U.S. exports to China. And for the first time ever, we imposed duties to combat a surge of Chinese tire imports pursuant to Section 421. The Obama Administration will not hesitate to bring additional enforcement cases when appropriate.

“Litigation alone is not enough. Results-oriented dialogues like the Joint Commission on Commerce and Trade (JCCT) and the Strategic and Economic Dialogue also yield swift and lasting benefits. Last year, our engagement led to new measures to increase legal software use in China. We also obtained China’s agreement not to discriminate against foreign intellectual property in its procurement policies, and to address agriculture concerns by eliminating unfair bans on our poultry exports, and some key restrictions on our pork.

“For this year’s JCCT, USTR continues to work intensively – together with the Commerce Department -- to secure results focusing on IPR, indigenous innovation, investment restraints, industrial policies, and other issues.

“Aside from this structured dialogue, we are also engaging China directly on its adherence to trade rules regionally and globally. This month, for the first time, the United States submitted in the WTO a subsidy counter-notification to call China out on over 200 subsidies that it had not notified as required. Similarly, we have called on China to share detailed information on measures that limit the supply of services over the internet and hinder the ability of our companies to effectively compete. Outside the WTO, we are working to strengthen trade rules across the global trading system through efforts including the Trans-Pacific Partnership and the Anti-Counterfeiting Trade Agreement.

“The Obama Administration is working hard so that the United States can compete with China on a level playing field, and American businesses and workers can prosper. Progress will occur if we recognize the value of this relationship and address the challenges of the work ahead.”