Office of the United States Trade Representative


Real Results in U.S. Trade With China
Expanding Opportunities and Leveling the Playing Field for American Farmers and Workers 09/09/2004

This Administration's trade enforcement strategy is simple: we are focused not on process, but on producing real results that create opportunities for American workers, farmers and companies.

-Robert B. Zoellick, U.S. Trade Representative



ü       In the last twelve months, U.S. exports to China grew to $33 billion, more than double the level of 2001.  Since President Bush took office, the U.S. has exported nearly $90 billion in goods and services to China, making it one of the fastest-growing export markets in U.S. history.


ü       The U.S. has resolved numerous potential WTO cases with China, opening its market for high technology and other manufactured products, financial and high-value services, and farm products like cotton, soybeans and corn.


ü       In July 2004, the U.S. and China successfully resolved a WTO dispute regarding China’s tax refund policy for semiconductors, a market worth $2 billion to American manufacturers and workers. 


ü       The U.S. exercised its rights to impose safeguards against Chinese imports to protect U.S. textile workers making products such as robes, undergarments, and knit fabric. 


ü       In four years, this Administration has imposed nearly as many antidumping orders against unfair imports from China as the previous Administration imposed in eight years.


Real Results With China


·         Semiconductors:  In July 2004, the U.S. and China reached an agreement to resolve a WTO dispute regarding China’s tax refund policy for integrated circuits (semiconductors), a market worth $2 billion to American manufacturers and workers.  The resolution will ensure non-discriminatory tax treatment for U.S. integrated circuits in China, the world’s fastest growing semiconductor market.  The U.S. had filed the first-ever WTO case against China in this dispute. 


·         Problem-Solving at the JCCT:  At a recent meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT), the U.S. used leverage, serious discussions, and practical problem-solving to resolve seven potential WTO cases.  This involved months of detailed work with Chinese officials in a host of ministries, culminating in an April 2004 meeting with Chinese Vice Premier Wu Yi.  Issues resolved included:


o        Wireless Internet Standards:  China announced a more open approach to developing next-generation wireless computing standards.  It agreed to suspend indefinitely its proposed implementation of a unique Chinese standard (WAPI) as a mandatory wireless encryption standard.


o        Third-Generation (3G) Mobile Phone Standards:  China agreed to support technology neutrality with respect to 3G wireless phone standards, and telecom service providers will be allowed to make their own choices.


o        Intellectual Property:  China presented a detailed action plan to address the piracy and counterfeiting of American ideas and innovations, particularly through increased criminal penalties for violators.


o        Trading Rights:  China agreed to implement its WTO trading rights obligations six months ahead of schedule, allowing U.S. firms to ship U.S. products to China without using local middlemen.


o        Distribution Rights:  China agreed to provide distribution rights to U.S. companies by the end of 2004 and shared a draft of its implementing regulations, resolving concerns about full implementation of this important WTO commitment.  This will allow U.S. firms to engage in wholesaling and retailing of U.S. products directly within China.


o        Express Delivery:  Preserved a growing market for U.S. express delivery service providers by securing China’s abolition of regulations that would have protected Chinese providers by disadvantaging U.S. and other foreign providers.


o        Agricultural Biotechnology:  China agreed to implement new procedures and issue new product approvals for U.S. biotech soybeans, canola, and corn.  Twelve U.S. biotech product approval requests have now been approved. 


·         Soybeans and Cotton:  As a result of U.S. problem-solving efforts, China has corrected problems in its tariff‑rate quota system for bulk agricultural commodities and has relaxed market constraints in soybeans and cotton trade.  U.S. exports of soybeans reached an all-time high in 2003 of $2.9 billion and cotton exports were $733 million, up 431 percent over 2002. 


·         Financial Services:  As a result of U.S. problem-solving efforts, China has reduced capital requirements for financial services and opened the auto financing sector to foreign competition.


·         Insurance:  China is in the process of changing its insurance regulations to make it easier for foreign insurance companies to do business there, as a result of U.S. pressure.


·         Textiles:  The U.S. exercised its rights to impose safeguards when import surges threaten U.S. production.  In December 2003, Chinese imports of robes, bras, and knit fabric were limited under safeguards. 


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