China’s admission to the World Trade Organization (WTO) in 2001 gave tens of thousands of Chinese enterprises access to global markets.
The conditions of China’s admission were that it reduce trade barriers, open up markets, increase transparency, protect intellectual property rights and reform its legal system to ensure consistency with WTO obligations. In part because of China’s admission to the WTO, the Chinese economy is now eight times larger than when it joined.
While China has taken advantage of the economic benefit of its WTO admission, it’s been slow to hold up its end of the bargain. In January, the Office of the U.S. Trade Representative released its report to the Congress on China’s WTO compliance, which details the ways in which China has failed to live up to its commitments.
“Ensuring that global trade is free, fair and reciprocal will have a significant positive long-term impact on the U.S. economy.”
~ The White House
Specifically:
- China uses foreign ownership restrictions, such as joint venture requirements and foreign equity limitations, and various administrative review and licensing processes to require or pressure technology transfer from U.S. companies to Chinese entities.
- China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market-based terms that favor Chinese recipients.
- China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies to access their sensitive commercial information and trade secrets.
These unfair practices prompted the U.S. to propose responsive actions, including historic tariffs against China. In addition to these tariffs, the U.S. has requested consultations at the WTO. The U.S. also is considering potential restrictions on Chinese investment and is working with allies affected by China’s unfair behavior to restore fairness to global trade.
“The president is for free trade,” said the White House in a statement, “but it must also be fair trade. Addressing unfair trade practices and ensuring that global trade is free, fair and reciprocal will have a significant positive long-term impact on the U.S. economy.”
