The United States Trade Representative released its annual report to Congress on China’s World Trade Organization Compliance, and the findings may serve to further fuel President-elect Trump’s promise to push a punitive tariff on China.
Since China joined the WTO in 2001, U.S. goods bound for China have increased “dramatically” and the country’s membership “remains complex,” according to USTR.
U.S. exports of goods to China have increased 505 percent since 2001, to $116 billion in 2015, establishing China as America’s largest goods export market outside of North America. Looking at exports of services, those have increased a substantial 802 percent to $48 billion in 2015.
For textiles and apparel specifically, the U.S. exported $343 million worth to China in 2002, the first full year after China’s WTO membership, and in 2015, that number reached $1 billion, according to the U.S. Department of Commerce.
Trump campaigned—and won—at least in part on his idea of cleaning up current trade policies, including bringing cases against China for its “unfair subsidy behavior,” which he said is prohibited by WTO terms, and for the thousands of manufacturing jobs the move cost America and the thousands of factories that shuttered as a result.
Throughout the 15 years of China’s WTO membership, the U.S. has brought 20 WTO cases against the country, more than double the amount any other country has brought against China.
“Many of the problems that arise in the U.S.-China trade and investment relationship can be traced to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy, which continue to generate significant trade distortions that inevitably give rise to trade frictions.”
Frictions may be putting it on the mild side as some are calling the brewing tensions between the U.S. and China the onset of a trade war.
China has promised to push back on the U.S. if Trump goes ahead with the 45 percent proposed tariff on imports from China, saying that it would answer in kind with a punitive tariff of its own.
Now U.S. businesses are concerned about the fate of their exports to China.
USTR said it has dealt with trade frictions that arise with China by pursuing a dialogue, but when that doesn’t lead to a resolution, it hasn’t hesitated to get the WTO involved.
China’s current leadership, according to the USTR report, has highlighted the need for further economic reform in China but little progress has yet been made.
“If pursued appropriately, a concerted reform effort offers the potential for addressing the problems brought on by a state-led economy and for helping to realize the tremendous potential of the U.S.-China trade and investment relationship,” the report noted.
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