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| CHINA's Interventions on the second session on US TPR |
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| Wednesday,June 25,2008 Posted: 22:36 BJT(36 GMT) | | From:wto mission Article type:Original |
TRADE POLICY REVIEW
OF THE UNITED STATES
China’s Interventions on the second session
June 11, 2008
• We appreciate the written responses by US to our questions and the additional explanations this morning by the US delegation. We would like to take this opportunity to provide a few comments and request additional clarification on a number of points discussed in the four parts of the Secretariat’s Report.
I. ECONOMIC ENVIRONMENT
• We feel extremely disappointed about the US responses to our Question 7 and 8 on the US Monetary and Exchange Rate Policies. We have asked about various aspects of the dollar depreciation, including the rational for the dollar depreciation and its impact on US economy and other economies particularly the developing ones, the US view on various analysis about the causal link between dollar depreciation and oil and food price hike and, possibly, global wide inflation, whether such a tendency would be continued, how much is the room for further rate cuts, and the impact on the status of dollar in the international reserve and settlement currency.
• However, the US provided 3 simple responses to all these questions:
1. The exchange value of the US dollar is wholly market determined;
2. Any comment on the Federal Reserve, which is an autonomous institution, would be speculative and reference is made to its website;
3. International discussion of these topics would occur in IMF and the WTO is not the appropriate forum to discuss the US monetary policy.
• Our comment on the US responses is as followed:
1. China’ questions are not about the role of market in the exchange of the US dollar and we do not intend to ask the USTR to comment on the autonomy or the operation of the Federal Reserve. We understand the constraints of the USTR in responding to those very technical questions. However, it has been the long-standing practice of the Review Mechanism that leading agency of a Member would coordinate with and seek responses from all other relevant authorities, including those in charge of monetary policies. We hope the US could at least do the same.
2. We feel extremely surprised in the US claim that the WTO is not the appropriate forum to discuss the US monetary policy. It is widely shared among Members that monetary policies, especially such a continuous depreciation of the US dollar as the key currency in the international reserve and settlement, would obviously affect economy and trade of other Members, particularly the developing ones. It has been long-standing practice of the Secretariat report to touch upon various macro-economic aspects of the Member under review, including monetary policies. The Trade Policy Mechanism itself also provides that: “The assessment carried out under the review takes place, to the extent relevant, against the background of the wider economic and development needs, policies and objectives of the Member concerned, as well as of its external environment.” We would also draw the US attention to its Question 1 and 2 on China’s TPR which asked extensively about China’s exchange rate regime and to the first part “Economic Environment” of the US intervention on May 23 on China’s TPR, which asked nothing but China’s exchange rate regime. And the US claimed in that intervention “As our questions reflect, we were particularly interested in learning more about China’s exchange rate regime, China’s experiments with a consumption-based value-added tax (VAT) and China’s labor policies.”
3. Our only interpretation from this is that the WTO is an appropriate forum to discuss monetary policies of other Members including China, but not of the US. We would therefore urge the US to drop the approach of double standard and respond to our question.
II. TRADE POLICY REGIME
• In our written questions 13 and 17, we asked about the US view on its leading role in the Doha negotiations. We note that in their responses, the US seems to concentrate solely on market access and “new trade flow” without mentioning anything about the reform of its agriculture regime, particularly the reduction of the trade distorting support. The fact is that, up to this critical moment of the Doha negotiations, all other Members are waiting for the US to put forward a new and meaningful offer on trade distorting support to break the ice. We would like to take this opportunity to remind the US that this is a Development Round and Development means much more than market access and “new trade flow”. Instead, it means real cut on farm subsidies, cotton, DFQF, SVEs, S&D, particularly SPs and SSM, and revision and improvement of rules, particularly on “zeroing”.
• On China’s question 14, and15, we appreciate very much the detailed responses provided by the US. Our comments are as followed:
1. We would welcome the guidance to be published the US Treasury Department later this year and would appreciate it if the US could send us a copy or at least refer us to a website which contains this guidance.
2. We would also welcome the public version of the annual report by CFIUS to Congress by July 31, 2008 and would appreciate it if this report could be shared among Members with a copy or a reference to the website. We would also urge the US to provide sufficient information in such public version of reports, while recognizing the needs for confidentiality, so as to ensure those Members, including China, who have put forward enormous questions on this issue that such reviews are done in a fair and transparent way with minimum adverse effects on foreign investment.
• On China’s question 18, we feel disappointed that the US simply referred us to CRTA instead giving us a direct response. We share the view that the CRTA and RTA transparency mechanism are the specific forums and tools to examine the RTAs. However, in our view, this does not necessarily preclude the opportunity for us to raise questions on RTA in the TPRM, the objective of which is to increase transparency on various aspects of a Member’s trade policies and practices. If we switch all specific questions to various committees, the effectiveness of TPRM would be seriously undermined. Furthermore, what we seek is a general picture of exclusion of US FTAs rather than too much detailed information. Therefore, we would urge the US to provide response to our questions.
• On China’s question 23, we appreciate the responses by the US. However, the document that the US referred us to, i.e. WT/COMTD/W/149 and its addendums is a notification of the US to the CTD about its internal process on the duty-free and quota-free market access for LDCs. And the latest addendum No.4 was made in April 2007, more than one year ago, we wonder if the US could share with Members updated information on DFQF and would urge the US to take the lead in materializing this important commitment to LDCs.
III. TRADE POLICIES AND PRACTICES BY MEASURE
• On China’s question 25-26 under “Customs procedures’ on 100% scanning pilot programs, we welcome the response and note that “all data gathered from these [SFI] pilot programs will be reported to our [US] Congress”. We would like to know if such data or any summary reports could be shared among Members so as to ensure many Members with similar concerns that such programs would not cause much negative impact to trade.
• On China’s question 35 on US tariffs of agricultural products, we welcome the statement that “the United States will lower all its bound tariffs within the framework of multilateral negotiations”. This would be a key element to demonstrate the US leadership in the Doha negotiations, particularly considering that tariff peaks as high as 160-350 % still exist in the US, which is 2.5 to 5.4 times of the highest agriculture tariff (65%) of China.
• On China’s question 37 on reduced tax rates for US domestic small beer and wine producers, we thank the US for providing their view on the “trade distorting effect” of such a practice, which actually is not what we asked about. We are more interested in the justification of this preferential tax policy solely for domestic producers under the national treatment principle. It should be underlined that, under the national treatment principle which specifically mentions “internal taxes and other internal charges”, there seems to be no “de minims” provision based on size of production or trade distorting effect to allow a Member to treat domestic products more preferably than imported products.
• In answering China’s question 41 where China questioned the US’ practice of double counting and duplicate remedies in joint AD/CVD investigations, the US replied that “there is nothing in either the Antidumping or Subsidies Agreement that prevents Members from investigating concurrent AD and CVD cases.” This is not a satisfactory answer. The question is, the methodology adopted by the US in AD investigations is to calculate the alleged dumping margin on the basis of surrogate country data, which already excludes any possible intervention by China, and is sufficient to provide remedy for any price distortion caused by alleged subsidies. This has also been proved by the practices of US in more than 20 years before the CFS case in 2006. We would ask the US to explain why a joint CVD investigation needs to be initiated now in addition to AD investigation without any change in AD investigation methodology? And please testify that joint AD/CVD investigations of the US did not cause double counting and duplicate remedy problems.
• In question 42, the US replied that Chinese corresponding domestic prices or rates were “unreliable” therefore external benchmarks were widely adopted. We noticed that US had determined to use an interest rate benchmark which was calculated by averaging the widely differed interest rates from a number of “selected” countries. It also determined to adopt the land price in Bangkok as the benchmark for a remote and poor province in China instead of an average land price around the land under investigation in the OTR Tires case. In recent cases, more than 90% of the “subsidy rate” used external benchmarks. A follow-up question is what are the criteria for the US to choose a benchmark in investigation against China?
• With regard to China’s question 43, please clarify whether the criteria for accepting new allegations after an investigation is initiated is the same as the initiation standard of investigation, which according the US is “(1) alleges the elements necessary for an imposition of a duty and (2) is accompanied by information reasonably available to the petitioner supporting the allegations.” Further, we would like to know, besides the willingness for consultation, whether US has conducted any consultations with Members concerned on new allegations after the initiation of a case or prior to its possible inclusion in the investigation.
• On China’s question 51 on Section 733 of the 2008 Agriculture Appropriation Bill, which requires that the appropriations shall not be used to enact or implement rules that allow importation of cooked poultry products from China, we asked about the nature of such a provision. However, US simply answered that “The US places great importance on ensuring that its measures are based on science.” We just wonder on the basis of what kind of science the US would be entitled to restrict appropriations from being used on imports of cooked poultry from nobody but China. Is that Chinese poultry overcooked? On its perspective, we welcome the US statement that “Section 733 is set to expire at the end of the fiscal year.” However, it is understood by Chinese exporters that there still remain the possibility to extend this Section. We would like to seek confirmation from the US whether such understanding is correct or not. If yes, then we would have to ask again that what measures the US would take to ensure this Section as extended would be in conformity with relevant WTO rules, particularly with MFN.
• On China’s questions SPS, particularly on additional question 10, we regret to see the simple responses of the US by saying “can’t”. As some other Members mentioned on Monday, especially developing members such as ASEAN, risk assessment is actually abused by the US and constitute de facto barriers to international trade of agriculture products. We continue to be concerned about the risk assessment on apples by the US dragging on for 10 years, during which probably the science itself for the assessment would have undergone substantial changes. Therefore, we strongly urge the US to conclude the risk assessments in a timely and scientific manner.
IV. TRADE POLICIES BY SECTOR
• On China’s question 82 about the possible linkage between the biofuel policies and the food price hike, we take note of the detailed explanation of the US, which China fundamentally disagrees. The US responses claim that, while the biofuel policies contribute in part to the price hike, other factors including increasing demand from developing economies such as China and India, higher oil prices and adverse weather conditions are contributing more. Our comments and further questions to these responses are as followed:
1. On what basis have the US come to the conclusion that the contribution of such other factors as mentioned above to the price hike outweigh that of biofule policy? Could the US share with other Members any study or analysis it has done?
2. China fundamentally disagrees with the US claim that increasing demand of developing economies constitutes one of the major factors for the price hike because this is morally unacceptable and scientifically ungrounded. Does the US mean that, while the US is consuming the most of the world cereals, developing economies should remain half-hungry and help bring the prices down?
3. According to the US Department of Agriculture in 2006/07 crop season, as compared to China, the US consumption per person of beef is 8 times, corn 7 times, chicken 6 times, vegetable oil 2.2 times and wheat 1.3 times. Further to that, it should be underlined that for long China has been producing more than we need and has been a net food exporter. Also according to a USDA report named “Global Food Consumption and Impacts on Trade Patterns”, “For an individual commodity there is not always a direct link between consumption and trade growth…The most noteworthy example is China, where rapid economic growth has not yet created a major demand for meat and livestock products. Rather, domestic livestock production has accelerated in China in the past two decades”. Therefore, China is contributing to resolve instead of exacerbating the food crisis. We would also draw the US attention to International Herald Tribune of May 14th and Le Figaro of May 31, which correctly pointed out that, according to FAO data, the US is eating an average of 3,770 calories per capita a day, which is the highest in the world, compared to China’s 2,700 and India’s 2,440. As Mr. Pradeep Mehta, the secretary general of CUTS Center for International Trade, Economics and Environment said, if Americans were to slim down to even the middle-class weight in India, “many hungry people in sub-Saharan Africa would find food on their plates.”
• Of course we understand that the food price hike is a complicated issue and would need comprehensive and thorough analysis before we could draw an objective and science-based conclusion. Therefore, we would draw the US attention to the very recent report of UNCTAD titled “Addressing the Global Food Crisis” issued on early June in Rome. In this report, biofuel together with food security was listed as one of the five major factors as underlying causes of the food crisis and this report specifically listed the US 2007 Energy Bill as an example and pointed out that “The use of maize for ethanol production is expected to almost double between 2005/06 and 2007/08. In 2009 it is forecast that almost 38 percent of total United States domestic maize use, equivalent to 100 million tons, will be devoted to biofules production.”
• We appreciate the responses by the US on our questions on trade in services. Our services experts in Beijing will study them carefully and would make further comments in due time. For the moment, we would like to make two comments:
1. On China’s question 105 on maritime transport, the US responded that “The U.S. offers are developed following consultations with our domestic constituencies, and reflect our commercial and economic interests in the WTO negotiations.” We would like to point out that, as a strong demandeur of services negotiations; the U should take the lead in offering commercially meaningful market access of services to other WTO members.
2. On China’s question 124 on transparency for trade in services, i.e. absence of any notification by the US under Article III of the GATS, the US response seems to admit that it has failed continuously to implement its commitments on transparency under the GATS. We share the U.S. view it expressed at many sessions of the TPR that transparency is one of the fundamental principles of the WTO Agreement and that this is a critically important issue, both from a governmental perspective and from a business perspective. Hence any failure of the U.S. to implement its transparency commitments is worrisome to China and, we believe, to other Members as well. We would very much welcome the U.S. prompt notifications to the Council for Trade in Services in accordance with Article III of the GATS.
• Mr. Chairman, we understand that time is short and the US delegation may not be able to respond to all of our questions. Therefore, while thanking the US delegation for their patience, after this meeting we would like to transfer through the Secretariat to the US delegation these questions and would look forward to their responses.
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