2018 Report to Congress on China's WTO Compliance
Total Page:16
File Type:pdf, Size:1020Kb
2018 Report to Congress On China’s WTO Compliance United States Trade Representative February 2019 2018 Report to Congress On China’s WTO Compliance United States Trade Representative February 2019 2018 USTR Report to Congress on China’s WTO Compliance TABLE OF CONTENTS FOREWORD ……………………………………………………………………………………..………………………………………….. 1 EXECUTIVE SUMMARY ………………………………………………………………………….……………………………………… 2 PART 1: U.S. ASSESSMENT OF CHINA’S WTO MEMBERSHIP OVERVIEW …………………………………………………………………………………………………………………………………..……. 5 EXPECTATIONS OF WTO MEMBERSHIP ……….……………………………………………………………………………………… 7 CHINA’S RECORD OF COMPLIANCE WITH WTO RULES ………………………………………………………………………… 8 CHINA’S RECORD IN TERMS OF ITS TRANSITION TO A MARKET ECONOMY ………………………………….……… 11 China’s Non-market Economic System ………………………………………………………………………………….……… 11 China’s State-led, Mercantilist Approach to Trade ..……………………………………………………………..………. 15 COSTS OF CHINA’S ECONOMIC SYSTEM TO WTO MEMBERS …………………………………………..…………………… 17 Forced Technology Transfer……………………………………………………………………………………………….……….… 17 Excess Capacity …………………………………………………………………………………………………………………….…..… 18 Distorted Markets …………………………………………………………………………………………………………….……… 19 BENEFITS OF WTO MEMBERSHIP TO CHINA ………………………………………………………………………………………… 19 U.S. EFFORTS TO ADDRESS TRADE DISTORTIONS CAUSED BY CHINA ……………………………………..…….……… 20 Bilateral Engagement ………….…………………………………………………………………………………………….……….… 20 WTO Dispute Settlement ………………………………………………………………………………………………….……….… 23 New WTO Rules ……………….……………………………………………………………………………………………….……….… 23 Effective Strategies ……………….………………………………………………………………………………………….……….… 25 PART 2: DETAILED ANALYSIS OF CHINA’S TRADE REGIME CHINA’S WTO ACCESSION …………………………………………………………………………………………………………………… 27 SUMMARY OF KEY CONCERNS ………….……………………………….…………………………………………………………..…… 29 Industrial Policies ……….……………………………………………………………….………………………………..………… 29 Intellectual Property Rights ………………………………………………………….………………………….………..……… 37 Services …….………………………………………………………………………………..….……………………………………………… 40 Agriculture ………………………………………………………………………………..….……………………………………………… 45 Transparency ………………………………………………………………………..….……………………………………………… 47 OVERVIEW OF U.S. ENGAGEMENT …………………………………………………………...………………………………………… 50 Bilateral Engagement ………………………………………………………………….………………………………..………… 50 Multilateral Meetings ………………………………………………………………….…………………………………..……… 52 Enforcement ………………………………………………………………………………..….……………………………………………… 52 CHINA’S WTO COMPLIANCE …..………………………………………………………………….……………………..……… 57 TRADING RIGHTS ……………....……………………………………………………….………………………………………………….……… 57 IMPORT REGULATION ………………………………………………………………….…………………………………..……… 58 Tariffs ………………………………………………………………….…………………………………..……… 58 Customs and Trade Administration ………………………………………………………………….……….……… 59 CUSTOMS VALUATION ………………………………………………………………….…………………………………..……… 59 RULES OF ORIGIN ………………………………………………………………….…………………………………..……… 60 IMPORT LICENSING ………………………………………………………………….…………………………………..……… 61 2018 USTR Report to Congress on China’s WTO Compliance TABLE OF CONTENTS CHINA’S WTO COMPLIANCE (cont’d) IMPORT REGULATION (cont’d) Non-tariff Measures ………………………………………………………………….…………………………………..……… 61 Tariff-rate Quotas on Industrial Products …………………………………………………………………………..……… 62 Other Import Regulation ………………………………………………………………….…………………………………..……… 62 ANTIDUMPING ………………………………………………………………….…………………………………..……… 62 COUNTERVAILING DUTIES ………………………………………………………………….…………………………………..……… 65 SAFEGUARDS ………………………………………………………………….…………………………………..……… 66 EXPORT REGULATION ………………………………………………………………….…………………………………..……… 67 INTERNAL POLICIES AFFECTING TRADE …….…………………………………………………………….……..……… 70 Non-discrimination ………………………………………………………………….…………………………………..……… 70 Taxation …………….………………………………………………………………….…………………………………..……… 74 Subsidies …………….………………………………………………………………….…………………………………..……… 75 Price Controls ………………………………………………………………….…………………………………..……… 79 Standards, Technical Regulations and Conformity Assessment Procedures ………………………………... 82 REGULATORY REFORMS ………………………………………………………………………………………… 82 STANDARDS AND TECHNICAL REGULATIONS ……………………………………………………………………………….… 84 CONFORMITY ASSESSMENT PROCEDURES ………………………………………………………………………………………… 93 TRANSPARENCY ………………………………………………………………….…………………………………..…….. 100 Other Internal Policies ………………………………………………………………….…………………………………..……… 100 STATE-OWNED AND STATE-INVESTED ENTERPRISES …………………………………………………………….……….…… 100 STATE TRADING ENTERPRISES ………………………………………………………………………………………… 103 GOVERNMENT PROCUREMENT ………………………………………………………………………………………… 104 INVESTMENT ………………………………………………………………………………………………………………………………….. 109 AGRICULTURE ………………………………………………………………………………………………………………………………….. 119 Tariffs ………………………………………………………………………………………………………………………………….. 121 Tariff-rate Quotas on Bulk Agricultural Commodities ……………………………………………………………………. 121 China’s Biotechnology Regulations ………………………………………………………………………………………… 123 Sanitary and Phytosanitary Issues ………………………………………………………………………………………… 125 Inspection-related Requirements ………………………………………………………………………………………… 129 Domestic Support ………………………………………………………………………………………………………..………….. 130 Export Subsidies ………………………………………………………………………………………………………..………….. 131 INTELLECTUAL PROPERTY RIGHTS ………………………………………………………………………………………… 131 Legal Framework ………………………………………………………………….…………………………………..……… 132 Enforcement ………………………………………………………………….…………………………………..……… 137 SERVICES ………………………………………………………………………………………………………………………………….. 141 Distribution Services ………………………………………………………………….…………………………………..…….… 143 WHOLESALING SERVICES ………………………………………………………………….…………………………………..……… 143 RETAILING SERVICES ………………………………………………………………….…………………………………..……… 145 FRANCHISING SERVICES ………………………………………………………………….…………………………………..……… 146 DIRECT SELLING SERVICES ………………………………………………………………….…………………………………..……… 146 2018 USTR Report to Congress on China’s WTO Compliance TABLE OF CONTENTS CHINA’S WTO COMPLIANCE (cont’d) SERVICES (cont’d) Financial Services ………………………………………………………………….…………………………………..……… 147 BANKING SERVICES ………………………………………………………………….…………………………………..……… 147 SECURITIES AND ASSET MANAGEMENT SERVICES …………………………………………………………………………… 149 MOTOR VEHICLE FINANCING SERVICES ………………………………………………………………………………………… 149 INSURANCE SERVICES ………………………………………………………………….…………………………………..……… 150 ENTERPRISE ANNUITIES SERVICES ………………………………………………………………………………………… 151 AUTO INSURANCE SERVICES ………………………..……………………………………………………………………… 152 FINANCIAL INFORMATION SERVICES ………………………………………………….…………………………………..……… 152 ELECTRONIC PAYMENT SERVICES ………………………………………………………………………………………… 152 Telecommunications Services ………………………………………………….…………………………………..……… 154 Audio-visual and Related Services ………………………………………………………………………………………… 155 Internet Regulatory Regime ……………………………………………………………….…………………………………..……… 156 Cross-Border Data Restrictions and Data Localization Requirements ……………………………………………… 158 Cloud Computing Services …………………………………………..………………………………………………………………… 158 Online Video and Entertainment Software Services ……………………………………………………………………… 158 Voice-over-Internet Protocol Services ………………………………………………………………………………………… 158 Educational Services …………………………………………………………………………………………………………………….. 159 Legal Services ………………………………………………………………….…………………………………..……… 159 Construction and Related Engineering Services …………………………………………………………………………… 160 Express Delivery Services ………………………………………………………………….…………………………………..……… 161 Logistics Services …………………………………………………………………………………………………………………….. 162 Air Transport and Related Services .……………………………………………………………………………………….. 162 Maritime Services …………………………………………………………………………………………………………………….. 163 Tourism and Travel-related Services ………………………………………………………………………………………… 163 LEGAL FRAMEWORK …………………………………………………………………………………………………………………….. 163 Transparency …………………………………………………………………………………………………………………….. 164 OFFICIAL JOURNAL …………………………………………………………………………………………………………………….. 164 TRANSLATIONS …………………………………………………………………………………………………………………….. 164 PUBLIC COMMENT …………………………………………………………………………………………………………………….. 165 ENQUIRY POINTS …………………………………………………………………………………………………………………….. 167 Uniform Application of Laws ………………………………………………………………………………………………………. 167 Judicial Review …………………………………………………………………………………………………………………….. 168 Other Legal Framework Issues ………………………………………………………………………………………………………. 168 ADMINISTRATIVE LICENSING ……………………………………………………………………………………………….. 168 COMPETITION POLICY …………………………………………………………………………………………………………………….. 169 FOREIGN NGO MANAGEMENT LAW ……………………………………………………………………………………………….. 172 COMMERCIAL DISPUTE RESOLUTION ……………………………………………………………………………………………….. 172 LABOR LAWS …………………………………………………………………………………………………………………….. 173 LAND LAWS …………………………………………………………………………………………………………………….. 174 CORRUPTION …………………………………………………………………………………………………………………….. 175 2018 USTR Report to Congress on China’s WTO Compliance ABBREVIATIONS ACFTU All China Federation of Trade Unions APEC Asia-Pacific Economic Cooperation AQSIQ State Administration of Quality Supervision, Inspection and Quarantine BOFT Bureau of Fair Trade for Imports and Exports CAC Cyberspace Administration of China CBRC China Banking Regulatory Commission CFDA China Food and Drug Administration CIRC China Insurance Regulatory Commission CNCA National Certification and Accreditation Administration GAPP General Administration of Press and Publication IBII Bureau of Industry Injury Investigation ISO International Organization for Standardization JCCT U.S.-China Joint Commission on Commerce and Trade MIIT Ministry of Industry and Information Technology MOA Ministry of Agriculture MOC Ministry of Construction MOF Ministry of Finance MOFCOM Ministry of Commerce