SIIA Testifies on China's WTO Compliance

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Today I testified before the United States Trade Representative on China’s compliance with its World Trade Organization (WTO) commitments.  See this document for my testimony and this United States Information Technology Office (USITO) submission to USTR. 

In addition to the serious Intellectual Property Rights issues and other matters such as China’s so-called secure and controllable cybersecurity policies discussed during the testimony, today’s hearing underscored three additional big picture factors that that policymakers need to address as a new administration soon takes office. They can be summarized as follows.

1)    Existing trade obligations need to be vigorously enforced.

2)    The U.S.-China relationship needs to be prioritized.

3)    New norms for international commerce are needed. 

We cannot let exhaustion with issues that sometime have been discussed for over a decade detract from sustained government and private sector engagement.  This is why SIIA engages systematically every year on China’s WTO accession commitments.  Moreover, as champions of an open global trading system, we know how critical enforcement is to building support here at home and elsewhere for free trade.   Both presidential candidates are right to focus on ensuring that countries, including China, live up to their legally binding trade commitments.  Secretary Clinton’s call to appoint a USTR Chief Trade Prosecutor and to triple USTR’s enforcement staff is therefore welcome.

The U.S.-China relationship is absolutely critical.  For instance, as U.S. Customs and Border Protection notes, a little over half of infringing goods seized by U.S. authorities in fiscal year 2015 came from China.  But China is not just a source of unfair commercial practices, it is also a source of opportunity for American companies and their workers.  This why sustained continued and creative U.S. government engagement with China, in consultation with stakeholders, remains essential.  Both the U.S. government and the private sector will need to up their intellectual games and work together to make arguments that while addressing stated Chinese concerns also do not shy away from explaining when Chinese practices depart from international norms, are trade distorting and/or discriminatory.

As China uses new policy objectives such as, for instance, promoting cybersecurity that include measures that are in practice trade distorting and/or discriminatory, it is essential to create new international commercial norms that discourage such measures.  The Trans-Pacific Partnership’s digital trade provisions, including the ban on revealing source code, are useful in this regard.   One forum where progress might be made is in the WTO’s e-commerce committee.  Work in this forum should be a priority for the next administration.      

Read the testimony here.

Carl Carl Schonander is Senior Vice President for Global Public Policy.