On January 19, 2018, the U.S. Trade Representative (USTR) released its annual reports on China’s and Russia’s compliance with their World Trade Organization (WTO) obligations.

These reports highlight areas in which these countries continue to pursue policies that run afoul of global trade rules. In its reports, USTR concluded that both “China and Russia have failed to embrace the market-oriented economic policies championed by the {WTO} and are not living up to certain key commitments they made when they joined the WTO.”

USTR expressed significant concerns with recent policies pursued by the Chinese Government.  The report states that, “over the past five years, despite Chinese pronouncements to the contrary, the state’s role in the economy has increased, as have the seriousness and breadth of concerns facing U.S. and other foreign companies seeking to do business in China or attempting to compete with favored Chinese companies in their home markets.”  The report identified “priority issues” of particular concern for the United States and U.S. stakeholders, including industrial policies, inadequate intellectual property rights protections, barriers to providing services in and agricultural exports to China, and a lack of transparency and other concerns with China’s legal framework.  Among the industrial policies USTR emphasized as problematic, the report identifies:

  • Technology transfer requirements;
  • The pursuit of industrial plans;
  • Indigenous innovation policies;
  • Investment restrictions;
  • Restrictions on information and communications technology products and services;
  • The provision of substantial subsidies to domestic industries;
  • Policies contributing to excess capacity situations in various industries;
  • The continued implementation of export restrictions;
  • The imposition or retraction export duties to manage exports;
  • Prohibitions and limitations on the importation of remanufactured products and recoverable materials;
  • The use of standards to limit market access and promote domestic companies’ interests;
  • The failure to adequately open the government procurement market; and
  • The use of trade remedy laws as retaliation against trading partners that have exercised their rights under the WTO.

With respect to Russia, USTR noted that a “few positive steps” have been made, but said that these “are the exception, not the rule.”  Among troubling policies and practices implemented by the Russian Government, USTR highlighted that Russia:

  • Has an opaque import licensing regime and customs legal regime;
  • Imposes export restrictions;
  • Maintains a ban on nearly all agricultural products from the United States and continues to erect other barriers to U.S. agricultural exports;
  • Provides subsidies to many producers;
  • Has expanded import substitution policies and localization requirements;
  • Has failed to reliably and effectively protect intellectual property rights; and
  • Needs to be more transparent in notifying the WTO about draft measures.

USTR has stated that it will pursue all avenues, including WTO dispute resolution, to address these policies and promote market-oriented practices in China and Russia.

The full text of USTR’s reports on China and Russia are available here and here.