The U.S.-China JCCT: Outcomes
Established
in 1983, the U.S.-China Joint Commission on Commerce and Trade (JCCT)
is a government-to-government consultative mechanism that provides
a forum to resolve trade concerns and promote bilateral commercial
opportunities.
Previously
led by the U.S. Secretary of Commerce and the Chinese Commerce Minister,
the status of the JCCT was elevated following the December 2003
meeting of President Bush and Chinese Premier Wen to focus higher-level
attention on outstanding trade disputes.
This
year’s JCCT – chaired by Commerce Secretary Don Evans,
U.S. Trade Representative Robert Zoellick and Chinese Vice Premier
Wu Yi – achieved concrete results on key U.S. systemic concerns
and laid the foundation for further progress.
Leveling the Playing Field -- Structural Issues and Market Economy
Status
One
of President Bush’s key goals in the trade arena is to ensure
that the playing field is level, meaning that competition is determined
by the market, rather than government intervention. In prior decisions,
the Commerce Department has found that China does not yet qualify
as a market economy under the U.S. antidumping law. In the case
of China, the surest means to ensure that the playing field is level
is to encourage China’s ongoing structural reforms, which
are intended to create a market economy.
In
order to assess China’s reforms to date, as well as to identify
the steps China would have to take, under U.S. law, to achieve market
economy status, China and the U.S. agreed during the JCCT meetings
to the establishment of a working group, to be jointly chaired by
James Jochum, Assistant Secretary for Import Administration from
the Department of Commerce, and the appropriate Director General
from MOFCOM. The immediate goals of the group will be to:
--
Consult closely regarding the criteria under U.S. law needed to
achieve market economy status;
-- Review, under the framework established by U.S. law, the broad
spectrum of policies and practices that are a part of the ongoing
structural reform in China ; and
-- Identify the steps necessary for China to qualify as a market
economy under U.S. law.
The
working group will provide a forum dedicated to the discussion of
these issues, including concerns about unfair trade problems and
the remedial measures applicable to them, which do not readily fall
within the mandate of any of the other working groups currently
in existence under the JCCT.
The
United States attaches great importance to the establishment of
this group so that our two governments may explore and discuss China’s
economy and its ongoing economic reform program, pragmatically address
concerns about trade- and market-distorting practices that might
otherwise lead to bilateral trade frictions, and consider the Government
of China’s concerns about China’s non-market economy
status under the U.S. antidumping law.
This
working group is the embodiment of the spirit of cooperation forged
between Premier Wen Jiabao and President Bush when they met last
year and we welcome China’s participation.
Export Controls
The
U.S. Department of Commerce reached an agreement with the Ministry
of Commerce of the People’s Republic of China on procedures
to strengthen end-use visit cooperation and help ensure that U.S.
exports of controlled dual-use items are being used by their intended
recipients for their intended purposes. During the JCCT meetings,
China and the U.S. agreed to the following:
This
new end-use visit understanding specifies procedures for conducting
end-use visits, while also providing a mechanism for consultations
on other end-use visit issues that may arise.
The understanding resolves a long-standing issue of great importance
to the U.S.-China high-technology relationship.
Resolution
of this longstanding issue will allow for increased U.S. exports
to China of high-technology items subject to appropriate safeguards.
This new end-use visit understanding provides an important example
of the United States and China working together to solve practical
problems to the benefit of both their peoples, as well as the increasing
consensus on the objectives of the underlying strategic purposes
of the controls.
Trade Promotion
In
December 2003, President Bush and Premier Wen agreed that significantly
increasing U.S. exports to China would be a priority of both governments,
and that the JCCT was a key vehicle for accomplishing this effort.
Currently
there are almost 13,000 U.S. small and medium-sized businesses that
export to China. China is the seventh largest market for U.S. merchandise
exports. This year should see an increase in opportunities for U.S.
small and medium-sized businesses (SMEs), as Chinese tariffs continue
to decrease due to their WTO commitments and additional non-tariff
barriers are eliminated. Despite these advantages, China is a difficult
market for U.S. companies due to distance, language, and numerous
Chinese regulations.
To
help U.S. companies overcome these barriers and take advantage of
the opportunities, the JCCT has been working on a joint proposal
on trade promotion. A key element of this proposal is an agreement
between the China Council for the Promotion of International Trade
(CCPIT), the U.S. Department of Commerce and the U.S. Small Business
Administration. This alliance includes:
-- CCPIT logistical support to DOC trade missions, especially those
organized for SMEs.
-- Introducing U.S. SMEs to Chinese firms and government entities
seeking suppliers of goods, products or services, especially through
downstream procurement. CCPIT has pledged to help U.S. SMEs gain
access to Chinese supply chains, either directly or via subcontracting.
This approach, coupled with the new Virtual Business Information
Center, will dramatically increase our ability to help U.S. SMEs
export to China.
Textiles
By
way of background, U.S. imports of textiles and apparel from China
reached $11.6 billion in 2003 while U.S. exports to China of these
products totaled $225 million (50 to 1 in China’s favor).
China’s exports of textile products to the U.S. have surged
dramatically since quotas were lifted on an array of such products
at the end of 2001. The U.S. consumer market is undoubtedly important
to the Chinese industry.
Those
facts have created tensions in our bilateral trade relationship.
Those tensions led the U.S. industry to exercise its right to petition
for relief under a special textile safeguard, bargained for by the
United States as a part of China’s WTO accession. As a part
of their arguments in support of their petition, the U.S. industry
maintained that China has policies and practices that distort trade
and investment in the textile sector including: high tariffs, improper
customs valuation practices, arbitrary import taxes, non-transparent
import licensing, subsidies provided to state-owned enterprises,
VAT rebates, and currency undervaluation. Intellectual property
rights violations, including textile design “knock-offs”
and trademark piracy, have also been a serious problem in China.
The
U.S. interagency Committee for the Implementation of Textile Agreements
(CITA) determined on November 17, 2003 that market disruption or
threat thereof existed for imports of three textile products from
China (brassieres, robes, knit fabric) that were subject to industry
petitions. Quotas were put into place on December 24 for a one-year
period. Consultations were held with China on the safeguards on
January 12-13, 2004 in Beijing and on March 3 in Washington. No
further consultations have been scheduled and the quotas remain
in place.
At
the same time, there is a growing market in China for American fiber
and other textile products. Cotton exports, for example, have grown
significantly in recent years, providing a reliable source of high-quality
fiber to the Chinese industry. Given the competitiveness of may
U.S. textile producers, there are new opportunities available in
those sectors of the market where the capital intensive nature of
U.S. production and their leading designs can offer an edge.
To
begin addressing the many difficult issues affecting our relationship
in this sector, the U.S. and China have agreed to reinforce their
existing dialog on textile trade. Under this plan, China has committed
to:
--
Upgrading ongoing discussions to the Under Secretary-Vice Ministerial
level, to attempt to understand and try to resolve issues.
-- As a part of this dialog, a seven company U.S. business delegation
visited Beijing in March, in conjunction with a visit by Commerce
Under Secretary Aldonas, to meet with counterparts in Chinese industry.
-- Discussions addressed mutual trade and investment opportunities,
barriers to U.S. exports of textile products to China, intellectual
property rights, and possible scenarios for the bilateral textile
trade relationship when quotas are eliminated at the end of this
year.
--
Further business-to-business discussions in the United States later
this year, with a view to improving the trade imbalance in this
sector.
For
additional information on agriculture, see the web site of the U.S.
Department of Agriculture (www.usda.gov). For further information
on other JCCT results – including industrial policies, intellectual
property and services – see the web site of the Office of
the U.S. Trade Representative (www.ustr.gov)
The
U.S.-China Joint Commission on Commerce and Trade –
April 21, 2004