USTR Urges China To Open Markets, Protect Intellectual Property

Portman calls on Pacific Rim nations to help conclude WTO Doha round

By Todd Bullock and Peggy B. Hu
Washington File Staff Writers

Washington -- The United States and China have a broad economic relationship that, for the most part, is mutually beneficial, but there are a number of issues that still need resolution, according to U.S. Trade Representative (USTR) Rob Portman.

In remarks November 14 at a conference on U.S.-China relations hosted by former President George H.W. Bush in Beijing, Portman said the United States is especially concerned by the growing trade deficit with China, which is expected to top $200 billion in 2005.

"I believe the problem is not so much the deficit per se, but what the deficit represents," Portman said.  "If the U.S. Congress and the American people believed that the current trade deficit with China were the result of fair and open market processes, I genuinely believe it would not get the attention it receives today."  However, he continued, "Americans today are greatly concerned about China's role in the world economy and, in particular, whether China is playing by the rules."

The United States welcomes China's economic growth, Portman said.  However, he added, China also must recognize that such growth "means that it must take on even more responsibility to the rules-based international economic system that has enabled that growth."

Portman called on China to open its economy further to foreign investment and U.S. products, address limitations in market access that continue to hamper U.S. companies seeking to participate in the Chinese market and "act vigorously" to address intellectual property (IP) infringement.

Intellectual property rights protection benefits Chinese companies as much as -- if not more than -- U.S. companies, the USTR said.

"While U.S. firms suffer huge losses from IP piracy and counterfeiting and while this has a disproportionate impact on U.S. knowledge-based exports, the losses faced by Chinese firms and by Chinese entrepreneurs and the Chinese economy are even greater," he said.

"Well-known Chinese marks such as Haier, for example, suffer from copycat productions of their goods.  Chinese musicians, movie studios, and authors lose profits from their own efforts because they cannot enforce their own legal rights throughout the country," Portman continued.

At a press conference following meetings with senior Chinese officials the same day, Portman said China also needed to ease restrictions on direct sales companies as part of its World Trade Organization (WTO) commitments.

"I believe it would be good for China to allow direct sales because it gets Chinese entrepreneurs directly involved in selling," which makes Chinese products more competitive in the global market, he said.

Portman also discussed a recent agreement between China and the United States on U.S. imports of Chinese textiles and apparel.  The trade representative said the agreement benefits China because "it gives Chinese exporters and manufacturers some predictability so that they can plan for employment."

However, Portman said any future textile agreement would depend on the Doha round of WTO trade talks, formally known as the Doha Development Agenda, which is aimed at creating market access opportunities and reform in agriculture and expanding opportunities for manufactured goods and services. 

Portman will lead the U.S. delegation to the Sixth WTO Ministerial Conference in Hong Kong December 13-18.  Ministerial conferences are the highest decision-making bodies within the WTO. The Hong Kong meeting will be vital for enabling the four-year-old Doha Development Agenda negotiations to move forward sufficiently to conclude the round in 2006.

Portman cited agricultural export subsidies and tariffs, particularly ones in the European Union (EU), as issues to work through before WTO talks can focus on other topics such as reducing industrial tariffs and barriers on services.

"I'm concerned right now that unless we can break this deadlock on agriculture it will be hard to make progress on all the other issues, including development," he said.

Portman urged China and other Asia-Pacific nations to play a stronger role in building consensus on issues in order to conclude the Doha round.

The Doha round is "a once-in-a-generation opportunity to bring down trade barriers, to generate worldwide economic growth and to alleviate poverty," he said.

"China and its neighbors in Asia have as much to gain as anyone from a successful Doha round because these countries in the Pacific Rim and China trade substantially.  That's why we need their voice at the negotiating table, to push for an ambitious and successful result in the Doha round," Portman said.

The text of Portman's remarks and a transcript  (PDF, 13 pages) of his press availability are available on the USTR Web site.