The US said China failed to implement “important commitments” under its obligations to the WTO and said it might file a complaint over that nation’s restraints on exports of rare earths.
China is using “excessive, trade-distorting government intervention” to the disadvantage of US companies, the US Trade Representative’s office said on Thursday in its annual report on China’s compliance with WTO rules.
Trade tensions have increased as China reported a record US$153.3 billion of exports last month and US lawmakers called for legislation on Chinese imports to combat any advantages from what they say is an undervalued yuan. The US filed a WTO complaint against China on Thursday, contending that favoritism toward domestic-made wind turbines is an unfair trade barrier.
Among issues highlighted today were China’s export constraints on minerals such as magnesium, silicon, zinc and rare earths.
“These types of export restraints can significantly distort trade and for that reason WTO rules,” the trade office said in its report. “In the case of China, the trade-distortive impact can be exacerbated because of the size of China’s production capacity.”
Rare earth minerals are used in electric cars, wind turbines and weapons, and at least 90 percent are produced in China.
The US said it pressed China to remove any limit on the export of rare earths before a meeting of trade officials from both nations this month. No agreement was announced.
“The United States will continue these efforts in 2011, while also considering other options for addressing China’s use of export restraints, including WTO dispute settlement, if appropriate,” the trade office said.
The US issued the report less than a month before Chinese President Hu Jintao (胡錦濤) is scheduled to visit US President Barack Obama at the White House. US businesses have grown increasingly critical of a series of Chinese policies aimed at boosting research and innovation among its domestic companies.
“China continued to pursue industrial policies in 2010 that seek to limit market access for non-Chinese origin goods and foreign suppliers of services, while offering substantial government resources to support Chinese industries,” the trade office said in the report. “The principal beneficiaries of these policies are less competitive state-owned enterprises.”
China is the third-largest US export market with US$69.5 billion of sales last year. Sales of goods and services by US companies in China reached US$98.4 billion, more than a fourfold jump from 2000, according to the US-China Business Council, a Washington-based group that represents companies such as Wal-Mart Stores, Inc and Citigroup Inc.
“Despite the many challenges that remain, China’s WTO membership has continued to provide substantial ongoing benefits to the United States,” the trade office said in its 124-page report.