The US said it would combat the “distortions” to the world economy created by China’s economic system, especially in markets for steel and aluminum.
In a report to the US Congress, the Office of the US Trade Representative (USTR) said its primary goal is to defend the government’s ability to impose duties on China for dumping goods at artificially low prices or unfairly subsidizing Chinese firms.
China’s economic system, which does not operate based on market principles, is hurting US workers and industries, USTR said a report on its enforcement priorities to the US Senate’s Finance and House Ways and Means committees.
“The international steel and aluminum markets, for example, are currently experiencing significant oversupply due in large part to production from excessive and uneconomic capacity in China,” the office said in the report dated July. “This oversupply has caused severe market distortions, including the suppression of US and global prices, and the displacement of US exports in foreign markets.”
A USTR spokeswoman did not immediately respond to a request for comment on the report.
The tough message on China follows a tense meeting in Washington between senior economic officials from the world’s two biggest economies who failed to agree on trade issues.
The US Department of Commerce has been investigating whether steel and aluminum imports represent a threat to national security, though US President Donald Trump suggested last week a decision on steel was not imminent.
“The risk is that, after a period of unlikely calm in US-China relations under Trump so far, a quick series of steps from both sides leads to an escalation and a rapid deterioration of relations,” said Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong. “This risk is real, as Trump may end up venting out his frustration while China’s government may feel the need to appear ‘strong’ vis-a-vis the domestic audience.”
The Chinese government disputes the US position that China does not operate as a “market economy.”
Designating China a “non-market economy” enables the US to impose higher duties in retaliation for dumping and unfair subsidies.
In its report, the USTR said it would continue to prioritize enforcement efforts in countries where intellectual-property protection “has deteriorated or remained at unacceptable levels.”
The report accuses China of “widespread infringing activity, including trade secret theft, rampant online piracy and counterfeiting.”
It said that India and Indonesia are on the US “priority watch list” for intellectual-property violations.
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