China hits back at U.S. criticisms at WTO

GENEVA Thu Jun 14, 2012 2:18pm EDT

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GENEVA (Reuters) - China has rejected U.S. criticisms during a review of its trade policies at the World Trade Organization and used the occasion to suggest many U.S. accusations were not only groundless but in some areas hypocritical.

U.S. Ambassador to the WTO Michael Punke leveled a wide-ranging salvo of criticisms during the two-day Trade Policy Review (TPR), which every WTO member has to undergo on a periodic basis, and said China was falling back into a "tighter embrace of state capitalism".

But China swatted aside many of the criticisms, which included complaints about its failure to disclose subsidies and a lack of transparency and intellectual property enforcement.

China's Assistant Minister of Commerce Yu Jianhua said he regretted that during the TPR process some WTO members had deemed China was practicing state capitalism.

"The term cannot be found in ... WTO documents. It has nothing to do with the TPR or WTO rules. We strongly believe TPR should not be abused for the purpose of domestic politics," he said.

Alongside the oral debate, China answered more than 1,720 written questions in a document running to 442 pages, on topics ranging from its plans to develop shale gas to a promise to set up a deposit insurance scheme as soon as possible.

In the internal WTO document seen by Reuters on Thursday, some questions submitted by the United States elicited barbed comments. Others, such as the U.S. allegation that the state bodies overseeing China's economy provide economic support to national champions in key industries, prompted flat denials.

A U.S. demand for more transparency fell on stony ground, with China saying the commitments to transparency cited by the United States were outside the WTO's remit.

"The U.S. never fulfills any of the transparency commitments made to China," it said.

Quizzed about its apparent failure to provide ample time for other countries to comment on changes to food safety laws, China said: "The problems raised ... do not exist. In addition, China has noticed that the U.S. has failed to provide ample time ... We hope that the U.S. could give more attention to honoring its own transparency obligations."

U.S. "MISTAKEN"

The United States challenged China in September last year to come clean on 200 subsidies that appeared to be prohibited by the WTO. On Tuesday, Ambassador Punke said WTO rules meant China should have responded by notifying the trade body of the subsidies promptly, but it had so far notified only 10.

But China's response to the U.S. written question was dismissive, and said there were offering differing opinions about what constituted an illegal subsidy.

"On a lot of items in the U.S. submission, China actually has already notified in its submitted notifications, but it seems to China that the U.S. has not been able to recognize those notified ones, in particular when they are implemented at the sub-central government level," it said.

"Rather, the U.S. has mistaken such implementations by our sub-central governments of the notified central programs as locally-initiated subsidies."

Nevertheless, China pledged to accelerate its efforts to notify the WTO of local subsidies in future, having so far concentrated its efforts on notifying central subsidy programs, an area where it had made "substantial progress".

In response to a U.S. complaint about Chinese farmers getting unfair advantage over importers, because they do not have to pay value-added tax if they sell direct to consumers, China said other countries did the same thing.

Its policy only allowed small-scale exemptions, for "farmers who sell their own products like a kilogram of potatoes in an open air market", and VAT would be impossible to administer.

China did, however, promise that later this year it would raise its bid to gain entry to the WTO's Government Procurement Agreement, a subset of the WTO whose members open their state contracts to each other's companies, markets that are potentially worth hundreds of billions of dollars.

Bringing China on board would be a huge boost to the agreement, but it has so far underwhelmed the existing members with the amount of its spending it is willing to open up.

But it resisted a U.S. call to include local governments, which account for 93 percent of procurement spending, saying it was up to those local governments to decide.

(Reporting by Tom Miles; Editing by Sophie Hares)

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