China brushes off U.S. questions over state enterprises at WTO

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By Tom Miles | GENEVA

GENEVA China responded to U.S. questions about
its state trading enterprises in a World Trade Organization
filing on Thursday that looked unlikely to end U.S. suspicions
that China is breaking WTO rules.

China’s five page response suggested that U.S. concerns were
misplaced, and said its state firms conducted “market-based
operations without government intervention”, or imported for
other firms on commission but with no mark-up.

Chinese enterprises’ internal data was not available because
of commercial secrecy, it said.

Robert Lighthizer, U.S. President Donald Trump’s nominee to
be the top U.S. trade negotiator, said at his confirmation
hearing on Tuesday that Beijing’s industrial policies had
supported vast amounts of “uneconomic” production capacity that
would not survive without state support.

Under WTO rules, state enterprises are supposed to trade on
the same non-discriminatory and commercial basis as private
firms, and member countries have to notify their state
enterprises to the WTO annually.

The United States has long complained that Beijing is
keeping the world in the dark about potentially unfair trading
by state-backed firms.

In 2014, Washington lost patience and submitted a “counter
notification”, listing 153 Chinese enterprises that it thought
Beijing should declare to the WTO.

That prompted China’s own WTO submission in 2015, but the
United States, as well as the European Union and Australia, came
back with more questions about transparency.

In the filing published on Thursday, with answers to 16
questions sent by the United States in June last year, Beijing
gave little away but said it was complying with the WTO rules.

“China attaches importance to and seriously performs its WTO
transparency obligations,” its first answer began.

The U.S. Trade Representative’s report to Congress in
January this year said that on joining the WTO in 2011, China “agreed to provide full information on the pricing mechanisms of
state trading enterprises… and that state trading enterprises
would limit the mark-up on goods that they import in order to
avoid trade distortions.”

In agriculture, China had agreed to let non-state firms
import specified amounts of agricultural commodities such as
vegetable oil as part of China’s quota of low-tariff imports,
despite state import monopolies, USTR said.

Asked why it had not notified firms exporting soybeans,
silk, tea, cotton yarn and woven cotton fabric, or importing
vegetable oil, it said those had not been state monopolies for
at least a decade.

It did list 19 tobacco-exporting firms, but declined to
explicitly list firms involved in trading silver, antimony and
antimony products, referring to lists in other filings.

The United States said China was the only country that
failed to follow the regular WTO format for its notification,
but China said it had conformed with the rules.

“China believes that WTO members can be informed by the
notification,” it said.

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