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This Week In Trade

Chinese officials knock U.S. over WTO compliance report, COVID-19 comments

Posted: March 09, 2020

As the week gets underway, Chinese officials are hitting back at the U.S. after the Office of the U.S. Trade Representative issued a report highly critical of China’s trade policies and Secretary of State Mike Pompeo referred to the coronavirus as the “Wuhan virus.”

USTR issued its annual report on China’s compliance with World Trade Organization rules late Friday. The report was due to Congress in December. The nearly 200-page report was a laundry list of U.S. complaints of Beijing’s policies -- from forced technology transfer to Made in China 2025 and agricultural tariff-rate quota administration.

China did not take kindly to the U.S. criticism.

“#USTR 2019 Report to Congress on China’s WTO Compliance #Fairtrade policies must follow rules agreed by all instead of picking and choosing,” Hua Chunying, a spokeswoman for China’s Ministry of Foreign Affairs, said on Twitter on Monday. “It is the greatest unfairness to impose one’s will upon others. Remember, WTO Appellate Body is in limbo because of U.S. obstruction.”

Hua was referring to the continued U.S. blockade of appointments to the WTO Appellate Body, which has left the panel without a quorum to hear new cases. The Appellate Body’s lone remaining member is China’s Hong Zhao. The U.S. last week claimed she is ineligible to serve because she is affiliated with the Chinese government.

But the U.S.-China tensions did not stop there. Pompeo drew the ire of Beijing by referring to COVID-19 as the “Wuhan virus” in several interviews. “Despite the fact that the [World Health Organization] has officially named this novel type of coronavirus, certain American politician, disrespecting science and the WHO decision, jumped at the first chance to stigmatize China and Wuhan with it. We condemn this despicable practice,” Chinese Foreign Ministry spokesman Geng Shuang said at a press conference in Mondays.

The coronavirus outbreak is the focal point of global economics as it has roiled markets and caused a steep drop in import and export numbers. China’s exports in January and February were down 17.2 percent compared to 2019, according to data from China’s General Administration of Customs. Imports also dropped by 4 percent.

Those numbers do not bode well for China’s ability to meet its commitments under the phase-one agreement it signed with the U.S. in January. China is supposed to buy $150 billion more U.S. goods and services than it did in 2017 within the first year of the deal.

China has downplayed the worrisome data, contending that the coronavirus’ impact on the Chinese economy will be temporary and that China’s economy already is showing signs of turning around. “With the recovery of logistics and resumption of operations well under way nationwide -- for example, more than 90 percent in the economic powerhouse of Guangdong province have resumed operations -- the damage on manufacturers will be further mitigated, which will enable them to quickly get their operations back up to speed. Thus the negative impacts on China's economy and foreign trade will only be temporary,” said an editorial in China Daily, a newspaper run by the Communist Party of China’s publicity department.

“Thanks to its vast consumer market gradually recovering, as well as the many targeted support policies the government has rolled out, auto sales, for example, have already started to bounce back, according to the Ministry of Commerce,” the article continued. “As more cases of infection are now being reported outside China than inside, the country's role as the bedrock for global supplies will become even more evident, as having swiftly brought the outbreak under control with its resolute actions, it will act as the stabilizer for world economic growth.”

Wilbur Ross, live

Commerce Secretary Wilbur Ross will defend his budget request on Tuesday before the House Appropriations Commerce, Justice, Science, and Related Agencies subcommittee. In its budget request, Commerce recommended cutting its funding in half while increasing appropriations for the Bureau of Industry and Security. The proposed increase in BIS funding would go toward implementing the Export Control Reform Act and countering China’s Made in China 2025 initiative.

Ross’ testimony will also give lawmakers the opportunity to grill the Commerce head over the still-classified Section 232 report on the national security effects of auto and auto parts imports. A Senate amendment to a spending bill also ordered the administration to release the report.

But the administration has refused, with the Justice Department claiming the report is subject to executive privilege. The Cause of Action Institute, a non-profit organization, is suing the Trump administration over its refusal to release the report. Senate Finance Committee leaders last week filed an amicus brief in support of Cause of Action.