On January 15, 2020, the Office of the U.S. Trade Representative (USTR) released its annual reports submitted to Congress that assess China’s and Russia’s implementation of their World Trade Organization (WTO) commitments. In keeping with past annual USTR reports during the administration of President Donald Trump, the reports note that these countries’ records of compliance with the terms of their WTO membership have been poor.
As noted in past reports, the 2020 USTR report highlights that China’s trade regime has generated many WTO compliance concerns. The United States, for example, has brought nearly two dozen cases against China at the WTO covering a wide range of important policies and practices, such as:
- local content requirements in the automobile sector;
- discriminatory taxes in the integrated circuit sector;
- prohibited subsidies in a wide range of manufacturing sectors;
- inadequate intellectual property rights (IPR) enforcement in the copyright area;
- significant market access barriers in copyright-intensive industries;
- severe restrictions on foreign suppliers of financial information services;
- export restraints on numerous raw materials;
- a denial of market access for foreign suppliers of electronic payment services;
- excessive domestic support for key agricultural commodities;
- the opaque and protectionist administration of tariff-rate quotas for key agricultural commodities; and
- discriminatory regulations on technology licensing.
The report also notes China’s retaliatory use of trade remedies and continued lack of transparency. Given all of these problems, and consistent with President Trump’s “more aggressive approach to China,” the report states that USTR has used “domestic trade remedies, bilateral negotiations, WTO litigation, and strategic engagement with like-minded trading partners – to respond to the unique and very serious challenges presented by China. But, the goal for the United States remains the same. The United States seeks a trade relationship with China that is fair, reciprocal and balanced.” For more details, see the full 2020 China WTO Compliance Report.
The 2020 report notes that the “past year has brought very few, if any, positive developments in terms of Russia’s implementation of a WTO compliant trade regime. On a positive note, consistent with its WTO commitments, Russia has implemented all of its final tariff bindings. However, in most other areas, Russia continues to reject the market-opening goals of the WTO.” The report points out that the majority of Russia’s trade-restrictive measures remain non-tariff import barriers. For example:
- a cumbersome, opaque and outdated import licensing regime on products with cryptographic capabilities;
- unjustified non-tariff barriers to U.S. agricultural exports, and subsidies to support its agricultural industry;
- lack of transparency in the development of technical regulations;
- expansion of general localization/domestic content policies well beyond government procurement to apply to Russia state-owned enterprises and to the private sector;
- continued weak intellectual property rights enforcement;
- lack of clear regulations governing customs valuation, creating uncertainty and additional paperwork;
- continued requirements for an activity license as a precondition for obtaining an import license for some products (e.g., alcohol, encryption products and pharmaceuticals);
- lack of harmonization of regulatory measures between Russia and the Eurasian Economic Union (EAEU); and
- significant and ongoing concerns about the completeness of Russia’s notifications pursuant to it obligations as a WTO member.
The report notes that “in the past year Russia has done little to change its reliance on protectionist policies, import-substitution schemes, and domestic content requirements.” It concludes that the United States “will continue to encourage Russia to adopt a free, fair, non-discriminatory, transparent, predictable, and stable trade environment based on the rule of law. Yet it is only Russia that can make the decision to comply with the spirit as well as the letter of the WTO rules.” For more details, see the full 2020 Russia WTO Compliance Report.