Vaguely Speaking
Posted by SCapozzola on May 21st, 2008
In 2007, total trade between the U.S. and China reached nearly $400 billion, according to Commerce Department figures. That’s a huge amount of money, and it makes for one of the United States’ largest foreign trade accounts. That most of the traffic (83%) flows one way, though, and accounts for the largest bilateral deficit in U.S. history ($256 billion), is also fairly well known.
But a recent study by the General Accounting Office (GAO) reveals a rather muddy picture of the logistics and procedures involved in U.S. trade with the People’s Republic. A just-released GAO report suggests that the Office of the U.S. Trade Representative (USTR) has not adequately analyzed and categorized the scope of issues involved in policing and tracking whether or not Beijing is playing fair with its trade practices.
It may not be entirely surprising if China’s system of trade regulations is more than a bit insular or opaque. The country regularly steals intellectual property, while using subsidies, dumping, and currency manipulation to further its trade advantage.
Unfortunately, the USTR may not be noting all of the subtle minutiae involved in monitoring China. The GAO believes that the “USTR’s annual reports to Congress do not have the systematic analysis needed to clearly understand China’s compliance situation.” More specifically, the GAO wants to know if China is living up to its obligations since joining the WTO. In order to do so, the USTR needs to “clearly and systematically identify the number, type, and disposition of the trade issues it is pursuing with China and report this and more useful trend information in its annual China trade compliance report to Congress.”
The USTR takes a generally sunny view of U.S. trade with China. In its 2006 report to Congress, it noted that “China has taken significant and often impressive steps to reform its economy since acceding to the WTO. During this period, China has repealed, revised or enacted more than one thousand laws, regulations and other measures in an effort to bring its trading system into basic compliance with WTO standards.”
The trouble, however, rests with what USTR itself admits in the report as the “inherent constraints presented by the sheer volume and complexity of the required changes to China’s trade regime and transparency obstacles.”
With GAO’s prodding, though, it’s hoped that the USTR will transition from “narrative reports” to more thorough and specifically concrete analyses. Without clear examples of China’s transgressions or improvements, GAO believes it is hard for Congress to get a full and accurate picture of what Beijing is or isn’t doing to follow world trade law.
With hundreds of billions of dollars at stake, and millions of U.S. jobs threatened by China’s predatory practices, there is an urgency to presenting a full and valid audit of trade with China. Additionally, a thorough review may help to boost the number of trade violations that are successfully prosecuted. As GAO noted in its report, USTR’s resolution of trade compliance disputes has dropped from 50% in 2003 to 30% in 2007—an unfortunate laxity that can only signal apathy on the matter to Beijing.
The USTR operates out of the Executive Office of the President, so it will be interesting to see if the next administration will be more aggressive in policing matters with China.
##
