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A Closer Look At China's Subsidies
by Danielle Belopotosky
A trade panel on Tuesday reviewed China's preferential treatment of domestic industry. The step came as the World Trade Organization prepares to unveil its first review of China later this month.
The U.S.-China Economic and Security Review Commission held a hearing to examine China's subsidy policies and practices, and their impact on U.S. industry and workers. Five years after accession to the WTO, China has yet to fulfill its obligations to provide specific data on subsidies, said Michael Wessel, co-chair of the commission.
"There can be no doubt that China is engaged in massive efforts to subsidize the development of its economy and to promote the further growth of its export base," he continued, noting that China appears to be subsidizing the growth of fields such as nanotechnology, biotechnology and optoelectronics, which includes fiber-optic communications, digital imaging and storage.
The subsidies cover taxes and land, he said, and Chinese firms receive indirect benefits from currency manipulation, intellectual property violations and non-performing loans.
Princeton University economics professor Gregory Chow said China's new five-year plan clearly identifies the industries it plans to subsidize, including the high-tech sector. "There is no lack of transparencies," he told the panel.
As to what the United States can do about China's increased competition, Chow said U.S. interests would be "better served by promoting economic cooperation with China ... rather than finding faults in China's compliance with the terms of the WTO in order to justify imposing higher tariffs on Chinese products."
The WTO is expected to release its first trade policy review of China on April 19. In the U.S. Trade Representative's 2005 annual report to Congress on trade barriers, the administration found "shortfalls persist" in China's compliance with its WTO commitments.
China Boosts Anti-Piracy Enforcement
As delegates from the United States, Australia, Canada, China and the European Union on Saturday sealed a deal to strengthen information sharing to combat IP theft, the Chinese government announced that it has pursued thousands of IP infringement cases.
The "Shanghai initiative," which was passed at a China forum on intellectual property enforcement, includes joint campaigns to "uproot" the establishment of counterfeiting facilities and the export, import and sales of pirated products, according to news reports. The document also calls for more effective tracking of equipment that produces pirated products.
"It's not a Chinese problem; it is a global issue," Gao Feng, deputy director-general of the Ministry of Public Security's economic crime investigation unit, told China's state-owned media Xinhua. "Cooperation is the only efficient way to fight such crimes."
Chinese media report that police have uncovered more than 6,700 IP infringement cases, with goods worth an estimated $437 million, in the past five years, according to Gao's office. More than 9,300 suspects have been detained by Chinese police.
China's State Office on Intellectual Property Protection announced last week that it will establish IP service centers in 50 major cities, according to Xinhua. The centers will probe IP infringement.
"We aim to arouse the whole society to strengthen enforcement," Jiang Zengwei, director of China's intellectual property protection office, said Friday at the IP forum.
He further said the Chinese government's 2006 action plan includes the tightening of its laws and enforcement of IP violations, enhanced information exchanges to assist infringement cases, and an elevated public education campaign to boost the awareness of IP protections.
The announcements come in advance of Chinese President Hu Jintao's upcoming visit to the United States. Hu is slated to meet with President Bush on April 20.
Australia To Telemarketers: Lose My Number!
Australia hopes to stop unsolicited telemarketing calls. Communications, Information Technology and the Arts Minister Helen Coonan on Tuesday announced that the government soon will introduce legislation to establish a national "do not call" registry and set minimum standards for telemarketers.
Under the plan, Coonan said the government will pay $12.3 million to establish the registry, while it hopes industry will cover the remainder of the costs. She said total costs would reach more than $23 million.
"The number of unsolicited calls in Australia has grown significantly in recent years, and has led to rising community concerns about the inconvenience and intrusiveness of telemarketing," Coonan said. The government estimates that more than 1 million people will register over the first week, with some 4 million in the inaugural year.
Telemarketers based in Australia and overseas telemarketers with Australian clients would have to comply with the law, which would carry warnings, fines and financial penalties, according to Coonan's office. The measure also would create standards such as permissible calling hours. Certain public-interest groups exempt from the registry would have to heed the standards.
Consumers who register their telephone numbers could opt out of receiving unsolicited telemarketing calls. The goal is to have a fully operable registry by 2007.
On Tuesday, Coonan also announced next steps in implementing the rollout of digital radio services. Under the plan, the services will be deployed in six capital cities by 2009.
She announced a series of legislative and regulatory proposals, including new licensing categories and a six-year moratorium for the issuance of new licenses for commercial digital radio, that aim to foster digital radio.
"Accordingly, the legislation must ensure open, efficient [service] and generally give non-discriminatory access to digital radio multiplexes," Coonan said in a statement. Her office also is considering funding assistance for community broadcasters.
European Union Seeks More Ways To Unite
The European Commission on Monday requested public comment on a proposal to create a single European Union defense equipment market. The initiative would include ways to reduce barriers to trade among the 25 EU nations in an effort to reduce costs while enhancing a unified security front, according to the commission.
"Opening the internal market for defense products would boost our economy and increase the competitiveness [of] the European defense-building companies," Commission Vice President Gunter Verheugen, who is responsible for enterprise and industry policy, said in a statement.
To facilitate cross-border exports of aeronautics, electronics, engines and ships, Verheugen's office recommends that intergovernmental cooperation be extended to all 25 nations, instead of the original six EU members. The plan calls for the reinforcement of a European security and defense policy, and proposes a new policy to lift export restrictions on military weapons within the union during crises.
EU nations recently adopted a code of conduct regarding defense procurement. It is slated to take effect in July. The code aims to get nations to support intra-union transfers of technologies and defense equipment.
With input from the consultation, the commission plans to submit a final proposal by the end of the year.
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