2017 Report to Congress On China’s WTO Compliance

1 2017 Report to Congress On China's WTO Compliance United States Trade Representative January 2018. 2017 Report to Congress On China's WTO Compliance United States Trade Representative January 2018. 2017 USTR Report to Congress on China's WTO Compliance TABLE OF CONTENTS. FOREWORD .. 1. EXECUTIVE SUMMARY . 2. OVERVIEW .. 2. CHINA'S APPROACH TO WTO MEMBERSHIP 6. 2017 DEVELOPMENTS 8. CHINA'S WTO Compliance .. 9. PRIORITY ISSUES .. 9. Industrial Policies . 9. Intellectual Property Rights .. 16. Services .. 19. Agriculture .. 22. Transparency .. 23. Legal Framework . 24. NEXT STEPS 25. INTRODUCTION .. 26. CHINA'S WTO ACCESSION NEGOTIATIONS 26. CHINA'S WTO COMMITMENTS .. 26. OVERVIEW OF ENGAGEMENT 28. DIALOGUE .. 28. Bilateral Engagement .. 28. Multilateral Meetings .. 29. ENFORCEMENT .. 30. CHINA'S WTO Compliance .. 33. TRADING RIGHTS .. 33. IMPORT REGULATION .. 34. Tariffs .. 34. Customs and Trade Administration.

2 35. CUSTOMS VALUATION .. 35. RULES OF ORIGIN .. 36. IMPORT LICENSING .. 37. Non-tariff Measures .. 37. Tariff-rate Quotas on Industrial Products .. 38. Other Import Regulation .. 38. ANTIDUMPING .. 38. COUNTERVAILING DUTIES .. 42. 2017 USTR Report to Congress on China's WTO Compliance TABLE OF CONTENTS. CHINA'S WTO Compliance (cont'd). IMPORT REGULATION (cont'd). Other Import Regulation (cont'd). SAFEGUARDS .. 43. EXPORT REGULATION .. 44. INTERNAL POLICIES AFFECTING TRADE .. 47. Non-discrimination .. 47. Taxation .. 50. Subsidies .. 51. Price Controls .. 56. Standards, Technical Regulations and Conformity Assessment Procedures .. 58. REGULATORY REFORMS 58. STANDARDS AND TECHNICAL REGULATIONS . 60. CONFORMITY ASSESSMENT PROCEDURES 69. TRANSPARENCY .. 74. Other Internal Policies .. 75. STATE-OWNED AND STATE-INVESTED ENTERPRISES .. 75. STATE TRADING ENTERPRISES 77. GOVERNMENT PROCUREMENT 78.

3 INVESTMENT .. 83. AGRICULTURE .. 95. Tariffs .. 96. Tariff-rate Quotas on Bulk Agricultural Commodities . 97. China's Biotechnology Regulations 98. Sanitary and Phytosanitary Issues 101. Inspection-related Requirements 105. Domestic Support .. 105. Export Subsidies .. 106. INTELLECTUAL PROPERTY RIGHTS 107. Legal Framework .. 108. Enforcement .. 113. SERVICES .. 117. Distribution Services .. 119. WHOLESALING SERVICES .. 119. RETAILING SERVICES .. 121. FRANCHISING SERVICES .. 122. DIRECT SELLING SERVICES .. 122. Financial Services .. 122. BANKING SERVICES .. 122. MOTOR VEHICLE FINANCING SERVICES 125. INSURANCE SERVICES .. 125. FINANCIAL INFORMATION SERVICES .. 127. ELECTRONIC PAYMENT SERVICES 127. 2017 USTR Report to Congress on China's WTO Compliance TABLE OF CONTENTS. CHINA'S WTO Compliance (cont'd). SERVICES (cont'd). Legal Services .. 129. Telecommunications Services .. 130. Audio-visual and Related Services 131.

4 Internet-related Services .. 132. Construction and Related Engineering Services 133. Educational Services .. 135. Express Delivery Services .. 135. Logistics Services .. 136. Air Transport and Related Services .. 136. Maritime Services .. 136. Tourism and Travel-related Services 137. LEGAL FRAMEWORK .. 137. Transparency .. 137. OFFICIAL JOURNAL .. 137. TRANSLATIONS .. 138. PUBLIC COMMENT .. 139. ENQUIRY POINTS .. 141. Uniform Application of Laws . 141. Judicial Review .. 141. Other Legal Framework Issues . 141. ADMINISTRATIVE LICENSING .. 142. COMPETITON POLICY .. 142. FOREIGN NGO MANAGEMENT LAW .. 145. COMMERCIAL DISPUTE RESOLUTION .. 145. LABOR LAWS .. 146. LAND LAWS .. 147. CORRUPTION .. 148. APPENDICES. Appendix 1: List of Written Submissions Commenting on China's WTO Compliance (September 20, 2017). Appendix 2: List of Witnesses Testifying on China's WTO Compliance (October 4, 2017).

5 Appendix 3: Initial Actions of the Economic Cooperation 100-Day Plan (May 11, 2017). 2017 USTR Report to Congress on China's WTO Compliance ABBREVIATIONS. ACFTU All China Federation of Trade Unions APEC Asia-Pacific Economic Cooperation AQSIQ State Administration of Quality Supervision, Inspection and Quarantine BOFT Bureau of Fair Trade for Imports and Exports CAC Cyberspace Administration of China CFDA China Food and Drug Administration CIRC China Insurance Regulatory Commission CNCA National Certification and Accreditation Administration CNIS China National Institute for Standards CUP China UnionPay GAPP General Administration of Press and Publication IBII Bureau of Industry Injury Investigation ISO International Organization for Standardization JCCT Joint Commission on Commerce and Trade MIIT Ministry of Industry and Information Technology MOA Ministry of Agriculture MOC Ministry of Construction MOF Ministry of Finance MOFCOM Ministry of Commerce MOFTEC Ministry of Foreign Trade and Economic Cooperation MOH Ministry of Health MOST Ministry of Science and Technology NCA National Copyright Administration NDRC National Development and Reform Commission NPC

6 National People's Congress OIE World Organization for Animal Health PBOC People's Bank of China SAC Standardization Administration of China SAIC State Administration for Industry and Commerce SAPPRFT State Administration of Press, Publication, Radio, Film and Television SARFT State Administration of Radio, Film and Television SASAC State-owned Assets Supervision and Administration Commission SAT State Administration of Taxation SCLAO State Council's Legislative Affairs Office SDPC State Development and Planning Commission S&ED Strategic and Economic Dialogue SFDA State Food and Drug Administration SIPO State Intellectual Property Office SPB State Postal Bureau SPC Supreme People's Court WIPO World Intellectual Property Organization WTO World Trade Organization 2017 USTR Report to Congress on China's WTO Compliance FOREWORD. This is the 16th Report prepared pursuant to section In preparing this Report , USTR drew on its experience 421 of the Relations Act of 2000 ( 106- in overseeing the Government's monitoring of 286), 22 6951 (the Act), which requires the China's WTO Compliance efforts.

7 USTR chairs the United States Trade Representative (USTR) to Report Trade Policy Staff Committee (TPSC) Subcommittee annually to Congress on Compliance by the People's on China, an inter-agency body whose mandate is, Republic of China (China) with commitments made inter alia, to assess China's efforts to comply with its in connection with its accession to the World Trade WTO commitments. This TPSC subcommittee is Organization (WTO), including both multilateral composed of experts from USTR, the Departments of commitments and any bilateral commitments made Commerce, State, Agriculture and Treasury, and the to the United States. The Report covers calendar Patent and Trademark Office, among other year 2016. It also incorporates the findings of the agencies. It works closely with State Department Overseas Compliance Program, as required by economic officers, Foreign Commercial Service section 413(b)(2) of the Act, 22 6943(b)(2).

8 Officers, Enforcement and Compliance officers and Intellectual Property Attach s from the Commerce Like the prior reports, this Report is structured as an Department, Foreign Agricultural Service officers, examination of the nine broad categories of WTO Customs and Border Protection attach s and commitments undertaken by China. Throughout the Immigration and Customs Enforcement attach s at Report , USTR has attempted to provide as complete the Embassy and Consulates General in China, a picture of China's WTO Compliance as possible, who are active in gathering and analyzing subject to the inherent constraints presented by the information, maintaining regular contacts with sheer volume and complexity of the required industries operating in China and maintaining a changes to China's trade regime and transparency regular dialogue with Chinese government officials obstacles. The Report identifies areas where at key ministries and agencies.

9 The subcommittee progress has been achieved and underscores areas meets in order to evaluate and coordinate of concern, as appropriate, with regard to the engagement of China in the trade context. commitments that became effective upon China's accession to the WTO as well as those commitments To aid in its preparation of this Report , USTR. scheduled to be phased in over time. published a notice in the Federal Register on August 2, 2017, asking interested parties to submit written The focus of the Report 's analysis continues to be on comments and testimony and scheduling a public trade concerns raised by stakeholders that, in hearing before the TPSC. The public hearing took the view of the Government, merit attention place on October 4, 2017. A list of the written within the WTO context. The Report does not submissions received from interested parties is set attempt to provide an exhaustive analysis of those forth in Appendix 1, and the persons who testified at concerns or the individual commitments made in the hearing before the TPSC are identified in China's WTO accession agreement that might be Appendix 2.

10 Implicated by them. 1. 2017 USTR Report to Congress on China's WTO Compliance EXECUTIVE SUMMARY Today, almost two decades after it pledged to support the multilateral trading system of the WTO, OVERVIEW the Chinese government pursues a wide array of continually evolving interventionist policies and After its accession to the World Trade Organization practices aimed at limiting market access for (WTO) in 2001, China was supposed to revise imported goods and services and foreign hundreds of laws, regulations and other measures to manufacturers and services suppliers. At the same bring them into conformity with its WTO obligations, time, China offers substantial government guidance, as required by the terms set forth in its Protocol of resources and regulatory support to Chinese Accession. policymakers hoped that the terms industries, including through initiatives designed to set forth in China's Protocol of Accession would extract advanced technologies from foreign dismantle existing state-led policies and practices companies in sectors across the economy.