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Ten Years in, China Still Dragging Its Feet on WTO Compliance

China celebrated the tenth anniversary of its accession to the World Trade Organization (WTO), but a report from the U.S. Trade Representative (USTR) finds that even after a decade, the booming Asian giant is still falling short on its compliance goals.

While China has taken many impressive steps to implement trade reforms since 2001, the USTR described the overall picture currently presented by the country's WTO membership as "complex," given a troubling trend in China toward intensified state intervention in the economy over the last five years.

"Increasingly, trade frictions with China can be traced to China's pursuit of industrial policies that rely on trade-distorting government actions to promote or protect China's state-owned enterprises and domestic industries," said the report. "In fact, in recent years, China seems to be embracing state capitalism more strongly, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership."

Progress toward market liberalization began to slow in 2006, according to the USTR, and certain Chinese policies have raised concerns that the country still has yet to fully embrace some key WTO principles, such as market access, non-discrimination and transparency. China's recalcitrance continued to create problems for U.S. stakeholders in 2011, most notably due to China's indigenous innovation policies, lax intellectual property rights enforcement and discrimination against foreign enterprises.

Looking ahead, stakeholders can expect to see continued enforcement efforts from the USTR and the rest of the Obama Administration, with a special focus on reducing Chinese government intervention.

"Breaking down Chinese market barriers and maximizing our stakeholders' opportunities to compete in the global marketplace could not be more important in today's world," said the report. "Going forward, the administration will continue its dedicated efforts to achieve these goals."

Jacob Barron, CICP, NACM staff writer