Inside us china trade 3-16-11


Published on

Article from March 16, 2011 Inside US-China Trade Newsletter entitled "China Automotive ‘‘Indigenous Brands’’ Policy Well Underway, Hard To Challenge". Includes quotes from Bill Russo.

Published in: Automotive
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Inside us china trade 3-16-11

  1. 1. from the publishers of Inside U.S. Trade Inside US-China Trade the exclusive weekly news service of Vol. 11, No. 11 - March 16, 2011China Automotive Doha Deal Could Enable China To Increase, Not‘‘Indigenous Brands’’ Lower, Farm SubsidiesPolicy Well Underway, Rising food prices and the increasing value of China’’s agriculturalHard To Challenge production have highlighted an unusual twist in the Doha round agriculture draft modalities text that would allow China to increase its subsidies in the China is already implementing future while other participants would have to cut them under a final Doha deal.aspects of its new automotive policy Under its World Trade Organization accession agreement, China agreed tothat will require foreign automakers to refrain from paying trade-distorting agriculture subsidies that would bededicate a portion of any newly considered ““amber box”” under WTO terminology. Unlike the United States, itapproved production capacity to the does not have a limit on amber box subsidies, which are considered the mostdevelopment of an indigenous brand trade-distorting form of subsidies.for sale in China, part of which must However, China’’s WTO accession protocol allows it to pay certain amberinclude a line of new energy vehicles box subsidies to farmers if those subsidies qualify for two special exemptions(NEVs), according to industry sources from China’’s overall amber box limit, which is zero. Those exemptions are forand China auto-industry analysts. product-specific and non-product specific subsidies. The policy, which is administered In particular, China is allowed to pay product-specific subsidies providedby the National Development Reform they do not exceed 8.5 percent of the value of production of that givenCommission (NDRC), China’’s state product. China is also allowed to pay non-product specific domestic subsidiesplanning body, is expected to be made provided that they do not exceed 8.5 percent of the value of its total agricul-public shortly as part of the beginning tural production.of China’’s twelfth five-year planning These de minimis exemptions, calculated each year based on the value ofcycle (Inside US-China Trade, March Chinese agricultural production, will likely not be altered under a final Doha9). deal. In fact, because the value of Chinese agricultural production is increas- The policy is viewed by some ing, the value of its two de minimis exemptions, which can be used for amberU.S. companies as another discrimina- box subsidies, are also increasing, sources said.tory manifestation of China’’s overall While increased food prices would also drive up the value of U.S.indigenous innovation policy strategy, agricultural production, and therefore the value of the U.S. de minimiswhich uses state-directed interventionto foster technology transfer, promote continued on page 6domestic intellectual property, andcreate strong national brands and Appellate Body Reversal On ‘‘Double Remedies’’modernization in cutting-edge Sparks Angry U.S. Reactionindustries of the future. The March 11 reversal by the Appellate Body of the World Trade Organi- But unlike China’’s linkage of zation of key parts of a dispute panel ruling involving the simultaneousindigenous innovation to government application of countervailing duties and antidumping duties by the Unitedprocurement preferences, which States on imports from China is ““as bad as it could be”” for the United Statesproduced a concerted, year-long and undermine U.S support for the WTO, according to a lawyer close to U.S.campaign of international business petitioners.and government pressure, the auto The AB reversed the original panel decision on two crucial points,policy’’s indigenous brands require- according to sources close to the U.S. domestic industry and to China.ments are unlikely to generate Most importantly, it found that the U.S. Commerce Department could notwidespread coordinated global continue its practice of assessing against the same imports both countervailingpushback. duties (CVDs) and antidumping (AD) duties using the non-market-economy Industry sources and analysts cite (NME) methodology without making sure that the price effects of the subsi-several reasons for why they believe dies being countervailed were not also being taken into account when calculat-there will be a more muted interna- ing the AD duties. This practice is known as ““double counting”” or ““doubletional response to Chinese automotive remedy.””restrictions. One is that Chinese The other systemically important issue reversed by the AB was the panel’’s continued on page 10 continued on page 8
  2. 2. News Briefs White House Wants Congress ““The U.S.Administration also understands well the impor- To Return Investigative Power To CBP tance of China’’s travel and tourism market,”” he said in a re- The White House is recommending legislation that would sponse to written questions from Reps. Pat Tiberi (D-OH) andgive Customs and Border Protection (CBP) agents the author- Dave Reichert (D-WA). ““We continue to press China’’s Nationality to share unredacted samples of products and its packaging Tourism Administration and China’’s Ministry of Commerce……with a right holder prior to a seizure to determine if a shipment to liberalize its market for travel and tourism services.””of goods is counterfeit. Tiberi and Reichert had complained that China discrimi- This legislation would return to CBP officials the author- nates against foreign travel and tourism firms, and places re-ity to share identification marks on suspected counterfeit goods strictions on foreign-owned enterprises on selling outboundwith right holders. The Department of Homeland Security travel packages and airline tickets. Travel agents and airlines(DHS), which oversees CBP, had determined that sharing these must use China’’s nationally owned computer reservation sys-marks violated the Trade Secrets Act. tem when booking airline tickets. The recommendation was part of a white paper that Victoria Kirk noted that China announced last year it would a launchEspinel, the administration’’s intellectual property enforcement a pilot program allowing a limited number of joint ventures tocoordinator, submitted to Congress on March 15. sell outbound travel and the U.S. is staying in ““close touch”” Specifically, the white paper recommends that Congress with the Chinese government on this issue.authorize DHS to allow this information it now restricts to be The U.S. and China ““later this year”” are also planning toused for investigations of suspected counterfeit goods, but it hold a joint forum on expanding travel distribution services,offers no specific guidance on a vehicle for such legislation. including computer reservation systems, according to Kirk. This The recommendation also wants Congress to authorize is a follow-up to a Chinese commitment made at a mid-2009DHS to share samples of potential circumvention devices prior Joint Commission on Commerce and Trade (JCCT), he seizure to help determine if they are, in fact, circumvention The agenda for the forum to be held in 2011 has been set, ac-devices that would be used to circumvent technological mea- cording to Kirk.sures that control access to copyrighted works. Currently, thelaw does not allow CBP officials to share these devices with S&ED To Take Place In U.S.right holders to confirm their use for infringing purposes. In Second Week Of May The U.S.-China Strategic and Economic Dialogue (S&ED) Kirk To Press China On Expanding is tentatively scheduled to take place in the United States in the U.S. Presence In Tourism Industry May 9-11 time frame, according to informed sources. U.S. Trade Representative Ron Kirk has pledged to House The economic track of the S&ED is chaired on the U.S.members that he will continue following up on China’’s prom- side by Treasury Secretary Timothy Geithner and on the Chi-ises to allow a certain number of joint ventures to provide ser- nese side by Vice Premier Wang Qishan. Wang also chairsvices to Chinese tourists traveling abroad, and to discuss lifting China’’s participation on the strategic track, which is led on thesome of its restrictions for booking airline tickets. U.S. side by Secretary of State Hillary Clinton.2 INSIDE US-CHINA TRADE - - March 16, 2011
  3. 3. Senators Call On Geithner, Salazar To Take Action On Chinese Rare Earths Four Senate Democrats on March 15 urged the Obama administration to cut off U.S. support for new multilateralbank financing for rare earth mining, smelting, separation or production projects by or within China, and to reciprocallyprohibit Chinese investment in U.S. mineral exploration and production until China lifts its rare-earths foreign investmentrestrictions. Sens. Charles Schumer (D-NY), Debbie Stabenow (D-MI), Robert Casey (D-PA) and Sheldon Whitehouse (D-RI)asked for these short-term actions ““to address the rare earth minerals shortage caused by China’’s anticompetitive policiesin a joint letter to Treasury Secretary Timothy Geithner and Interior Secretary Ken Salazar. ““We know from experience with China’’s foreign exchange regime that meetings and discussions have no significantimpact on China’’s anticompetitive practices —— which is why we respectfully ask you to take specific steps to respond toChina’’s deleterious rare earths policies,”” the senators wrote. They requested that Geithner instruct the U.S. executive director ““at each multilateral bank, including the WorldBank entities, to oppose the approval of any new financing to the government of China or for a project located withinChina involving rare earth mining, smelting or separation, or production of rare earth products.”” This action should be undertaken, they argued, because U.S. support for multilateral bank international developmentinitiatives ““should not extend to projects directly at odds with our own national and economic security needs.”” The four senators pointed to a series of reports that highlight U.S. vulnerability to rare earth minerals shortages,posing national and economic security challenges. They noted that China produces over 95 percent of rare earth mineralsoutput while the U.S. is ““100 percent reliant on imports.”” In addition, the senators requested that Salazar ““enforce reciprocal prohibitions with respect to Chinese investment inmineral exploration and purchase in the United States”” until China lifts is prohibitions on rare earths foreign investment. This is permitted by a 90-year-old U.S. mining law that ““has recognized that foreign investment in mineral explora-tion and purchase should be prohibited where a foreign country denies reciprocal privileges to U.S. companies,”” accord-ing to the letter. The Obama administration has been considering filing a consultation request on China’’s rare-earths export restraintsat the World Trade Organization. The U.S. reportedly won a similar challenge on Chinese export restraints on othercritical raw materials, but the interim report of that panel decision only went to the parties last month.USTR Considering WTO Case Against China Poultry Tariffs The Office of the U.S. Trade Representative is in the process of determining if it should take action on China’’spermanent use of antidumping duties on imports of U.S. poultry products in the World Trade Organization and is consult-ing with members of Congress on this issue, according to informed sources. An informed source said USTR indicated that it would file a case at the WTO by the end of this month, but therehave been no official word that it will do so. Sources said a U.S. case could argue that Chinese poultry tariffs are inconsistent with the Agreement on Subsidiesand Countervailing Measures and the Antidumping Agreement. But despite USTR’’s indecision to this point, members of Congress are meeting with USTR to discuss the issue. Thisincludes a March 9 meeting between USTR and congressional members from Delaware, a major poultry-producing state,sources said. Sen. Tom Carper (D-DE) is ““concerned about any restrictions on U.S. poultry exports and has urged the USTR to useall appropriate tools at their disposal to encourage China to remove these restrictions,”” a Carper spokesperson said. Carper asked U.S. Trade Representative Ron Kirk at a March 9 Senate Finance Committee hearing whether theadministration would be pursuing a WTO case on the Chinese poultry tariffs. Kirk replied that China ““is unfairly exercising those trade remedies through those countervailing duties, and we arestudying that”” but declined to specify if USTR was intending to pursue specific legal action. ““It is our practice and custom not to comment any further in terms of whether we would pursue additional strategieswithin the WTO,”” Kirk said at the hearing. Rep. John Carney (D-DE), who also met last week with USTR, would also support action against China, but aspokesman declined to say if Carney was specifically pushing USTR to file a WTO case. The impact of the Chinese tariffs has caused the U.S. poultry industry to lose 85 percent of its sales in China,according to an industry source. USTR had been unsuccessful when appealing these tariffs to the Chinese government, Kirk said. The U.S. had 60days to ask China’’s Ministry of Commerce ( MOFCOM)to review the Sept. 26 decision for imposing antidumping duties. One observer was critical of the seriousness of this appeal, since it involved USTR appealing the decision to theChinese administrative agency rather than in a Chinese court or, preferably, at the WTO. Attorneys representing the U.S. industry spent two weeks in China shortly after the September decision was madeINSIDE US-CHINA TRADE - - March 16, 2011 3
  4. 4. working to hammer out a deal that would lower or eliminate the tariffs, according to an industry source. This source said one proposal involved curtailing the sale of other U.S. poultry products in China if the U.S. industrywould be granted continued lower tariff market access for chicken feet, which are a popular product in China, making up55 percent of U.S. sales there, but have no demand in the U.S. This deal was rejected by MOFCOM even though it wassupported by the Chinese poultry industry, which had originally pushed the Chinese government to make the anti-dumping duties permanent, this source said. In September, China made its antidumping duties permanent on U.S. poultry. Those tariffs range from 50 percent to105 percent depending on the company. China first implemented anti-dumping duties in September 2009 following a U.S.decision to impose antidumping duties on Chinese tires, sources said. Delaware producers of poultry, which include Perdue, Mountaire and Allen, were subject to a tariff of 51.8 percent.The initial antidumping duty in 2009 for these companies was 64.5 percent, according to the Carper spokesperson. A legal observer said the U.S. would have a strong case against China’’s use of antidumping duties on poultry becausethe most popular product that China imports is chicken feet, which are sold in the U.S. at a price far lower than in China. China argued that chicken feet were being dumped on the Chinese market because they were being sold at a price perpound that was lower than the price per pound for an entire bird, this source said. This argument is flawed because nocountry prices meat parts uniformly as this would be akin to pricing intestines of a cow the same as a prime cut of steak,this source said. China also argued that U.S. poultry was subsidized because the grain that was used to make poultry feed wassubsidized by the U.S. government. The source said China was looking at data from 2008 and 2009, which would haveshown that prices for grain was not priced low those years and the industry buys feed products at global commodityprices.Ractopamine Ban Dents U.S. Market Share In Taiwan; No Solution In Sight The U.S. beef industry is projecting that it lost almost half its market share in Taiwan last month due to stepped-uptesting for traces of the feed additive ractopamine, amid fears that the political climate in Taipei may delay until nearly2013 progress to normalize beef imports and revitalize broader trade talks, industry sources said this week. The inspections that started at the beginning of the year and led to U.S. beef being pulled from Taiwan’’s store shelveshave had a ““chilling effect”” on importers, though the inspections have now been scaled back to testing for ractopamine atthe ports, according to one industry official. As a result, he said he expects that the normal 46 percent market share heldin Taiwan by U.S. producers would fall to around 25 percent in February. Taiwan for years has had a nominal zero-tolerance policy for ractopamine —— an additive permitted in the U.S. thathelps grow lean meat —— but it was not ““vigorously enforced”” until its Health Ministry took over testing from the Ministryof Economic Affairs at the beginning of 2011, the official explained. ““As long as the zero-tolerance policy is in place, exporters need to be confident”” that they are shipping meat that isractopamine-free, he said. Taiwan and the U.S. do not have export verification procedures in place, so importers andexporters must coordinate independently, the source added. ““I know it’’s a top priority for our people,”” the official said, referring to U.S. government efforts to persuade Taiwanto change its stance on beef. He said there had not been any breakthroughs yet, ““but that doesn’’t mean they’’re notworking on it.”” A USDA spokeswoman said yesterday (March 15) that she had no further details to provide at this time about theadministration’’s efforts to resolve the ractopamine issue. A business source familiar with U.S.-Taiwan relations said the issue has ““exasperated”” U.S. trade officials and ledthem to cancel talks on the Trade and Investment Framework Agreement (TIFA), which have been stalled since 2007.Prior to the ractopamine flap, the two sides had not formally set a date for the resumption of TIFA talks, but there hadbeen momentum to hold them in February, the source said. Taiwanese trade officials say that they are waiting for Codex —— a commission formed by the World Health Organiza-tion and the Food and Agriculture Organization that sets food safety standards —— to adopt a recommended maximumresidue limit (MRL) for ractopamine, the source said. The officials expect Codex to make some kind of move onractopamine this summer, he added, but the effort could be blocked by France. If Codex does adopt a recommended MRL, Taiwan would then move to incorporate that MRL into its own regula-tions and pave the way to accept more beef from the U.S., the source said. Taiwan is not a Codex member but it is notunusual for the country to adopt rules set by international agencies without officially joining them because of its trickysovereign status with regard to China, he explained. Codex agreed last July to further consider MRLs for ractopamine at its session to be held this summer, according toits 2010 annual report. However, Taiwan will hold its legislative elections next January and its presidential elections in March, the businesssource noted. Because the ractopamine issue is ““highly contentious”” domestically, it is unlikely that politicians will take it4 INSIDE US-CHINA TRADE - - March 16, 2011
  5. 5. up in advance of those elections or in the near term afterward —— pushing any potential resolution of the issue toward theend of 2012, he said. For now, the issue is ““dead in the water,”” the source added. The USDA spokeswoman said early last month that with the flare-up of the beef issue, ““the current environment isnot conducive to holding productive high level TIFA discussions.”” She added that the U.S. ““will consider the matter ofwhen to resume high-level TIFA talks in the future”” (Inside U.S. Trade, Feb. 11). U.S. beef exports to Taiwan dropped 14 percent by volume and 4 percent by value in January, according to theindustry official, who predicted the more pronounced drop in February because importers are now ““gun shy”” of bringingin U.S. meat unless they are assured it is ractopamine-free. The U.S. does raise some cattle without the use of ractopamine, but the substance is used by most producers toencourage muscle growth. The industry source said that it would not be possible to supply Taiwan across all the levels ofits market —— from the grocer to the steakhouse —— with 100 percent ractopamine-free product. He noted that the U.S. has an agreement with the European Union to supply it with hormone-free beef, but said thedifference between the Taiwanese and EU markets is ““huge.”” U.S. producers supply the EU mostly with beef intended forhigh-end consumers, while shipping to Taiwan a wider range of cuts at various price levels. With U.S. shipments curtailed, Australia and New Zealand are gobbling up the U.S. share of the Taiwanese market,the industry source said. ““The longer we have a reduced presence, the harder it will be to win market share back,”” headded. Beef exports to Taiwan boomed in 2010, reaching approximately $200 million, after setting a record in 2009 of totalsales amounting to $140 million. Much of the increase in 2010 reflects the fact that 2010 was the first year the U.S. couldship bone-in beef products to Taiwan, one source said. Ractopamine is approved for use in the United States and 25 other countries. Taiwan conducted its own risk assess-ment in 2007 and found that ractopamine was safe for use, and notified the World Trade Organization that it intended toimplement a MRL for ractopamine use in cattle and pigs, according to the USDA spokeswoman. However, the Taiwan authorities have failed to implement either of these MRLs as a result of opposition from thedomestic pork industry, the USDA spokeswoman said, adding that there is no scientific basis for questioning the safety ofthe use of ractopamine within the MRLs set by the U.S., South Korea, Japan, and other countries. —— Ben HancockIn China Innovation Hearing, ITC Promises Feedback On Retaliation Impact International Trade Commission (ITC) Acting Director of Operations Karen Laney has promised to deliver tomembers of Congress information on Chinese contracting in the U.S., whether curtailing it would violate global traderules, and the potential impact on U.S. businesses if Washington were to revoke China’’s most favored nation trade status. Speaking before the House subcommittee on terrorism, nonproliferation and trade in a March 9 hearing dedicated toChina’’s indigenous innovation policies and their effect, Laney repeatedly deferred prodding questions from lawmakersbut assured them that she would follow up. The lawmakers’’ offices said early this week they had not yet received anyinformation from the ITC or a time line by which it will be delivered. In the hearing, House legislators shared common concerns that Chinese companies are stealing innovative technologyand ideas from American businesses and then reaping the benefits of biased government procurement policies, and soughtways to address the problem. Subcommittee Ranking Member Brad Sherman (D-CA) said he was not satisfied by promises made by Chinesepresident Hu Jintao in January that China will de-link procurement from so-called ““indigenous innovation”” policiesbecause a preference for China-made products has already been communicated. ““You can’’t un-ring the bell. The word has already gone out,”” Sherman said, according to a transcript. ““[I]f you are abureaucrat or provincial authority in China and you buy products containing American intellectual property instead ofChinese intellectual property, you are subject to reeducation regardless of what the official regulations finally state.”” China’’s linkage of procurement to indigenous innovation has typically meant that when government offices buyproducts in categories labeled by Beijing as ““innovative,”” they give special preference to ones developed by Chinesecompanies in order to bolster domestic innovative industries. The Obama administration has touted Hu’’s pledge to de-linkinnovation policies from procurement preferences as meaningful, and has promised active follow-up to insist on commer-cially significant implementation of the commitment (Inside US-China Trade, Feb. 9). Laney also promised to respond after the hearing to Sherman’’s request to know whether some kind of retaliatorylegislation —— to the effect of prohibiting U.S. state, local, and federal governments from procuring anything from Chinauntil Beijing signs the WTO government procurement agreement —— would be in violation of World Trade Organizationrules. The ITC does not formulate policy recommendations, but is allowed to offer fact-based analysis. In opening remarks, subcommittee Chairman Ed Royce (R-CA) also expressed doubts about the commitments madeby Hu during his visit to Washington early this year, and said the U.S. should ““aggressively challenge”” China’’s procure-INSIDE US-CHINA TRADE - - March 16, 2011 5
  6. 6. ment policies. The chairman said that ““a number”” of members on the subcommittee have called for Congress to act toblock Chinese companies from bidding on U.S. government contracts until China signs the WTO procurement agreement. Royce asked Laney if she had information on the current extent of Chinese contracting at the state, local, and federallevel in the United States. ““No,”” Laney answered, ““and I will look into that and get back to you on that.”” A spokeswoman for Royce on March 14 said the lawmaker’’s office has yet to receive that information from the ITC.She added, however, that Royce also is seeking information on the same subject from the Congressional ResearchService. In a March 14 interview, Sherman said he had yet to hear from the ITC. ““We will be prodding them to get a re-sponse,”” he said, although he confessed that he expected any answer would be ““as non-informational as possible.”” An ITC spokeswoman said on March 15 that she did not yet have information about the timing of any ITC responseto the lawmakers’’ queries. In the hearing, Laney spoke as the ITC’’s acting director of operations —— a position that hasbeen rotating since the director retired —— but has since returned to her role as director of the office of industries, thespokeswoman added. During the hearing, Laney also promised to ““get back to”” Sherman and Rep. Ted Poe (R-TX) about what theeffect would be on the U.S. economy if the U.S. were to revoke China’’s most favored nation status, which Congressgranted in 2001 with China’’s accession to the WTO. Sherman introduced a bill in the last Congress that would revoke China’’s MFN status. In the interview, the congress-man said he would reintroduce that bill ““soon”” but did not expect it to pass or be taken up by any committee. ““It is a chance for those of us who see us coming to the precipice to at least have tried to pull us back from it,”” saidSherman. ““This year it would be symbolic. Maybe next year, the year after, it becomes more viable.”” The bill, Sherman said, would revoke MFN six months after enactment and calls for emergency negotiations betweenWashington and Beijing with the goal of creating a new trade agreement that would achieve a ““balanced relationship””within four years. In the second half of the hearing, witnesses were asked whether they would favor revocation of MFN for China, andwere split in their responses. Philip Levy, a scholar at the American Enterprise Institute, said he was opposed. PeterBrookes of The Heritage Foundation would not comment because he was not familiar with Sherman’’s bill. But Thea Lee,chief of staff at the AFL-CIO, described the proposal as ““certainly something that we should look into.”” Lee also noted that China’’s discriminatory indigenous innovation practices, which typically have been raised as anissue by multinational firms trying to compete on the ground with Chinese competitors inside China, is naturally relatedto labor’’s traditional concerns of job loss in the United States. ““One of the points I wanted to make in general is that the AFL-CIO has been raising the issues about job loss withrespect to our unfair and imbalanced trade relationship with China for many years,”” Lee said. ““And what we said many,many years ago was that the manufacturing jobs might move first but the engineering and know-how would surelyfollow.””China Might Boost Supports In Doha Deal . . . begins on page oneexemptions, the United States has agreed to cut in half its de minimis allowances for product-specific and non-product-specific subsidies under the Doha round. China will likely not face any de minimis cuts, sources said. One source pointed to paragraph 32 of the draft modalities text, which states that countries with no final boundamber box commitments —— like China —— ““shall continue to have the same access as under their existing WTO obliga-tions to the limits provided for product-specific and non-product-specific de minimis.”” Furthermore, another source pointed out that China will also benefit from paragraph 12 of the draft modalities text,which states that new WTO members can maintain the full extent of their subsidy outlays under the de minimis exemptioneven if that amount exceeds their WTO-established overall subsidy limit. That overall limit is known as China’’s overall trade-distorting support (OTDS) ceiling. One source said paragraph 12is important for China because the value of its two amber box exemptions may exceed its OTDS ceiling, depending onfood prices and China’’s value of production in coming years. Paragraph 12 allows China to exceed the OTDS limit so long as it does not exceed the de minimis exemptionscontained in its accession deal. It states that OTDS limits ““shall be understood not to have the effect of constraining theaccess of [recently acceded members] to their de minimis entitlements under the terms of their accession to the WTO.””The issue of China’’s insulation from subsidies cuts in the Doha round has been discussed by the European Union, UnitedStates, Australia and others in Geneva, but observers concede that these provisions allowing China to increase its subsi-dies have essentially already been ““locked in”” as part of the draft agricultural modalities text. It is unlikely that the United States or anyone else would be able to reopen these provisions and change them. At thesame time, sources said the EU is looking to ensure that this perceived problem is not replicated in the context of Russia’’sWTO accession process, which is still ongoing. The impact of a final Doha deal on China stands in stark contrast to U.S. commitments under a final Doha6 INSIDE US-CHINA TRADE - - March 16, 2011
  7. 7. agricultural package, which would force the United States to reduce its amber box outlays and overall subsidy outlays. Under the draft modalities, the United States has to reduce its amber box subsidy ceiling from the current $19.1billion to $7.6 billion. The United States has also committed to lowering its OTDS ceiling down to $14.5 billion, al-though many observers believe it will have to offer deeper cuts to secure a final deal. Overall, China has drastically increased farm subsidy outlays for grains since 2004, and that spending is onlyexpected to increase in the coming year, according to a March 8 report published by the U.S. Department of Agriculture’’sForeign Agricultural Service (FAS). These policies, which were implemented to encourage grain production and maintain profit margins for farmers,include direct payments to grain farmers, price support programs, subsidies for the purchase of farm machinery, and adirect subsidy for fuel and fertilizers. The FAS report states that China will likely continue expanding these programs. The increase in farm subsidies has been most dramatic for the purchase of machinery and the direct subsidy for fueland fertilizer. While China offered roughly $45.6 million in machinery subsidies in 2005, that number is up to about $2billion in 2009, according to the report. Likewise, China offered no fuel or fertilizer subsidies in 2005, but offered about $11.5 billion in that area in 2009.Overall, Chinese outlays for grain production subsidies totaled about $18.7 billion in 2009 and about $20.3 billion in2010, the report estimates. These figures reflect Chinese monetary values converted at current exchange rates. Chinese direct payments have also increased, albeit in a less dramatic fashion, FAS said. Whereas direct payments tograin farmers totaled about $2 billion in 2005, they increased to about $2.3 billion in 2010, the report states. In the past, several members of the U.S. agriculture community have questioned whether China is providing trade-distorting agricultural subsidies in excess of its de minimis exemptions (Inside U.S. Trade, May 14). According to a 2010WTO report, China is the world’’s top producer of agricultural products by value, with production valued at $536billion. —— Jamie StrawbridgeFinance Chairman, Members, Press Kirk On China Trade Barriers, Currency Senate Finance Committee Chairman Max Baucus (D-MT) and members of his committee from both parties lastweek urged U.S. Trade Representative Ron Kirk for a more aggressive stance on battling China’’s trade barriers, particu-larly those related to intellectual property rights (IPR) piracy and the manipulation of its currency. According to Baucus, a more aggressive stance on China’’s trade barriers is one of two requirements for meetingPresident Obama’’s goal of doubling U.S. exports by 2015. The other is approval of three pending free trade agreements with Korea, Colombia, and Panama, Baucus said in hisopening statement at a March 9 hearing on the President’’s trade agenda. The FTAs along with China’’s trade barriers and currency manipulation were the topics raised most often by senatorsduring the hearing. On China, members flagged complaints about piracy of business software and academic journals, the policy onindigenous innovation, and China’’s failure to open its government procurement market by joining the GovernmentProcurement Agreement (GPA) in the World Trade Organization. Both Baucus and Sen. Tom Coburn (R-OK) urged a tougher approach on China’’s IPR piracy, with Coburn urgingUSTR to quit hitting China with a ““fly swatter and start hitting them with a hammer.”” He said if China fails to change its““highly inadequate”” protection of IPR, he may pursue legislation to bring about change. Baucus asked Kirk if USTR has developed a concrete strategy for battling China’’s piracy of business software,including an estimate of what human resources and funds China would have to expend to curb such piracy. Kirk questioned whether USTR has the resources to develop such a detailed plan telling China exactly how toenforce its IPR obligations, but offered to brief Baucus and his staff on current USTR efforts in that area. Baucus challenged Kirk to use the resources of companies most hurt by China’’s piracy to develop such a strategicplan, to which Kirk replied USTR is working closely with businesses and industry on the issue. However, Baucus clearly signaled that U.S. businesses are not satisfied with the way USTR is handling the issue.““They complain to me, so I complain to you,”” he said. He urged Kirk to use an analysis by the International Trade Commission that will provide ““hard data”” on howChinese piracy impacts the United States. ““I know that you’’re going to take that report and use that as leverage toadvance the ball here,”” Baucus said. The study, which Baucus said will be issued in May, is the second part of an analysis he said he requested with Sen.Charles Grassley (R-IA). The first part of the study, which has already been issued, described China’’s IPR practices,Baucus said. Kirk made it clear USTR is not satisfied with China’’s enforcement efforts on IPR, but that ultimately China istoo important a market to ““just say we’’re going to walk away from the table.”” He said U.S. companies estimate that more than 90 percent of the software used in government agencies is pirated,INSIDE US-CHINA TRADE - - March 16, 2011 7
  8. 8. and that companies such as Microsoft have said that a reduction of that piracy to 50 percent would be an ““extraordinary””economic gain for the United States. He also recited the Chinese commitments made during the January state visit of Chinese President Hu Jintao thatChina will provide funds for government agencies to buy legal software and to conduct audits of those agencies. Sen. Bob Menendez (D-NJ) urged Kirk to respond to what he said has been the increasing Chinese online piracy ofcommercial and non-profit journals over the past two years. He urged Kirk to focus more on the enforcement of the commitments that China has made in this area, and said hehoped to work with USTR to address this issue. Beyond these IPR issues, Kirk’’s responses to the complaints raised by senators largely consisted of reiterating hisdetermination to continue fighting China’’s barriers and reciting the most recent commitments China has made in the JointCommittee on Commerce and Trade (JCCT). When Sen. Debbie Stabenow (D-MI) raised China’’s failure to open its procurement market by failing to join theGPA, Kirk recited the latest Chinese commitment to provide a new offer this year and to have it cover ““many”” of theirsubcentral government entities. In response to a complaint from Stabenow on China’’s indigenous innovation policies, which seek to promoteinnovation in Chinese companies by discriminatory methods that encourage foreign technology or IPR transfer, Kirk saidChina has committed at the JCCT to ““back off”” its policy that companies could only sell certain products if a product wasmanufactured and copyrighted in China. The U.S. got China to drop that requirement, which he said was a way to forceU.S. companies to hand over their intellectual property, he said. Kirk said the indigenous innovation issue ““concerns us greatly,”” and that USTR would continue to press China onthis issue as well as government procurement. ““We’’re still going to watch this very carefully,”” he said. ““But we’’reencouraged that if we can see follow-through on those two [issues], that will go a long way to addressing two of ourmajor concerns.”” Stabenow only briefly urged the administration to focus on currency manipulation, but the issue was promi-nently raised by Sen. Olympia Snowe (R-ME) as a major cause of U.S. job losses, particularly in her home state. She urged the administration to develop a ““coherent strategy”” to combat it to the point of suggesting that the U.S.should only enter into future trade agreements if the president can certify countries have not engaged in currency manipulation. Snowe said the devastating impact of China’’s currency manipulation on employment in Maine is one of the reasonsshe introduced legislation with Sen. Sherrod Brown (D-OH) to allow the artificially low value of the yuan to be offset incountervailing duty cases. Kirk responded that the currency issue is under the jurisdiction of the Treasury, but said President Obama andTreasury Secretary Timothy Geithner have pressed China on increasing the value of the yuan in relation to the dollar atthe highest level. He said USTR sees the need to focus on other elements of China’’s policies, such as the complaints raised on indig-enous innovation, the application of the value-added tax, and IPR violations. He said he believes the U.S. has madeprogress on these issues in the JCCT and in the Strategic and Economic Dialogue. Sen. Ben Cardin (D-MD) also highlighted China’’s currency manipulation as a ““major trade concern”” for himself andother senators. ““Progress has been made, but it’’s been slow and [currency manipulation] disadvantages U.S. manufactur-ers and producers and it will continue to be an issue that’’s going to be raised,”” Cardin said. In his opening statement, Baucus also flagged the U.S. job losses caused by China’’s currency manipulation, but hedid not press the issue further during the hearing.AD/CVD Overturn Irks U.S. . . . begins on page oneconclusion that the U.S. had properly shown that state-owned enterprises (SOEs) that are input suppliers for the targetedimports in the four U.S. trade remedy cases at issue in the dispute were ““public bodies.”” Under WTO rules, they must bepublic bodies in order to be able to confer government subsidies, and the AB rejected that SOEs are necessarily public bodies. U.S. Trade Representative Ron Kirk on March 11 called the Appellate Body decision ““deeply troubling”” and said itappeared to be ““clear case of overreaching”” by the AB. He said USTR was ““reviewing the findings closely in order tounderstand their full implications.”” The ““Appellate Body overreach will only undermine confidence in the WTO as an institution —— and will only make itmore difficult to reach new agreements to liberalize trade,”” said House Ways and Means Trade Subcommittee RankingMember Jim McDermott (D-WA). ““Unfortunately, this is not the first time the Appellate Body has appeared to ignore the text of an agreement reachedbetween WTO Members on issues related to trade remedies,”” McDermott added . He said that this AB report is ““the same movie we saw in the zeroing cases,”” a reference to another AB overrule thatwent against a U.S. trade remedy practice. House Ways and Means Ranking Member Sander Levin (D-MI) also criticized the ruling on March 11. ““The Appellate8 INSIDE US-CHINA TRADE - - March 16, 2011
  9. 9. Body’’s findings will make it more difficult for market economy countries to confront the trade distortions inherent in thetroubling trend toward ‘‘state capitalism,”” he warned. A petitioners’’ lawyer said the potential negative ramifications of the ““profoundly disturbing,”” unappealable ABdecision could be a reevaluation by the U.S. of its negotiating approach on trade-remedy issues. This would mean furthercomplications for concluding the Doha round even if negotiating modalities are agreed later this year, he said. ““If you have an Appellate Body that is going to make [stuff] up like this, then the only way you can protect yourselfis to negotiate every exception you may want to do,”” he complained. The AB ““fully endorsed China’’s interpretation of what the term ‘‘public body’’ means.”” according to a lawyer close tothe Chinese side. That view is, he said, that a public body is ““an entity invested with authority to act on behalf of thegovernment”” and one that therefore ““must have some kind of express governmental authority.”” He said the AB’’s definition ““obliterates”” the rationale that the Commerce Department has used in its recent CVDinvestigations involving China: that SOEs ““are the government”” for purposes of the CVD laws. The AB did uphold thepanel’’s finding that Chinese state-owned banks (SOBCs) could be considered public bodies for CVD purposes. ““It’’s important to bear in mind that in these four investigations …… most of the subsidy margins come from allegedsubsidies from these SOEs,”” said the source close to the Chinese side. The source close to China called the AB ruling a ““decisive”” win for China’’s position on both the double remedies andpublic bodies aspects of the case, which he said were the two most important ““systemic issues”” raised by the challenge. ““Clearly there is a double remedy problem”” in the way Commerce calculates CVDs and AD duties simultaneouslyagainst NMEs like China, he said. ““It’’s not even debatable at this point.”” He noted that the Court of International Trade has also ruled against the Commerce double remedy practice in aseparate domestic ruling, on imports of tires made by the Chinese subsidiary of GPX International Tire, that is currentlyunder appeal by Commerce. Another lawyer close to domestic industry termed the appellate body’’s decision ““very disappointing.”” Heacknowledged that the reversals by the appellate body of the original panel’’s decision and of the original U.S. trade-remedy decisions in the four AD/CVD cases at issue constituted ““pretty negative developments,”” but insisted it was tooearly to speculate on the full ramifications or what could be done to counteract it. The AB did agree with the United States that certain subsidies were specific to the industries targeted, and also““appeared to agree”” with the U.S. stance that Commerce could use benchmarks from outside China to measure the““benefit”” of certain subsidies, said the source close to domestic industry. But he readily acknowledged that those ““helpfulparts”” of the AB report were ““not the most significant parts”” of the decision. The latter viewpoint was underscored strongly by a petitioners’’ attorney familiar with USTR thinking on thematter, who said the three members of the AB who made the ruling should be barred from reviewing future cases becausethey chose to substitute their own views for the rules negotiated by the WTO parties. The three panelists were Presiding Member Ricardo Ramierez-Hernandez, the chair of International Trade Law at theMexican National University (UNAM) in Mexico City, whose AB term expires in 2013; Lilia Bautista, a former chair ofthe Philippines’’ Securities and Exchange Commission who currently serves as a consultant to the Philippine JudicialAcademy training school for justices, judges and lawyers, whose term expires this year; and Peter Van den Bossche, aprofessor of international economic law and head of the Department of International and European Law at MaastrichtUniversity in the Netherlands, whose term ends in 2013. The AB’’s approach in this ruling is a ““caricature”” of proper WTO decision-making, charged the petitioners’’attorney. Instead of remaining loyal to the WTO members’’ intent when they negotiated the the General Agreementon Tariffs and Trade 1994, the Antidumping Agreement, the Agreement on Subsidies and Countervailing Measures(SCM) and China’’s accession protocol, the AB members’’ instead appeared to try to find a way to overturn thatintent, which they found ““distasteful,”” rather than be ““bound by the bargain the members made,”” according to thisattorney. From a ““legal interpretation”” standpoint, he said, the AB overturn thereby ““makes a real mockery of the standard ofreview”” that ought to properly be applied by appellate bodies when reviewing decisions, which should be limited in scopeto assessing whether the panel correctly interpreted international trade rules. ““If the Appellate Body can make up something like this, it can make up literally anything, which is profoundlydisturbing”” and means ““there is nothing in our entire AD/CVD system that it could not rule against,”” he said. Faced withthat reality, the United States may feel compelled to change its relationship to the WTO and how it negotiates trade rulesthere, he warned. Distrust of the fealty of the AB to the bargains reached in past rules negotiations could mean the U.S. and others whorely on trade remedy measures to address unfair trading practices will feel the need to negotiate more explicit rules thatspell out every possible practice to which their administering agencies might resort. This would be contrary to the commonly accepted international approach of negotiating only those practices thatthey, as sovereign bodies, agree to refrain from undertaking. Such a shift in approach would greatly bog down any rulesINSIDE US-CHINA TRADE - - March 16, 2011 9
  10. 10. negotiations that are part of the Doha round, he noted. ““The agreements will have to look like the phone book, specifying what you can do rather than what you cannot do,””he said. On double remedies, he said, the AB report specifically is wrong ““both factually and legally”” in asserting that theoffsetting of domestic subsidies with CVDs produces double counting when the NME AD methdology is applied, as wellas in suggesting that the U.S. ever agreed to refrain from using countervailing duties in tandem with NME AD methodol-ogy. ““If you look at China’’s [WTO accession] protocol, they agreed to be subject to CVDs and to the special AD ap-proach,”” he said. ““That could not be any clearer in the protocol.”” In finding that there is double counting, the AB made the ““fundamental error”” of assuming that the CVD remedyexists only to offset the price effect of the subsidy rather than the subsidy itself, which is not the case. ““Whether subsidies affect the price or not is irrelevant, and that’’s the law we have lived with since 1947,”” which iswhat the original panel concluded and what should not have been overturned, he said. The only mention in any agreement of limitations on the use of countervailing against subsidies in tandem withcalculation of antidumping duties is in GATT 1947, and that reference explicitly only proscribes the simultaneousoffsetting of export subsidies in tandem with the use of AD duties. The four cases at issue in the Chinese challengeinvolved domestic subsidies, not export subsidies. ““It’’s not that these Appellate Body people’’s idea, as a policy matter, is idiotic,”” he said. ““It’’s just that it has neverbeen agreed to —— and that’’ not how it’’s supposed to work.”” Under WTO rules, the WTO will now formally adopt the AB ruling within 30 days of its issuance on March 11. If theU.S. agrees then that it wants to implement the ruling, then it receives a ““reasonable period of time”” to implement thedecision and will probably begin what is known as the ““Section 129”” process to bring the targeted trade-remedy determi-nations into compliance with the decisions. The ““reasonable period of time”” in the past has frequently been about 15months. —— Scott OttemanChina Auto Plan Divides, Conquers . . . begins on page oneauthorities have already employed a quiet, divide and conquer strategy with individual foreign automakers, several ofwhom have already negotiated additional production capacity with NDRC and agreed to produce indigenous brands. The NDRC usually only makes its most pointed demands for an indigenous brands component as a quid pro quo forapproval of additional capacity in face-to-face meetings rather than in writing, according to an industry source based inChina. If some favorable response is not forthcoming, the capacity application is ““slow-walked”” and never gets finalapproval, the source said. Another reason joint industry opposition is unlikely is that different automakers and analysts are split over how theyare interpreting the intent and likely impact of the indigenous brands requirement. Some view the new requirement as a necessary cost of doing business in the booming Chinese market, as well as anopportunity to pursue the low-cost end of the domestic Chinese auto market without damaging the reputation of theirhigher-cost, higher-quality global brands. ““Instead of fighting the policy, they are embracing it to reach out to more consumers at lower price points,”” said BillRusso, president of Synergistics Limited, a Beijing-based automotive consultancy. According to Russo, one such exampleis GM, which is already creating the lower-cost indigenous brand Baojun in its joint venture with Shanghai AutomotiveIndustry Company (SAIC). But Russo recognized that some foreign automakers whose own brands are already targeting the mass market couldbe reluctant to cannibalize existing sales with a new indigenous brand. Firms that might take that position could includeHyundai and Ford, whose Ford Focus brand seeks to appeal to the lower-middle segment of the Chinese market, hespeculated. But Hyundai’’s Kia Motors announced a new deal this month that includes an indigenous brands component, saidindustry sources. And Volkswagen, which has been negotiating additional capacity for several years while resisting theindigenous brands requirement, also recently concluded a deal with NDRC that reportedly includes such a commitment.An announcement of that new plan is expected as early as the Shanghai auto show, which takes place in mid-April. Other companies continue to resist the indigenous brand requirement, seeing it less as an opportunity than as animplicit, non-compensated technology transfer given that the intellectual property for the new brand will be based almostentirely on the foreign joint venture partner’’s IP, yet the profits and decision-making as to its future will be shared 50-50with the Chinese SOE joint venture partner. Another fear expressed by some foreign firms is that the eventual global marketing of a Chinese joint-ventureindigenous brand would dilute their profits as compared to the global marketing of a brand owned 100 percent outright bythe foreign maker. ““Global automakers will have no way to block exports of indigenous brand product because the Chinese will own10 INSIDE US-CHINA TRADE - - March 16, 2011
  11. 11. rights to those products,”” said Michael Dunne, president of the Dunne and Company Ltd. Hong Kong-based autoconsultancy, reflecting this view. ““Instead of selling Chevrolets to Morocco from, say, Korea, and collecting 100 percentof the revenues, GM’’s indigenous products from China, when exported, will put only 50% of the revenues into GMpockets.”” According to Dunne, the new regulation ““is designed to accelerate China’’s emergence as a car exporting powerhouseto the world.”” The indigenous brands aspect is being pushed by NDRC, he said, because the traditional joint venturearrangement between foreign automakers and SOEs, which has been in effect for more than a quarter century, has notsucceeded in modernizing the Chinese SOE joint-venture partners. But even with the new regulation, Russo predicted it was more likely that China’’s first successful Chinese-brand autoexport would come from one of the independent Chinese automakers rather than from the 50-50 joint ventures permittedbetween foreign firms and SOEs. Independent firms such as Chery, BYD, Geely and Great Wall have been much moresuccessful in capturing the 30 percent of the Chinese market that has not been buying foreign brands, he noted. He stressed that China’’s indigenous brands requirement is only one of five auto sector priorities that will be high-lighted in the new automotive policy. The indigenous brands requirement, along with three others, will be implementedwith a view as to how they contribute to the NDRC’’s main overall objective of encouraging industry consolidation bylimiting production capacity and reducing market fragmentation caused by having too many firms. The other goals of the plan are to direct foreign investment toward specific policy objectives such as developing theinterior, western-region provinces; encouraging fuel-efficient vehicles; and promoting safety and environmental care. China’’s definition of NEVs does not include traditional hybrid vehicles, only all-electric plug-ins or plug-ins thatmainly rely on battery power rather than fossil fuels. —— Scott OttemanKirk Sees More Sales Of Legitimate Software After China IPR Commitments U.S. Trade Representative Ron Kirk has told a member of the House Ways and Means Committee that China’’s mostrecent commitments on curbing the use of pirated software in government agencies marks ““a significant opportunity forgenuine progress”” that he expects to lead to increased sales of legitimate software in China. ““We expect to see concrete and measurable results, including indications of a more robust market for legal software,””he said in a written reply to Rep. Bill Pascrell (D-NJ). ““As always, we will monitor progress on these issues to make surethat China is following through on its commitments, using such tools as the [Joint Committee on Commerce and Trade]IPR Working Group, and other opportunities.”” Kirk said the U.S. is also asking China to undertake additional enforcement efforts in the context of its ““SpecialCampaign against counterfeiting and piracy that it launched in October. Pascrell posed the question to Kirk in the wake of a Feb. 9 hearing before Ways and Means and USTR sent thereplies following the March 9 hearing before the Senate Finance Committee on the President’’s trade agenda, according toKirk’’s reply. Kirk also noted that he will study the results of a forthcoming study by the International Trade Commission that willquantify the impact of China’’s IPR infringement and its indigenous innovation policy on the United States. At the March9 hearing, Senate Finance Committee Chairman Max Baucus (D-MT) urged Kirk to use that report, which he said wouldbe issued in May, as the basis for further USTR action. In his response, Kirk pointed out that President Barack Obama raised the issue of Chinese software piracy withChina’’s President Hu Jintao in January and that China committed to allocate new funding for legal software purchases bygovernment agencies at the December JCCT. In addition, China committed to ““audit the use of legal software and publishthe results of those audits,”” Kirk said. He said China also said it would promote the use of licensed software in private and state-owned companies through““software asset management programs.”” SUBSCRIPTIONS: Publisher: Jutta Hennig Chief Editor: Scott Otteman 703-416-8500 or Contributing Editors: Jamie Strawbridge, Adam Behsudi, Matthew Schewel, 800-424-9068 Alex Lawson, Ben Hancock Production Manager: Lori Nicholson Production Specialists: Daniel Arrieta, Sharonel Pedronan, Andrew Leonard Inside US-China Trade is a service of and is published every Wednesday by Inside NEWS OFFICE: Washington Publishers, P.O. Box 7167, Ben Franklin Station, Washington, DC 20044. © Inside Washington 703-416-8539 Publishers, 2011. All rights reserved. Contents of Inside US-China Trade are protected by U.S. copyright laws. No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system, Fax: 703-416-8543 or translated into any language in any form or by any means, electronic or mechanical, without written permission of Inside Washington Publishers.INSIDE US-CHINA TRADE - - March 16, 2011 11
  12. 12. China Includes Sub-Central Procurement Officials In GPA Delegation China on March 9 for the first time included officials from sub-central governments in a delegation that traveled toGeneva to discuss its accession to the Agreement on Government Procurement (GPA) in the World Trade Organization,said diplomatic sources who cited this move as a sign that China was seeking to fulfill its commitment to cover sub-central entities in its next revised accession offer. This assessment was shared by Nicholas Niggli, the Swiss diplomat who chaired the March 9-11 GPA Committeemeeting that focused primarily on concluding ongoing talks to revamp the GPA, but also included a plurilateral segmenton China’’s accession. Niggli called the inclusion of sub-central government representatives ““the most significant new development”” in thisweek’’s accession talks. China has pledged, both in Geneva and in bilateral discussions with the United States, to transmitits second revised accession offer, including provincial and municipal government entity coverage, before the last meetingof the GPA Committee in 2011. China’’s initial offer and its first revised offer were both criticized by trading partners for their high thresholds andfailure to cover government procurement agencies beyond the central government level. Niggli noted that it also was a ““positive sign”” this week that GPA parties did not raise specific bilateral demands withChina during the Committee’’s plurilateral session dedicated to China’’s accession. He said the U.S., the EU, Canada, andSwitzerland, among others, commented during the group meeting that they had been undertaking significant bilateralactivity with China on its accession process. ““It is indeed a strong signal that the bilateral channels are working in a satisfactory manner and that GPA parties areconfident they can move forward and address the difficult issues with China through direct contact,”” he said on March 10. The accession process is in ““excellent condition,”” he said. ““On the one side, China continues to be engaged, to be forthcoming and committed to acceding to the process,””Niggli added. ““On the other side, major GPA parties are also very much engaged, organizing lots of useful bilateraltechnical assistance exchanges with China, enhancing their mutual understanding and allowing China to better understandthe experiences [implementing the GPA] in their own countries.”” SUBSCRIPTION ORDER FORM Sign me up to receive ChinaTradeExtra, including the newsletter Inside US-China Trade, at $595 per year in the U.S. and Canada; $645 per year elsewhere (air mail). Lower prices are available to subscribers of Inside U.S. Trade and World Trade Online. Call for details. To order by mail: Send this coupon to ChinaTradeExtra, Name __________________________________________________ P.O. Box 7167, Ben Franklin Station, Washington, DC 20044. Affiliation _______________________________________________ To order by phone, fax or e-mail: Call 800-424-9068 (in the Washington, DC area, 703-416-8500). Fax to 703-416-8543. Address _________________________________________________ E-mail at City/State/Zip ____________________________________________ Please check one: Visa Bill me Phone __________________________________________________ MasterCard Check enclosed Card number _________________________________________ E-mail __________________________________________________ Name on the card _____________________________________ Signature _______________________________________________ Exp. date ____________________________________________12 INSIDE US-CHINA TRADE - - March 16, 2011