Source: Los Angeles Times

Promises were not honored, a report says, raising the threat of economic sanctions.
From the Associated Press
December 12, 2006

WASHINGTON — The Bush administration Monday criticized China’s record on opening its markets and said the U.S. would not hesitate to seek economic sanctions if that record did not improve.

Calling China’s performance “decidedly mixed,” U.S. Trade Representative Susan Schwab released a 100-page report that accused China of failing to live up to commitments it made five years ago, when it joined the World Trade Organization.

The annual report, which is required by Congress, said that stronger action was needed by the Chinese government to address copyright piracy.

It also said China should work harder to eliminate government policies that unfairly discriminate in favor of Chinese companies, block U.S. exports and hinder American financial and other service firms seeking to operate in China.

“Certain industries face frustrating barriers to doing business in China, and there are worrisome signs that China’s market liberalization efforts have slowed in the last year,” Schwab said in a statement.

The administration said it would not hesitate to use all the tools available, including bringing cases before the WTO if the country did not do more to lower barriers to American exports and U.S. companies.

Treasury Secretary Henry M. Paulson Jr. is leading a high-level team to China for talks Thursday and Friday on trade issues including China’s currency system. The team includes seven members of President Bush’s Cabinet as well as Federal Reserve Chairman Ben S. Bernanke.

American manufacturers call China’s currency undervalued and see it as a culprit in a U.S. trade deficit with China that is on track to surpass last year’s $202-billion record.

Paulson said the new talks, dubbed the Strategic Economic Dialogue, would “lay the groundwork for important progress down the line.”

“Rather than going issue by issue, we can look at all the items on the agenda and have conversations that really try to move the ball forward in many different areas,” Paulson said in a speech in Washington.

Sen. Max Baucus of Montana, who will head the Finance Committee when Democrats take control of Congress in January, said legislators should have a role in the dialogue with China.

“Done without Congress and without addressing the toughest issues, this dialogue will be just another lost opportunity,” Baucus said in a statement