U.S.-China Trade: Summary of 2003 World Trade Organization Transitional Review Mechanism for China, 2005

January 25, 2005

The Honorable Max Baucus
Ranking Minority Member
Committee on Finance
United States Senate

The Honorable Charles B. Rangel
Ranking Minority Member
Committee on Ways and Means
House of Representatives

The Honorable Sander M. Levin
Ranking Minority Member
Subcommittee on Trade
Committee on Ways and Means
House of Representatives

Subject: U.S.-China Trade: Summary of 2003 World Trade Organization
Transitional Review Mechanism for China

China’s 2001 accession to the World Trade Organization (WTO) raised expectations with Congress and the private sector about the prospects for China to reform its markets and allow greater access to foreign goods and services. As part of our long term body of work related to China’s membership in the WTO, we reported in October 2004 on how the U.S. Trade Representative (USTR) and the Departments of Commerce, State, and Agriculture were positioned to monitor and enforce China’s compliance with its WTO commitments in 2003.1 In that report, we examined the multilateral annual WTO review of China’s progress, referred to as the TransitionalReview Mechanism (TRM). We found that the TRM has ongoing limitations in its participation and its procedures. We made recommendations to improve related U.S. government activities. In a subsequent request, you asked us to provide detailed information about the TRM process in 2003 so that you could better gauge the level of activity and the efficacy of the United States and other WTO members’ efforts to utilize it.

In response to your request, we compiled information about WTO members' participation and about the particular implementation issues raised by the United States and other WTO members’ during the TRM, using WTO documents. We organized this information into separate tables for each of the 16 WTO subsidiary bodies with a role in reviewing China’s WTO commitments (encs. I through XVI).2 We further discuss our methodology below.

Summary
As seen in the enclosed tables, 11 out of a total of 148 WTO members participated in the 2003 multilateral review of China’s trade commitment implementation. These members participated in the TRM process by submitting written questions to China prior to meetings of 16 WTO subsidiary bodies with a role in the Transitional Review Mechanism (TRM), or by raising issues verbally with China during these meetings, which occurred from September to December 2003. Specifically, 7 WTO members both submitted written questions and discussed issues verbally in some TRM meetings: the United States, the European Communities, Japan, Chinese Taipei,3 Australia, Canada, and Mexico. Four other members—Brazil, Korea, Norway, and Pakistan—only participated verbally during some meetings. The United States was the most active member in the 2003 TRM, participating one or both ways in 14 of the 16 subsidiary bodies; the exceptions were the Committees on Balance-of-Payments Restrictions and Rules of Origin. Table 1 displays an overview of member participation for the 2003 TRM.

Click here to download the GAO report.