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The article focuses on the U.S. Government Accountability Office's review of U.S. federal funds for U.S.-China research and development (R&D) collaboration and U.S. contributions to multilateral institutions. Topics discussed include the importance of federally-funded R&D to the U.S., the amount of funds provided by U.S. federal agencies for R&D collaboration with foreign entities in fiscal year 2020, and the focus of R&D awards funded by the U.S. Centers for Disease Control and Prevention.

The article focuses on a study conducted by the Government Accountability Office (GAO) on nonimmigrant visa (NIV) for travelers of the U.S. It mentions that the U.S. expand its capacity and increases its NIV applicants to meet the goals of Executive Order (E.O.). It states that maintaining a high level of security to protect borders helps in improving NIV processing. It highlights the highest demand countries for the U.S. NIVs are India, Brazil, China and Mexico.

The article discusses the U.S. Government Accountability Office's opinion regarding the Office of Science and Technology Policy (OSTP)'s violation of a statutory provision which prohibits the agency from using appropriations for bilateral activities with People's Republic of China's government. As stated, the OSTP also violated the Antideficiency Act. It is added that the OSTP admitted to engaging in prohibited activities.

Congress mandated that the United States Trade Representative (USTR) annually assess China's trade compliance and report its findings to Congress. In addition, USTR conducted an interagency "top-to-bottom review" of U.S. trade policies toward China. USTR's resulting February 2006 report outlined U.S objectives and action items. GAO was asked to (1) evaluate USTR's annual China trade compliance reports to Congress and the degree to which they present information necessary to fully understand China's compliance situation and (2) examine the status of the plans presented in USTR's February 2006 top-to-bottom report. GAO systematically analyzed the contents of USTR's compliance reports from 2002 to 2007 and reviewed information on the status of agencies' monitoring and enforcement activities. USTR's annual reports to Congress, which detail U.S. industry concerns with China's compliance and progress on resolving such concerns, are very consistent in format and language. However, they lack any summary analysis about the number, scope, and disposition of reported issues that would facilitate understanding of developments in China's trade compliance and better tracking of the effectiveness of U.S. monitoring and enforcement efforts with China. For example, USTR's narrative reports make it difficult to understand the relative level of progress China made in each trade area in a given year. USTR reported issues that spanned nine trade areas and ranged from very specific issues to broader concerns; however, USTR's narrative reports make it difficult to ascertain specific changes or trends. GAO's systematic content analysis quantified the number, type, and disposition of trade issues and identified 180 individual compliance issues from 2002 to 2007. GAO analysis showed that China resolved a quarter of these issues, but made no progress on one-third of them. Also, GAO's analysis revealed that China's progress in resolving compliance issues varied by trade area and has been slowing over time, especially since 2004, when most progress was made. GAO could only partially determine the status of U.S. agencies' implementation of USTR's 2006 top-to-bottom report, which outlines broad objectives and priority goals for U.S.-China trade relations as well as specific action items. GAO found that key trade agencies made considerable progress implementing planned action items. They increased bilateral engagement with the Chinese and monitoring and enforcement capacity by increasing staffing levels and training opportunities, but staffing gaps and limited Chinese language capacity are challenges at some agencies. However, GAO could not determine agencies' progress toward achieving some U.S. objectives and goals identified in the report. USTR does not formally assess its progress or measure program results. The lack of linkages between U.S. objectives and planned action items and undefined terms make it difficult to assess whether the steps agencies... [ABSTRACT FROM AUTHOR]

The article focuses on the impact of the establishment of the U.S.-China Economic and Security Review Commission for the assessment of the national security implications of the trade and economic relationship between the U.S. and China. The Government Accountability Office (GAO) sets the management policies which, in turn, do not suit with the control standards for federal government. In this connection, GAO offers eight recommendations for the improvement of the business operation.

U.S. companies adversely affected by unfair imports may seek a number of relief measures, including antidumping (AD) duties. The Department of Commerce (Commerce) classifies China as a nonmarket economy (NME) and uses a special methodology that is commonly believed to produce AD duty rates that are higher than those applied to market economies. Commerce may stop applying its NME methodology if it finds that China warrants designation as a market economy. In light of increased concern about China's trade practices, the conference report on fiscal year 2004 appropriations requested that GAO review efforts by U.S. government agencies responsible for ensuring free and fair trade with that country. In this report, the last in a series, GAO (1) explains the NME methodology, (2) analyzes AD duties applied to China and compares them with duties applied to market economies, and (3) explains circumstances in which the United States would stop applying its NME methodology to China and evaluates the potential impact of such a step. Commerce agreed with our findings, commenting that our report provides timely and helpful information on the NME methodology and its application to China. Commerce's methodology for calculating AD duties on nonmarket economy products differs from its market economy approach in that (1) since NME prices are unreliable, it uses price information from surrogate countries, like India, to construct the value of the imported products and (2) it limits eligibility for individual rates to companies that show their export activities are not subject to government control. Companies that do not meet the criteria or do not participate in Commerce investigations receive "country-wide" rates. China has been the most frequent target of U.S. AD actions. On 25 occasions, Commerce has applied duties to the same product from both China and one or more market economy. China (NME) duties were over 20 percentage points higher than those applied to market economies, on average. This is because average China country-wide rates were over 60 points higher than comparable market economy rates. Individual China company rates were similar to those assigned to market economy companies, on average. Commerce can declare China a market economy if the country meets certain criteria, thus ending the use of surrogate price information and country-wide rates in China AD actions. These changes would have a mixed impact. Duties would likely decline for Chinese companies not assigned individual rates. Individual company rates would likely diverge, with those that do not cooperate with Commerce receiving rates that are substantially higher than those that do cooperate. In any case, it appears that the actual trade impact of the NME methodology will decline as the portion of total export trade conducted by Chinese companies assigned individual rates increases and as the country-wide rates that largely account for the comparatively high average rates applied to China decline in importance. [ABSTRACT FROM AUTHOR]

U.S. companies adversely affected by unfair imports may seek a number of relief measures, including antidumping (AD) duties. The Department of Commerce (Commerce) classifies China as a nonmarket economy (NME) and uses a special methodology that is commonly believed to produce AD duty rates that are higher than those applied to market economies. Commerce may stop applying its NME methodology if it finds that China warrants designation as a market economy. In light of increased concern about China's trade practices, the conference report on fiscal year 2004 appropriations requested that GAO review efforts by U.S. government agencies responsible for ensuring free and fair trade with that country. In this report, the last in a series, GAO (1) explains the NME methodology, (2) analyzes AD duties applied to China and compares them with duties applied to market economies, and (3) explains circumstances in which the United States would stop applying its NME methodology to China and evaluates the potential impact of such a step. Commerce agreed with our findings, commenting that our report provides timely and helpful information on the NME methodology and its application to China. Commerce's methodology for calculating AD duties on nonmarket economy products differs from its market economy approach in that (1) since NME prices are unreliable, it uses price information from surrogate countries, like India, to construct the value of the imported products and (2) it limits eligibility for individual rates to companies that show their export activities are not subject to government control. Companies that do not meet the criteria or do not participate in Commerce investigations receive "country-wide" rates. China has been the most frequent target of U.S. AD actions. On 25 occasions, Commerce has applied duties to the same product from both China and one or more market economy. China (NME) duties were over 20 percentage points higher than those applied to market economies, on average... [ABSTRACT FROM AUTHOR]

China is important to the global economy and a major U.S. trading partner. By joining the World Trade Organization (WTO) in 2001, China pledged to further liberalize its trade regime and follow global trade rules. While U.S.-Chinese commercial relations have expanded, controversies have emerged, including the size and growth of the U.S. trade deficit with China, China's lack of intellectual property protection, and China's implementation of its WTO obligations. Despite these challenges, China's vast consumer and labor markets present huge opportunities for U.S. exporters and investors. GAO (1) analyzed U.S. goods and services exports to China, (2) assessed how U.S. exports to China have fared against those of other major trading partners, and (3) analyzed U.S. investment and affiliate sales in China. We provided the Office of the U.S. Trade Representative, the Departments of Agriculture and Commerce, and the International Trade Commission with a draft of this report for their review and comment. These agencies chose to provide technical comments from their staff. We incorporated their suggestions as appropriate. China is a rapidly growing market for U.S. goods and services. Although still small, accounting for only 4 percent of U.S. goods exports in 2004, U.S. goods exports to China tripled, from $11 billion to $33 billion, and increased across virtually all major categories from 1995 to 2004. Over the same period, China went from the ninth-largest to the fifth-largest U.S. market for goods behind Canada, the European Union, Mexico, and Japan. Although smaller, U.S. services exports grew from $3 billion to $7 billion, from 1995 to 2004. Economic growth in China and liberalization of its market, including joining the WTO, are among the factors driving the impressive export growth. Despite rapid growth, U.S. goods exports to China have not kept pace with those of other countries, particularly exports from Asia. The U.S. share of world goods exports to China declined from 12 percent to 9 percent, from 1995 to 2004, while South Korea and Taiwan's shares increased and at times surpassed that of the United States. The decline is partly due to increased integrated production among China's neighbors; growing resource-based exports, such as oil, from smaller countries; and macroeconomic factors, including exchange rates. Sales to China by U.S. affiliates located in China grew faster and exceeded U.S. exports to China in 2003, $38 billion versus $35 billion, while U.S. foreign direct investment grew from $2 billion to $15 billion from 1995 to 2004. Growth in U.S. investment and affiliate sales, particularly for goods, is due at least in part to China's attraction as a growing economy, including its burgeoning domestic market, high productivity and low labor costs, and developing infrastructure. [ABSTRACT FROM AUTHOR]

The 1988 Trade Act requires the Department of the Treasury to annually assess whether countries manipulate their currencies for trade advantage and to report semiannually on specific aspects of exchange rate policy. Some observers have been concerned that China and Japan may have maintained undervalued currencies, with adverse U.S. impacts, which has brought increased attention to Treasury's assessments. In 2004, Congress mandated that Treasury provide additional information about currency manipulation assessments, and Treasury issued its report in March 2005. Members of Congress have continued to propose legislation to address China currency issues. We examined (1) Treasury's process for conducting its assessments and recent results, particularly for China and Japan; (2) the extent to which Treasury has met legislative reporting requirements; (3) experts' views on whether or by how much China's currency is undervalued; and (4) the implications of a revaluation of China's currency for the United States. In commenting on a draft of this report, Treasury emphasized it does consider the impact of the exchange rate on the economy, and factors influencing exchange rates also affect U.S. production and competitiveness. Treasury has not found currency manipulation under the terms of the 1988 Trade Act since it last cited China in 1994. Treasury officials make a positive finding of currency manipulation only when all the conditions in the Trade Act are satisfied--when an economy has a material global current account surplus and a significant bilateral trade surplus with the United States, and is manipulating its currency with the intent to gain an unfair trade advantage. Treasury said that in its 2003 and 2004 assessments, China did not meet the criteria for manipulation, in part because it did not have a material global current account surplus and had maintained a fixed exchange rate regime through different economic conditions. Japan did not meet the criteria in 2003 and 2004 in part because its exchange rate interventions were considered to be part of a macroeconomic policy to combat deflation. Treasury has generally complied with the reporting requirements for its exchange rate reports, although its discussion of U.S. economic impacts has become less specific over time. Recent reports stress the importance of broad macroeconomic and structural factors behind global trade imbalances, which Treasury officials contend meets the intent of economic impact requirements. Many experts have concluded that China's currency is undervalued, but by widely varying amounts, while some maintain that undervaluation cannot be determined. The significant variation in estimates can be attributed in part to different methodological approaches, but experts also believe that exchange rate assessments are especially challenging for rapidly developing economies such as China's. Among experts who believe China's currency is undervalued, views on policy steps to correct the imbalance differ. A revaluation of China's currency could have implications for various aspects of the U.S. economy, although the impacts are hard to predict. They depend on multiple factors, including how much appreciation is passed through to higher prices for U.S. purchasers and the extent to which reduced imports from China are replaced with imports from other countries. In addition to affecting trade-related sectors, a revaluation could have implications for U.S. capital flows. [ABSTRACT FROM AUTHOR]

Today's hearing takes place not only at a time of increasing trade between the United States and China but also amidst a period of ongoing concern about the growing U.S. trade deficit with China, which totaled $162 billion in 2004. Managing this relationship with one of the United States' most important trading partners is an effort that calls upon the resources of nearly every aspect of the U.S. trade policy apparatus. Our ongoing body of work has examined several aspects of this apparatus, including U.S. government efforts to ensure China's compliance with complex and far-reaching World Trade Organization (WTO) commitments, as well as the federal government's application of available trade remedies against China. As part of that work that has been issued to date, we have recently put forth a number of recommendations to the key executive branch agencies about how to improve the U.S. government's efforts in these areas. To provide Congress with an update on these issues, this statement discusses (1) the key findings and recommendations from our recently issued work on U.S. government efforts to ensure China's compliance with WTO commitments, as well as U.S. efforts to protect U.S. intellectual property rights overseas and (2) issues related to how the United States has applied a key trade remedy--the China textile safeguard. These observations are based on a series of reports initiated at the bipartisan request of various congressional committees. That work has included an analysis of China's commitments, surveys and interviews with private sector representatives, the results of two annual assessments of the U.S. government's compliance efforts, a review of overseas intellectual property rights protection, and, most recently, a review of the China textile safeguard. The complexity, breadth, and ongoing nature of many of the problems with China's WTO compliance demonstrate the need for a cohesive and sustained effort from the key U.S. agencies to effectively monitor and enforce China's implementation of its commitments. The U.S. Trade Representative (USTR), and the Departments of Commerce, State, and Agriculture (USDA) have coordinated on policy issues and increased staff resources to enhance their capacity to carry out these efforts. Our previous work acknowledged the administration's concerted and deliberate strategy of high-level bilateral engagement with China. However, recent turnover of key U.S. trade officials has seemed to interfere with this strategy this year. These developments punctuate the relevance of our recommendations for the key agencies to institutionalize U.S. compliance efforts at the working levels through better strategic planning and human capital management. Specifically, in order that agencies more effectively plan and measure results, we recommended that each of the key agencies improve performance management of their China-WTO compliance efforts. Further, we recommended that, in an environment of high and regular staff turnover, the key agencies should direct additional management attention to ensuring that staff have an opportunity to acquire training relevant to their China-WTO compliance responsibilities. The agencies generally responded positively to most aspects of these recommendations, and indicated that efforts were under way to enhance performance management and provide additional training opportunities for staff. We are in the process of following up with the agencies regarding their specific plans for implementing the recommendations. Finally, in our review of intellectual property protection overseas, we found that coordination on policy matters had helped lead to strengthened laws but that enforcement in China and other countries remains weak. We suggested that the Congress review the efforts of the key interagency mechanism for coordinating law enforcement efforts on intellectual property. Managing the U.S.-China trade relationship goes beyond ensuring access for U.S. businesses seeking to enter China's market. It also includes ensuring U.S. industries are protected from harmful surges in imports and unfair Chinese trade practices. The terms of China's WTO membership allowed the United States and other members to put special mechanisms in place to respond to such situations while China's economy was in transition. Our most recent report examined the U.S. government's interagency Committee for the Implementation of Textile Agreements (CITA) use of one of these special mechanisms--the China textile safeguard. We found that procedural shortcomings have impaired effective application of this safeguard mechanism. First, 17 months elapsed before CITA issued any procedures and, second, the procedures did not clearly indicate how CITA would proceed in "threat-based" cases. A court-ordered injunction has prevented further consideration of the threat-based cases until litigation is resolved and, as a result, new actual market disruption cases have been initiated instead. Additionally, the lack of production data impaired access to safeguard measures for U.S. sock producers and may pose similar problems if other producers in similar circumstances seek application of this mechanism. To address these issues, we recommended that CITA clarify its procedures for threat-based safeguard cases and that Commerce take actions to make production data more available for industry sectors that are at risk of experiencing disruptive import surges. Lastly, we have an ongoing body of work on other import relief mechanisms regarding China, including countervailing and antidumping actions, and the China product-specific safeguard measures authorized under section 421 of the Trade Act of 1974, as amended. [ABSTRACT FROM AUTHOR]

U.S. government efforts to ensure China's compliance with its World Trade Organization (WTO) commitments require a sustained and multifaceted approach. To provide Congress with an update on these issues, GAO (1) discussed the key findings, conclusions, and recommendations from our recently issued work on China-WTO issues and (2) updated the Commission on a number of ongoing GAO reviews on China trade and economic issues. The observations are based on a series of reports initiated at the bipartisan request of various congressional committees. That work has included an analysis of China's commitments, surveys and interviews with private sector representatives, and the results of two annual assessments of the U.S. government's compliance efforts. Additionally, our work on China- WTO issues included fieldwork in Washington, D.C., China, and at the WTO headquarters in Geneva, Switzerland. The complexity, breadth, and ongoing nature of many of the problems with China's WTO compliance demonstrate the need for a cohesive and sustained effort from the key U.S. agencies to effectively monitor and enforce China's implementation of its commitments. The U.S. Trade Representative (USTR), and the Departments of Commerce, State, and Agriculture (USDA) have coordinated on policy issues and increased staff resources to enhance their capacity to carry out these efforts. However, there are three areas in which we noted that these key agencies should take steps to improve their efforts and maximize the effectiveness of the resources allocated to the task of securing the benefits of China's membership in the WTO. First, although U.S. government efforts to ensure China's compliance emphasize high-level bilateral engagement, we recommended that USTR take steps to maximize the potential benefits of the WTO's annual multilateral review of China's compliance, referred to as the Transitional Review Mechanism (TRM). Second, to more effectively plan and measure results, we recommended that each of the key agencies improve performance management of their China-WTO compliance efforts. Third, we recommended that, in an environment of high and regular staff turnover, the key agencies should direct additional management attention to ensuring that staff have an opportunity to acquire training relevant to their China-WTO compliance responsibilities. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

China's 2001 accession to the World Trade Organization (WTO) required China to reform its economy and trade practices. As part of ongoing work, GAO reviewed how the U.S. Trade Representative (USTR) and the Departments of Commerce, Agriculture, and State pursued China's WTO compliance in 2003. Specifically, this report (1) discusses the scope and disposition of China's compliance problems, (2) reviews the U.S. government's bilateral and multilateral approaches for resolving these problems, (3) assesses the key agencies' strategies and plans for ensuring compliance, and (4) assesses how the agencies have adapted their staff resources to conduct compliance activities. China has successfully implemented many of its numerous WTO commitments, but USTR reported that over 100 separate compliance problems arose in 2002 and 2003. These problems ranged from specific, relatively simple issues to broader, more systemic concerns. Most problems continued from 2002 to 2003, an indication that China was able to address the more easily resolvable problems, while the more complex issues persisted. Furthermore, new problems emerged, with many arising from phased-in commitments that China was due to implement in 2003. The U.S. government continued to pursue resolution of compliance problems in 2004, and the agencies noted the successful resolution of several major issues of economic importance to U.S. companies. The key U.S. agencies have done much to ensure China's compliance, but GAO found three areas in which these key agencies could take steps to improve their efforts: First, U.S. efforts to address compliance problems emphasized high-level bilateral engagement with China in 2003, with increased senior-level delegations to China and elevated participation in formal consultative mechanisms. U.S. multilateral engagement with China in 2003 reflected more emphasis on working through regular WTO committee business, because the WTO's annual review of China's implementation, the Transitional Review Mechanism (TRM), has ongoing limitations. Nevertheless, the TRM has benefits and these could be enhanced by increased member participation and earlier U.S. submissions, which would maximize the potential for full and informed responses from China. Second, although interagency and intra-agency coordination on policy and high level compliance strategies was generally effective, GAO found various performance management limitations that make it difficult to clearly measure and assess the outcome of the key agencies' China-WTO compliance efforts. GAO found that the specific units within the agencies that are most directly involved with these efforts could improve how the agencies measure and report the results of their activities. Furthermore, developing clearer linkages between unit-level results and agency goals that are established in accordance with the Government Performance and Results Act of 1993 could enhance the effectiveness of these units' activities. Third, turnover and lack of training limited the effectiveness of increased staff resources for China-WTO compliance activities. New staff members were called upon to take up complex monitoring and enforcement activities while relying primarily on on-the-job training, which was complicated by high and often predictable staff turnover. Attention to human capital management is particularly important, given the long-term challenges associated with ensuring China's compliance. [ABSTRACT FROM AUTHOR]

As the second largest source of foreign direct investment in China, U.S. companies continue their keen interest in China's implementation of its World Trade Organization (WTO) commitments. China's 2001 WTO commitments include specific pledges to increase market access, liberalize foreign investment, continue fundamental market reforms, and improve the rule of law. In 2002, GAO reported on selected U.S. companies' views, finding that many commitment areas, particularly those related to rule of law, were important to U.S. companies. GAO also found that company representatives expected China's reforms would have a positive impact on their business operations but expected some difficulties during implementation. In 2003, GAO continued to analyze companies' views about (1) the extent to which China has implemented its WTO commitments and (2) the impact of China's implementation of its WTO commitments on U.S. companies' business operations. GAO collected the views of representatives from 82 U.S. companies with a presence in China. GAO focused on companies in the agriculture, banking, machinery, and pharmaceutical industries. Results reflect a response rate of 60 percent of the study population. These responses may not reflect the views of all U.S. companies with activities in China. U.S. company representatives who completed GAO's 2003 questionnaire thought that China had implemented most of the 26 listed WTO commitment areas on average only to some or little extent. When respondents assessed five areas found to be of greatest importance to their companies overall--(1) standards, certifications, registration, and testing requirements; (2) customs procedures and inspection practices; (3) intellectual property rights; (4) tariffs, fees, and charges; and (5) consistent application of laws, regulations, and practices--responses were mixed, but they reported that China had taken at least some steps to implement these commitment areas. Our analysis showed that the importance placed on specific areas differed among the agriculture, banking, machinery, and pharmaceutical industries. For example, agricultural respondents identified tariffs as important while banking respondents identified scope of business restrictions for services as important. Few respondents were able to assess all of China's commitment areas for reasons that varied depending on each company's experience and operations in China. More than two thirds of respondents reported that China's implementation of its WTO commitments had a positive impact on their companies' ability to do business in China. However, some respondents indicated that China's reform efforts had created difficulties for their company operations in China. Overall, company representatives reported that company activities, such as volume of production in China and company revenue stream, have increased since China joined the WTO. However, respondents noted that changes in business activities cannot be directly attributed to China's WTO accession. [ABSTRACT FROM AUTHOR]

China's December 2001 membership in the World Trade Organization created substantial opportunities for U.S. companies seeking to expand into China's vast market, and for significant reforms within China at all levels of government. However, the benefits of China's membership in the World Trade Organization are contingent on China's successful implementation of its commitments. In recognizing this fact, Congress has provided increased resources to executive branch agencies to enhance the government's ability to effectively monitor and enforce China's compliance. In this study, one of several that GAO will conduct for Congress on China-World Trade Organization issues, GAO was asked to (1) examine key agencies' organizational changes and the interagency process used to carry out compliance responsibilities and (2) review how the agencies have addressed compliance issues that arose during the first year of China's membership, by using two specific examples; the examples illustrate the type of compliance issues U.S. officials face but are not representative of China's compliance record overall. The U.S. Trade Representative and other agency officials provided technical and editorial comments mainly on our characterization of issues relating to tariff-rate quotas and the multilateral review of China's trade policies. We clarified these issues and made other changes as appropriate. In order to better monitor China's compliance with its World Trade Organization commitments, the U.S. Trade Representative and the departments of Agriculture, Commerce, and State have (1) reorganized or established intra-agency teams to coordinate their oversight of China's compliance; (2) increased staff from about 28 to 53 in key units in Washington, D.C., and China from fiscal year 2000 to 2002; and (3) reflected these changes in their agencies' recent performance and strategic plans. In addition, the U.S. Trade Representative is leading a new interagency working group on China's compliance to identify, analyze, and resolve problems. This group, which utilizes private sector input, was very active in monitoring and responding to issues during the first year of China's membership, although it took some time for agencies to work out their respective roles and responsibilities in the interagency group. U.S. agencies' experiences in two areas during the first year of China's World Trade Organization membership illustrate the challenges ahead in addressing compliance issues. First, problems regarding China's commitments to grant market access to certain bulk agricultural commodities through the use of tariff-rate quotas show the extensive effort required to identify difficulties, gather and analyze information, and begin to resolve complex and technical issues with China. Second, disagreement among World Trade Organization members over how to conduct a comprehensive annual review of China's trade policies within the World Trade Organization led to a limited first-year review that did not meet U.S. expectations, and illustrated the challenges of gaining consensus in this multilateral forum to improve future oversight. Problems in both of these areas are unresolved, and U.S. officials continue to pursue their resolution with China in 2003. [ABSTRACT FROM AUTHOR]

China's entry into the World Trade Organization (WTO) on December 11, 2001, brought the world's seventh largest economy under global trade liberalizing rules. If implemented, China's commitments will open China's economy and reform its trading activities, thereby expanding U.S. companies' opportunities for investing in China and for exporting goods, agricultural products, and services to China. Understanding U.S. companies' expectations is fundamental for policymakers to judge the degree to which the benefits of China's WTO membership are being realized. GAO analyzed U.S. companies' views about (1) the importance of, (2) the anticipated effects of, and (3) prospects for China implementing its WTO commitments. GAO surveyed a random sample of 551 U.S. companies and interviewed 48 judgmentally selected companies in four cities in China. Survey results reflect responses from 191 companies--a response rate of 38 percent--and may not reflect the views of all U.S. companies with activities in China. U.S. companies that responded to the GAO survey reported that most of China's WTO commitments are important to them. These companies, which already have a presence in China, identified rule of law--related reforms as more important than other reforms to increase market access, to liberalize foreign investment measures, and to make fundamental changes to continue China's transition to a market economy. Specifically, WTO commitments in the areas of intellectual property rights; consistent application of laws, regulations, and practices; and transparency of laws, regulations, and practices emerged as the most important areas in which China made commitments. Most companies responding to GAO's survey expected that China's WTO commitments would have a positive impact on their business operations, that the impact has already begun or would begin within 2 years and that it would lead to an increase in their volume of exports to China, market share in China, and distribution of products there. However, some company representatives whom GAO interviewed in China believed that China's implementation would be incremental. Survey respondents expected that most of the WTO--related commitment areas listed in GAO's survey would be difficult for Chinese officials to implement. Companies expected the important rule of law--related commitment areas to be the most difficult commitments to carry out and had mixed expectations about implementation for different government levels and geographic areas across China. Besides rule of law--related reforms, company representatives described how they expect that China's need to protect its domestic interests and China's culture with regards to business relationships might create impediments to implementation. [ABSTRACT FROM AUTHOR]

Since 1986, China has narrowed the gap between the U.S. and Chinese semiconductor manufacturing technology from between seven to 10 years to two years or less. China's success in acquiring manufacturing technology from abroad has improved its semiconductor manufacturing facilities for more capable weapons systems and advanced consumer electronics. The multilateral Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies has not affected China's ability to obtain semiconductor manufacturing equipment because the United States is the only member of this voluntary arrangement that considers China's acquisition of semiconductor manufacturing equipment a cause for concern. Under the Export Administration Regulations pertaining to China, the general licensing policy is to approve applications, except those items that would make a direct and significant contribution to specific areas of China's military. Furthermore, U.S. agencies have not done the analyses, such as assessing foreign availability of this technology or the cumulative effects of such exports on U.S. national security interests, necessary to justify such a practice or serve as the basis for licensing decisions. Consequently, the executive branch lacks a sound, well-documented basis for making export-licensing decisions to China. [ABSTRACT FROM AUTHOR]

The United States and China concluded a bilateral trade agreement in November 1999 on issues related to China's joining the World Trade Organization (WTO). The Administration has asked Congress to pass legislation that would allow the President to grant China permanent normal trade relations status. This report updates GAO's past work on the status of China's membership negotiations, including parts of GAO's earlier analysis that were recently declassified by the U.S. Trade Representative. GAO discusses (1) the results of the November 1999 bilateral Agreement on Market Access between China and the United States and (2) the status of China's ongoing multilateral negotiations in WTO. [ABSTRACT FROM AUTHOR]

China has the largest economy worldwide that is not covered by the World Trade Organization (WTO). WTO seeks to promote open and fair international trade through increased transparency (public openess), rules, and commitments to reduce barriers on foreign goods and services, and provide a binding system for resolving disputes. China would like to join WTO and is now in the negotiation phase. Joining WTO will require China to make major changes to its economy. Although Congress does not vote on China's WTO membership, the U.S. Trade Representative is required to consult with Congress before a WTO vote it taken. The administration plans to ask Congress to enact legislation to resolve a potential conflict between the conditional most-favored-nation status afforded China under U.S. law and the unconditional most-favored-nation status provided by the WTO Agreements. If China becomes a member and Congress has not enacted this legislation, the administration intends to invoke a WTO provision that would permit the United States not to apply the WTO Agreements to China. An important consequence of this action would be that China and the United States would not be obligated to provide each other with all the WTO trade commitments that they would give to other WTO member states. In such a situation, U.S. businesses may not be able to benefit fully from the commitments that China will make to open its markets to other WTO members. [ABSTRACT FROM AUTHOR]