From: / Will Leahy, Manager, China Policy
To: / Asia Task Force, China AmChams
I) JCCT/SED Outcomes
II) USTR Releases Annual Report on China’s Compliance with WTO Commitments
III) Members of Congress Highlight Likelihood of China Bill in ’08, Frustration with JCCT/SED Outcomes, and Skepticism Surrounding Korea FTA
IV) Bain Capital/Huawei Deal Submitted to CFIUS for Review
I) JCCT/SED Outcomes
Below, please find links to fact sheets from the Department of Treasury and Office of the U.S. Trade Representative summarizing the outcomes of this week’s meetings of the Joint Commission on Commerce and Trade (JCCT) and Strategic Economic Dialogue (SED) in Beijing.
JCCT outcomes can be accessed on the USTR web site.
SED outcomes can be accessed on the Treasury web site.
Outcomes from both dialogues included:
·  Two Memoranda of Agreement (MOA) on the safety of food and feed as well as drugs and medical products;
·  Increased commitments in the area of financial sector reforms, including allowing for foreign issuance of RMB stocks and bonds;
·  Commitments in the area of environmental sustainability, including the establishment of a national emissions trading program in China, as well as a Memorandum of Understanding to combat illegal logging.
The U.S. Chamber expressed its support for the outcomes of the dialogues in a press release, while also highlighting the need for increased market access commitments on the part of the Chinese in order to help mitigate growing protectionist sentiment.
The next meeting of the Strategic Economic Dialogue will be held in Washington in June.
II) USTR Releases Annual Report on China’s Compliance with WTO Commitments
The Office of the U.S. Trade Representative released on Tuesday its Congressionally-mandated annual report assessing China’s compliance with its WTO commitments. The report analyzes the status of China’s WTO compliance efforts in a number of areas, including services, intellectual property rights, agriculture, and investment.
Among other things, the report highlighted growing concern in the business community and in the U.S. government with China’s “continued pursuit of problematic industrial policies that rely on excessive Chinese government intervention in the market through an array of trade distorting measures.”
The full report can be accessed on the USTR web site.
III) Members of Congress Highlight Likelihood of China Bill in ’08, Frustration with JCCT/SED Outcomes, and Skepticism Surrounding Korea FTA
Expressing disappointment with the outcomes of the JCCT and SED earlier this week, Ways and Means Subcommittee on Trade Chair Sander Levin (D-MI) stated that he expects the Ways and Means Committee to move on China legislation in 2008, “earlier rather than later.”
Levin said that a China bill would include provisions on intellectual property violations, currency manipulation, and offer improvements to China-specific safeguard provisions of U.S. trade law. Levin said that among the differing legislative approaches for addressing currency manipulation, none has been selected, but that he would be discussing the approaches with the Democratic caucus in the near future.
In addition, Levin expressed continued skepticism with the U.S.-Korea Free Trade Agreement, explaining that the agreement’s problems extend beyond automotive provisions and beef restrictions. Levin stated that the FTA needed to be renegotiated.
In addition, Senate Finance Committee Chair Max Baucus (D-MT) expressed his frustration with the lack of progress in the JCCT in expanding market access in China for U.S. beef.
IV) Bain Capital/Huawei Deal Submitted to CFIUS for Review
According to recent press reports, the proposed acquisition of Massachusetts-based 3Com by Bain Capital and Huawei technologies has been submitted to the Committee on Foreign Investment in the United States (CFIUS) for review.
The CFIUS process consists of an initial 30-day review, followed, if security concerns are raised, by a subsequent 45-day review process.
The Washington Times has reported that the Office of the Director of National Intelligence (DNI), a member of the inter-agency review process, has submitted a required threat assessment in which it characterizes the deal as posing a “threat” to U.S. national security.
Subsequent to the story and the apparent leak of information from the DNI, House Financial Services Committee Chair Barney Frank (D-MA) sent a letter to the White House expressing concern that such leaks could potentially politicize the review process, and thus compromise an objective analysis of the national security implications of the deal.
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