China’s Failure To Honor WTO Commitments Subject of CECC Chairs’ Letter to U.S. Trade Representative
China’s Failure To Honor WTO Commitments Subject of CECC Chair
s’ Letter to U.S. Trade Representative
Failure to implement promised legal reforms and ongoing human rights violations do "lasting harm to U.S. national interests," say Chairs.
September 22, 2016
Media Contact: 202-226-3777
(Washington DC)—In a letter this week to the Office of the U.S. Trade Representative (USTR), the Chairs of the Congressional-Executive Commission on China (CECC), Representative Christopher Smith and Senator Marco Rubio, expressed their concern about the Chinese government’s failure to honor “many of its World Trade Organization (WTO) commitments.” “It is critical that China, a tremendous beneficiary of the global trading system, be held accountable for failing to honor its commitments, said the CECC Chairs,.” The letter was written in response to USTR’s request for public comments as it prepares its annual report to Congress on China’s compliance with the commitments made in connection with its accession to the WTO.
Raising the issues of Internet censorship, failure to embrace the rule of law, the arbitrary detention of American businesswoman Sandy Phan-Gillis, and the passage of China’s law governing foreign NGO activity in China, the Chairs concluded that “time and again, we have observed that there is a direct link between concrete improvements in human rights and the rule of law in China and the security and prosperity of both the United States and China” and asked the U.S. Trade Representative to include the issues raised in their letter in the USTR’s annual report on China.
The Chairs also raised the expropriation of property from U.S. investors by the government of the Macau Special Administrative Region of China—in a 2010 case that remains unresolved— and asked the USTR to include the issue in its annual reporting and urged U.S. officials to engage with the government of Macau and the Chinese government to quickly resolve the issue.
The full text of the letter can be found below.
September 21, 2016
Office of the U.S. Trade Representative
600 17th Street, NW
Washington, DC 20150
Re: Request for Comments Concerning China’s Compliance with WTO Commitments
As chair and cochair of the Congressional-Executive Commission on China (CECC) we submit our concerns regarding China’s failure to comply with many of its World Trade Organization (WTO) commitments, specifically legal commitments related to the rule of law and human rights.
The U.S.-China Relations Act of 2000, which requires USTR to submit a report to Congress each year on China’s compliance with commitments made in connection with its accession to the WTO, also created the Commission which we chair. The Commission is charged with monitoring China’s compliance with international human rights standards and encouraging the development of the rule of law in China. As the Commission’s own Annual Report from 2015 illustrates and as our forthcoming 2016 Annual Report also makes clear, there is little to be encouraged about in these areas.
Rather, 15 years after China joined the WTO, it has largely failed to implement the substantive legal reforms anticipated at the time and has persisted in violating international human rights standards and its own domestic laws with lasting harm to both U.S. national interests and the Chinese people.
We commend to USTR’s attention the Commission’s report as mentioned, which addresses these concerns in significant detail. Below is a list, far from comprehensive, of some of the most troubling trends and developments we’ve observed over the past year:
- Failure to Embrace Rule of Law: When China acceded to the WTO, the Chinese government committed to “apply and administer in a uniform, impartial, and reasonable manner all its laws, regulations and other measures.” However, few would reasonably assert that rule of law has taken root in China. In fact, the Chinese government and Communist Party have embraced rule by law whereby the law is used to repress and control, and often disregarded when it does not serve their purposes. The obvious impact on the Chinese people is on display in the Commission’s Political Prisoner Database which presently contains more than 1,300 records of men and women currently detained or imprisoned for exercising his or her rights under international law, such as peaceful assembly, freedom of religion, freedom of association, and free expression. But, perhaps less obvious is the direct impact that rule by law has on U.S. interests. We share USTR’s observations from last year that “… the absence of rule of law in China fosters the use of vague and unwritten policies and does not provide for meaningful administrative or judicial review of Chinese regulatory actions, thereby enabling government officials to take unilateral actions without fear of legal challenge. Exacerbating this situation is the fact that foreign companies are hesitant to speak out publicly, or to be perceived as working with their governments to challenge China’s foreign investment approval practices, because they fear retaliation from Chinese government officials.” (2015 USTR Report to Congress on China’s WTO Compliance, pp. 95-96.); and, that “Both domestic and foreign companies often avoid seeking resolution of commercial disputes through the Chinese courts, due to deep skepticism about the independence and professionalism of China’s court system and the enforceability of court judgments and awards” (2015 USTR Report to Congress on China’s WTO Compliance, p. 163). Systemic weakness in the rule of law and outright abuse of the law in China contribute to discrimination against foreign companies and individuals and inadequate intellectual property protection. Additionally, China’s non-market economy, in which state-owned enterprises receive preferential treatment, further undermines the notion of a uniform or impartial legal system.
- Internet Censorship: China’s vast Internet censorship regime, or Great Firewall, is the most sophisticated system of Internet control in the world. Among the countless websites blocked in China are those of the New York Times, Bloomberg News, the Wall Street Journal, and Reuters. Chinese authorities also continue to control access to commercial information and impose restrictions on economic reporting. This reality limits the free flow of news and information and restricts market access online which poses serious trade obstacles to U.S. companies and investors. Between January 2010 and November 2015, Chinese companies raised US$36.7 billion from U.S. investors in initial public offerings, according to analysis by Bloomberg News. As of August 2016, however, the Public Company Accounting Oversight Board (PCAOB), a non-profit corporation established by the U.S. Congress to oversee public company audits, reportedly remained unable to obtain legal and financial documents from China-based companies listed on U.S. stock exchanges. We welcomed USTR’s April 2016 decision to add China’s Internet censorship to the annual list of trade barriers but we believe more must be done on a practical level to reflect the reality that censorship is a trade barrier that directly impacts U.S. interests. We would also highlight that we’ve observed little if any change in the last three years of USTR’s reporting on the important issue of “China’s arbitrary blocking of commercial websites.” We are hopeful that this year’s report will feature new, updated, and relevant information as the situation can hardly be described as static.
- Arbitrary Detention: The United Nations Working Group on Arbitrary Detention released an opinion in June 2016 finding that American citizen and businesswoman Sandy Phan-Gillis had been arbitrarily detained. Phan-Gillis had been the president of the Houston-Shenzhen Sister Cities Association, and she was taking part in a trade delegation with the mayor pro-tem of Houston when she was detained by Chinese authorities in March 2015. The opinion marked the first time the Working Group had determined that the Chinese government arbitrarily detained an American citizen. According to the U.S. State Department, the Chinese government has placed restrictions on communication between U.S. consular officials and Phan-Gillis and these restrictions are “inconsistent” with China’s obligations under the U.S.-China Consular Convention. She has at times been denied access to legal counsel, held in solitary confinement at an undisclosed location, interrogated at least daily and sometimes more. Her physical health has suffered and she has been hospitalized on at least two occasions. Her grievous mistreatment raises serious questions about the safety of any American citizen traveling or conducting business in China.
In addition to these issues, it is also worth mentioning that with the passage in April 2016 of a widely criticized law governing overseas NGO activity in China, the government codified an approach to civil society that treats many groups and individuals operating in this space as security threats rather than as vital contributors to Chinese society. The broad range of organizations covered under the law, such as industry and trade associations, chambers of commerce, and development and rights-based entities, is likely to have a chilling effect on innovation, exchanges, and cooperative projects. Also of note, the Government of the Macau Special Administrative Region of China expropriated the property of U.S. investors and citizens in a well-documented case in 2010 that remains unresolved thereby setting a harmful precedent for U.S. companies conducting current and future business in China. Given the Chinese government’s unique relationship with the Macau government under the “one country, two systems” policy, USTR should report on developments in this case and U.S. officials should work with authorities in Macau and Beijing to quickly resolve the issue.
Time and again we have observed that there is a direct link between concrete improvements in human rights and the rule of law in China and the security and prosperity of both the United States and China. The security of U.S. investments and personal information in cyberspace, the health of the economy and environment, the safety of food and drug supplies, and the protection of intellectual property will all depend on the Chinese government’s willingness to comply with international law, enforce its own laws, allow the free flow of news and information, fulfill its WTO obligations, and protect the basic rights of Chinese citizens. The concerns outlined above are far from exhaustive. Rather they are among the most pressing and most relevant to the work of the Congressional-Executive Commission China. As you prepare your 15th annual report we comment this information to your attention as we believe it is critical that China, a tremendous beneficiary of the global trading system, be held accountable for failing to honor its commitments.
Congressman Chris Smith
Senator Marco Rubio