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China, US reach minor agreements over trade issues

Officials from the US and China attended the 26th China-US Joint Commission on Commerce and Trade in Guangzhou, China, on Nov. 23, 2015. Photo: Zuma Press

The US and China said on Monday that they had reached some agreements over several trade issues, including preventing the theft of trade secrets and opening the Chinese market more broadly to American companies.

US companies welcomed what they termed as incremental progress at annual talks known as the US-China Joint Commission on Commerce and Trade, or JCCT, but said that the more important task is to complete a proposed bilateral investment treaty aimed at governing financial relations between the world's two largest economies.

"We're looking for reasonable signs that there's the political commitment," said Myron Brilliant, executive vice president with the US Chamber of Commerce.

Prevention of trade secrets theft

US Commerce Secretary Penny Pritzker said on Monday that China will offer better legal protection to US firms that suffer theft of trade secrets.

"We got significant outcomes on trade secrets which is a really big issue," Pritzker said in an interview.

"This is where China clarified its intent to make preliminary injunctions and meaningful remedies and other judicial protections more easily accessible to those who are confronting trade secret theft ... It's a big deal."

The issue has become a growing problem for American companies. Victims have included General Motors, Ford, DuPont, Dow Chemical, Motorola, Boeing and Cargill as well as lesser-known firms.

US Trade Representative Michael Froman also said that US officials had received confirmation China will not be moving forward with a controversial banking technology law that will place restrictions on the amount of foreign information technology Chinese banks can purchase.

Beijing suspended the policy for further review earlier this year after a sharp backlash from foreign companies and governments following the release of a draft in December.

"We concluded a year of intensive engagement around proposed measures in the banking sector by confirming that banks in China are free to resume purchasing information and communication technology products of their choosing," Froman said.

More open market

China also pledged on Monday to move toward more open markets, better safeguard the intellectual property of foreign companies and ensure that its antimonopoly agency will pursue antitrust cases without political or bureaucratic interference, US officials said.

Froman told Reuters that he expects some US genetically modified crop strains, including GMO soybeans, could be approved by China by year end, following protracted reviews.

US companies also called for a more open Chinese market for American beef.

Representatives from US biotech companies, trade associations and the government, including Agriculture Secretary Tom Vilsack, called for science-based decisions in China's regulatory process.

"The US is very concerned about biotechnology, and Secretary Vilsack has said again and again that policy should be science-based," China's Vice Premier Wang Yang told a conference of American and Chinese executives on the sidelines of the negotiations. "But we also say, many in China oppose it on scientific grounds," he said.

China regards gene-modified food with more trepidation than the US, though it permits a handful of GMO crops to be imported for animal consumption.

"The approval process has been stuck for a long time, we're encouraging China to move them out," Froman told Reuters.

While Beijing has pledged to loosen its manufacturing and service sectors, regulators issued a negative list of prohibited and restricted industries for foreign investors in March.

US business lobbies say that China's negative list is too broad and must be cut back.

Thorny negotiations over the negative list, part of a proposed new investment pact called the Bilateral Investment Treaty (BIT), have weighed on commercial ties.

Froman, however, said there had been no concrete progress on this front during the current talks.

Even as China vowed to better protect intellectual property rights, officials said on Monday the nation's status as a developing country should afford it some leeway.

"We need to effectively protect intellectual property in a balanced way," Zhang Xiangchen, Chinese vice minister of commerce, told reporters. "That means we need to protect the rights of holders and users," he added.

China's demands

On the Chinese side, China pushed the US for better access to US high-technology exports that Washington restricts on grounds of national security, said US and Chinese officials.

Chinese officials also wanted broader access to acquisitions in the US, especially when it comes to American regulatory treatment of China's tens of thousands of state-owned enterprises. Of particular concern to the Chinese has been the transparency of the review process for deals carried out by the Committee on Foreign Investment in the US, which involves many government agencies and is led by the Treasury Department.

Zhang Xiangchen, the deputy China international trade representative at China's ministry of commerce, said on Monday after the talks that the US and China hoped to expand trade, but obstacles remained.

"China's investments in the US are subject to some barriers, such as uncertain and untransparent security checks," Zhang said. "On the other hand, the US hopes China can open up its market more. Both these concerns are legitimate."

The two days of talks in southern China came as Washington and Beijing are sparring over cybersecurity, regional economic leadership and freedom of navigation in the South China Sea.

At a meeting on Sunday of Southeast Asian nations held in Malaysia, Premier Li Keqiang said that it was China's sovereign right to build structures on reefs it claims in the South China Sea and urge outsiders—an apparent reference to the US—not to fan regional tensions, according to the official Xinhua News Agency.

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