China offers a large and growing market for U.S. businesses. However, the Chinese government engages in harmful trade and investment practices that prevent U.S. companies from competing on a level playing field against Chinese domestic competitors.
Business Roundtable strongly supports the following reforms for liberalizing the Chinese market and ensuring fair treatment of foreign companies in China. These reforms present new trade rules,enhancingWorldTradeOrganizationrules,focusedon:increasedmarketaccess; non- discriminatory treatment in the application of Chinese laws, regulations, and policies; protections against intellectual property theft and technology transfer; curbing of competition- distorting subsidies; and liberalized trade in the digital economy.
When U.S. companies can access global markets and compete fairly, the United States wins. The Administration should use the priorities outlined in this document to guide their objectives for trade negotiations with China. Progress against these objectives, rather than a temporary reduction in the trade deficit, should be the measure of success. Moreover, we should work with our allies to seek sustained progress, since it will take a large group of trading partners to drive this level of change. Finally, we should pursue these objectives through negotiations and consider trade and investment sanctions as a last resort if negotiations fail to address our concerns.
I. Expand near-term market access for U.S. exporters and investors, ensure fair and equal opportunity to compete and strengthen intellectual property protection.
A. Expand Access to Chinese Market for U.S. Companies
China’s investment regime – one of the G-20’s most restrictive – limits foreign investment in key industries. China’s average tariff level (9.9 percent) is nearly three times higherthantheUnitedStates(3.5percent).
1. Lift all restrictions on foreign ownership of Chinese enterprises subject to a list of narrow and specific exceptions for sensitive sectors comparable in scope to U.S. restrictions, and permit 100 percent foreign ownership in the following sectors, among others:
a) agricultural biotechnology
b) cloud computing and telecommunications services
c) financial services
d) internet-related services
e) legal services
f) new-energy and combustion vehicle manufacturing
g) oil and natural gas development, trading, and marketing
2. Substantially reduce tariff rates and other import barriers in priority sectors for U.S. exporters. Eliminate restrictions (i.e., quotas) on the number of companies that can receive licenses and regulatory approvals necessary to operate in the Chinese market.
B. Ensure Fair and Reciprocal Treatment for U.S. Companies
China’s licensing and approval regimes may forestall or deny market access, even in nominally open sectors. Behind-the-border policies and practices, such as in antitrust, standard-setting and taxation, limit U.S. companies’ ability to compete in the market.
- Provide foreign investors treatment no less favorable than the best treatment offered to any domestic Chinese company, whether private, state-owned or state controlled;
- Eliminate Chinese laws and regulations, enforcement activities, approval processes, and other policies or requirements (including with respect to standard-setting, licensing, localization, procurement, and tax) that treat foreign entities less favorably than domestic firms, including by:
- a) allowing U.S. companies to independently obtain licenses without a Chinese partner (e.g., telecommunications licenses, export licenses, cloud service and electronic payment licenses);
- b) ensuring consistency and transparency of laws and regulations across agencies and localities;
- c) ensuring Chinese marketing approval processes, technical regulations and product standards are transparent, science-based and synchronized with other trading partners consistent with international standards;
- d) eliminating requirements for domestic content, licensing, transfer of technology, localized production or use of domestic content;