Thursday, July 8, 2004

The United States and China yesterday resolved their first trade dispute brought to the World Trade Organization, with the Asian nation agreeing to roll back special tax breaks for locally made computer chips.

The Bush administration used the deal to combat accusations by Democrats that it is not tough enough in enforcing trade laws and protecting the interests of U.S. companies.

“It’s another step forward for us with a long list of real results produced by this administration’s trade-enforcement strategy,” Robert B. Zoellick, the U.S. trade representative, said in front of a green-and-white backdrop that repeated the “real results” slogan.

Trade relations with China have been especially sensitive. The country is the fastest-growing export market for U.S. companies, but also is a leading rival for struggling American manufacturers.

The U.S. trade deficit with China for goods last year was $124 billion, the widest gap with any nation.

“They waited until an election year to file their first case. It’s too little, too late,” said Phil Singer, a spokesman for Sen. John Kerry, Massachusetts Democrat and his party’s presumptive presidential nominee.

The Bush administration in March brought the WTO case targeting tax rebates that favor semiconductors made in China. Semiconductors are the United States’ second-biggest export to China after soybeans, and the country is the world’s third-largest market for the high-tech product.

By April 2005, China will stop paying out the tax rebates that favor locally produced semiconductors, Mr. Zoellick said.

Rep. Sander M. Levin, Michigan Democrat and a critic of Bush administration trade policy, said yesterday’s agreement was the result of a strategy long urged by Democrats — stronger enforcement of trade agreements and, especially, pursuit of more WTO cases.

Mr. Levin and other Democrats in a March letter demanded that the administration “start to enforce vigorously” trade rules and specifically urged a series of cases at the WTO. The letter contrasted the average number of WTO cases brought by the Clinton administration annually — 10 — with the three under Mr. Bush.

Mr. Zoellick rejected the Democrats’ approach and responded that “any measurement of success should focus on results, not tools.”

Yesterday, Mr. Zoellick outlined a series of agreements reached with China without resorting to WTO litigation, including promises by China to open up wireless Internet and mobile phone standards and to relax rules that had prevented U.S. goods from reaching the local market.

“Day in, day out, we are working hard to enforce trade rules,” Mr. Zoellick said.

In other areas, the administration continued to struggle with China. The country, this week, overturned an American company’s patent on Viagra, a case that fits “within a pattern of intellectual property infringement,” according to the Office of the U.S Trade Representative.

If the United States and China had not reached the semiconductors agreement, the two sides most likely would have argued the case before a dispute settlement panel and eventually an appeals panel, a process than can take more than a year.

The United States could reinitiate the WTO case if it decides that China is not abiding by the negotiated agreement.

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