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Vice President Pence Defends Additional Tariffs on Mainland China

U.S. Vice President Pence defended the Trump administration’s trade policy, including the recently-imposed additional tariffs on US$34 billion worth of mainland Chinese products, in a 16 July speech at the U.S. Department of Commerce. Separately, the United States has submitted a new Section 301 report to the WTO where it decries a range of mainland Chinese practices.

U.S. Vice President Mike Pence defended the Trump administration’s trade policy in a 16 July speech at the U.S. Department of Commerce. He also defended U.S. Commerce Secretary Wilbur Ross, who he insisted had only “inadvertent” ethical issues related to his large investment portfolio. Pence insisted that the additional tariffs on US$34 billion worth of mainland Chinese products that the United States imposed on 6 July, along with the additional expected tariffs, are “commensurate to the damage that China has done to the American economy through forced technology transfers from our businesses to theirs, as well as their broader trade policies.” 

According to Pence, if mainland China “refuses to level the playing field and continues to retaliate against American manufacturers and American agriculture, their leaders should know: America will not back down, our resolve will never break, and we will keep taking strong action to protect American workers until China changes course.” The vice president claimed that mainland China has been “implementing a sustained, centralised and strategic effort to undermine America’s global economic leadership”, and added quite fittingly that “with this president, everything’s a negotiation.”

Also on 16 July, the United States submitted a new Section 301 report to the WTO where it decries a range of mainland Chinese practices, including (i) subsidies to state-owned enterprises, some of which allegedly drive overcapacity; (ii) state control over industries and companies; (iii) investment and ownership restrictions; (iv) discriminatory licencing practices; (v) commercial espionage; and (vi) the theft of intellectual property. The U.S. submission to the WTO complained that mainland China has moved away from embracing a market-driven economy despite commitments it made to do so when it joined the multi-lateral body.

The United States also claimed in its report that mainland China is failing to meet transparency obligations and is wrongfully taking advantage of the special and differential treatment afforded to developing countries under WTO rules to grow its economy at the expense of other WTO members. The United States listed a range of factors and figures that ostensibly prove that mainland China should no longer be considered a developing country for purposes of WTO rules, including the size of its economy, its GDP growth rate, its foreign exchange reserves, its technological achievements and its defence spending.

“China has pursued policies and practices that not only conflict with its WTO obligations, but which also manifest a disregard for the WTO’s fundamental principles,” the document reads. “The United States would remind Members that China's Protocol of Accession questioned China’s claim to be a developing country and expressly denied China’s right to self-elect developing country status under several of the WTO agreements.” “As long as China remains on this path, the implications for this organization are decidedly negative,” the United States warned.

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