U.S. and Taiwan (2006)

Testimony of
Ambassador Karan K. Bhatia
Deputy United States Trade Representative
Before the Committee on International Relations
United States House of Representatives

July 20, 2006
Washington, D.C.

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Consistent with the Committee's request, I will focus today on the Administration's trade agenda in Asia – my area of focus at USTR – and, in particular, on the free trade agreements that we are currently negotiating with Korea, Malaysia, and Thailand. I will also touch briefly on our trade relations with Japan, China, India, Taiwan, and Southeast Asia, and would be happy to delve into those relationships at greater depth, if you would like.

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TIFAs and Other Dialogues – Other East Asian Economies, China, and India

In addition to FTAs, we are using our "Trade and Investment Framework Agreements," or TIFAs, to deepen our trade relationships with Asian partners, address bilateral trade issues, cooperate on regional and multilateral issues, and, in some cases, lay the groundwork for FTAs. We have robust TIFA dialogues with a number of individual ASEAN countries – including Indonesia, the Philippines, and Brunei – under which we meet several times a year to discuss the full range of issues on our trade agenda, ranging from intellectual property rights, to regulatory issues affecting agricultural trade, to customs agreements to combat shipments of illegal goods. Last week, we signed a U.S.-Cambodia TIFA that we hope will help spur bilateral investment and provide us with a forum to handle trade issues as they arise.

We also have an active TIFA dialogue with Taiwan. I recently traveled to Taiwan for two days of discussions under the U.S.-Taiwan TIFA, and was able to get a first-hand view of the vibrancy of that economy and of the importance that senior leaders there place on our trade relationship. That relationship is a strong one, with nearly $57 billion in two-way goods trade last year. Taiwan is an important economic partner for the United States and it is one that we are determined not to overlook.

No overview of our activities in East Asia would be complete without a discussion of our trade relations with China, relations that are critical to our economy and our people. In February, USTR unveiled a top-to-bottom review of our trade relationship with China. It was a balanced and comprehensive assessment that concluded that, while the U.S. has clearly derived substantial benefits from U.S.-China trade, the relationship has not been sufficiently balanced in the opportunities it provides. The review also called for our China trade policy resources and priorities to be refocused.

Now that China's transition period as a new WTO member is ending, the United States will treat China as a mature trading partner and will draw upon the full set of tools available to us to ensure that China complies with its commitments. China needs to do more to open its markets, reform policies that skew markets and discriminate against U.S. exporters, and abide by its WTO commitments, particularly in the area of intellectual property rights enforcement. In short, China must bear responsibilities that are commensurate with the benefits it has obtained from participation in the rules-based trading system.

In accordance with this view, USTR has enhanced its trade enforcement capacity by establishing a China Enforcement Working Group, and I will say more about this later. We are also working to strengthen, expand, and increase the effectiveness of the U.S.-China dialogue on issues such as standards and SPS issues, China's subsidies practices, financial services, telecommunications services, labor, environmental protection, and transparency and the rule of law, among others. The Administration recognizes as well the importance of increasing coordination with other trading partners in pursuing these issues and – as evidenced by our coordination with European and Asian partners on intellectual property rights and auto parts issues – is already vigorously pursuing such coordination.

This emphasis on enforcement, we believe, complements the dialogue with China that we carry out on a number of levels, primarily through the Joint Commission on Commerce and Trade. During the most recent JCCT in April, we achieved progress on a range of important bilateral issues, including measures to improve intellectual property rights enforcement, China's commitment to join the WTO Government Procurement Agreement, transparency of government regulations, improved market access for medical devices and telecommunications services, and beef.

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Let me note here the emphasis that we at USTR have placed on the enforcement of China's trade commitments. Stepping up that enforcement was a particular focus of the Top to Bottom review discussed above. In particular, it called for the creation of a new Chief Counsel for China Enforcement (the first time in history that USTR has created an enforcement czar focused on a single country), a China Enforcement Working Group, the infusion of new analytical resources in USTR to help create stronger and more forward-looking cases, and close collaboration with trading partners in seeking to enforce our rights.

We are already far along on implementing many of the recommendations in that report. We recently hired a Chief Counsel for China Enforcement. We have already filed one WTO case this year – concerning China's treatment of U.S.-made auto parts – and we were on the verge of filing another when China rescinded the offending regulation. We have been working closely with allies in Europe and elsewhere in bringing these cases.

Let me mention in particular, that we continue to press China on its obligations to honor U.S. intellectual property rights. We have made clear that if action is not taken to curb piracy in China, we will not hesitate to exercise our rights at the WTO to enforce its obligations.

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