USTR Report Criticizes WTO Compliance by China

Jan. 27, 2025
By: Chaney A. Finn

In January 2025, the U.S. Trade Representative (USTR) published its 2024 Report to Congress on China’s WTO Compliance where it provided an assessment of China’s WTO membership. In its report, the USTR concluded that China exhibited a poor WTO compliance record due to its violation of WTO rules. Among others, the most pertinent violations include its “embrace of a state-led, non-market approach to the economy and trade which has increased rather than decreased over the past decade.” The USTR describes this as “predatory in nature” designed to “aggressively displace foreign competitors” and “secure the dominance of Chinese enterprises in targeted industries” causing harm companies and workers of other WTO members.

Addressing these practices has been an ongoing, experimental, and delicate balance due to the reliance the U.S. has with China as its supplier for critical commodities. The USTR explains that it has been unable to effectively deter China’s practices with its current available tools. Additionally, completely decoupling the U.S. from China would not address China’s practices, and would cause significant harm to economic and national security interests of the U.S.

Instead, the USTR recommends that the U.S. should continue to pursue a multi-faceted approach to de-risk and diversify. That strategy includes (1) enhanced domestic investment in key industries to support “the industries of today and tomorrow,” (2) bilateral engagement, particularly with respect to China’s implementation of the Phase 1 trade agreement, (3) strengthening existing, and developing new, domestic trade tools, and (4) working with allies and partners to build support for solutions to the many problems China has created for the global trading system. These targeted actions are initially focused on reducing economic and national security risk but can be expanded to impose a greater economic strain to incentivize greater WTO compliance after the U.S. secures critical commodity and resource supply chains to be able to do so without detrimental repercussion.  

The findings and recommendations largely align with the expected actions from the Trump administration’s recently implemented America First Trade Policy. This trade policy is intended to “promote investment and productivity, enhance our Nation’s industrial and technological advantages, defend our economic and national security, and — above all — benefit American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.” The America First Trade Policy begins as a memo to several Federal departments and agencies that initiates a series of investigations and requests for reports that are due back to the President by April 1, 2025. The requested reports cover a wide range of U.S. trade issues pertaining to deficits, critical supply chains, and economic and national security risks. Recommended actions from the requested material are expected to result in a variety of tariffs on goods imported into the U.S.

The USTR’s report continues the documented record of hostile commercial practices exhibited by China, and recommended actions for the U.S. to levy. We previously covered the U.S.-China Economic and Security Review Commission’s 2022 annual report to Congress, which recommended that China be suspended from Permanent Normal Trade Relations (PNTR) treatment for non-compliance with its World Trade Organization obligations, due to the same violations and predatory market practices as reported by the USTR. Removal from the PNTR would result in some of the highest tariffs and trade barriers into the U.S. market and aligns with policies the U.S. has already taken to isolate China from the U.S. economy, including Section 301 tariffs and the Uyghur Forced Labor Prevention Act (UFLPA).

Do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP for questions about supply chains in China, forced labor issues, complying with the UFLPA, or any other import or trade-related question.