U.S.-China Trade:

Implementation of Agreements on Market Access and Intellectual Property

GGD-95-61: Published: Jan 25, 1995. Publicly Released: Jan 27, 1995.

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Pursuant to a congressional request, GAO reviewed China's implementation of two memoranda of understanding regarding improved market access and intellectual property rights (IPR) protection, focusing on: (1) China's compliance with the market access provisions; (2) China's progress in meeting eligibility requirements for the General Agreement on Tariffs and Trade (GATT); (3) China's compliance with the IPR memorandum of understanding (MOU); and (4) U.S. concerns about foreign market access and IPR protection under the 1974 Trade Act.

GAO found that: (1) China has substantially complied with most of the market access MOU provisions; (2) China has made progress in verifying its trade laws and practices and reducing nontariff barriers, but it has not ensured that its sanitary and phytosanitary standards and testing requirements are not used as import barriers; (3) U.S. companies continue to experience problems in market access because of the declining control over provincial and local officials, China's vested interest in state-owned industries, the lack of convertible Chinese currency, and price regulation; (4) Chinese negotiators and GATT members need to resolve a number of issues before China can join GATT or its successor, the World Trade Organization; (5) China has amended and issued IPR laws as required, but it has not significantly improved its compliance with the MOU enforcement provisions; and (6) because of its enforcement failure, the Office of the U.S. Trade Representative has designated China a priority foreign country under U.S. trade law, initiated a special investigation into China's IPR practices, and published a proposed list of Chinese products that would be subject to 100-percent tariffs if China does not improve its IPR enforcement.

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