Barshefsky vows strict enforcement of China pact

By Adam Entous/Reuters

WASHINGTON (Reuters) - The U.S. administration on Wednesday promised strict enforcement of its landmark trade pact with China, through a powerful new inter-agency body that could curb imports and initiate World Trade Organization (WTO) complaints if Beijing breaks the rules.

U.S. Trade Representative Charlene Barshefsky, in an interview with Reuters, called the Clinton administration's compliance effort "completely unprecedented," and said Washington would be ready to "undertake substantial enforcement actions if China is not complying."

The warning comes one day after legislation granting permanent normal trade relations (PNTR) to China won overwhelming Senate approval, fulfilling one of President Clinton's final foreign policy objectives.

The legislation, which Clinton was expected to sign into law next week, brings an end to the 20-year-old annual ritual of reviewing China's trade status and guarantees Chinese goods the same low-tariff access to the U.S. market as products from nearly every other nation.

In exchange for the benefits, China has agreed to open a wide range of markets, from agriculture to telecommunications, under the terms of a landmark agreement setting the stage for Beijing to join the Geneva-based WTO later this year.

Business groups have hailed final passage of the trade bill as a victory of free-trade over protectionism that will boost U.S. exports and create high-paying jobs.

"We must not forget, however, that this is just the beginning of the work we will need to do to make sure China's obligations as a member of the World Trade Organization are fully implemented and enforced," said Calman J. Cohen, President of the Emergency Committee for American Trade.

UNPRECEDENTED ENFORCEMENT

The Clinton administration's monitoring and enforcement plan -- the largest for any trade deal -- calls for "accelerated investigations" of future trade complaints against China and for the creation of a "rapid response team" to monitor Chinese compliance.

U.S. trade experts will be based at the American embassy in China. In Washington, the Commerce Department will more than double the number of enforcement officers devoted to China.

To coordinate the effort, the administration will create an inter-agency body that would evaluate China's progress in meeting its WTO obligations, and decide how the United States should respond to violations.

If Chinese goods flood the U.S. market at below fair market prices, the panel could recommend punitive duties or import caps to protect hard-hit American industries, including steelmakers.

The panel -- which will be headed by Barshefsky's office and include experts from the departments of Commerce, State, Treasury and Agriculture -- could also initiate a WTO case or other actions.

"No country in the world will be subjected to such a broad array of monitoring and enforcement tools," Barshefsky said.

Business groups and lawmakers said strict enforcement was justified.

Already Beijing has sought to delay the phase-out of certain tariffs on information technology products, including computers, semiconductors and telecommunications equipment.

U.S. fears that China would throw up barriers to Taiwan's membership in the WTO prompted Clinton earlier this month to protest directly to Chinese President Jiang Zemin.

The United States is also having trouble convincing China to submit to annual WTO reviews of its compliance.

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