Froman Probed on Investment, Agricultural Restrictions at House Trade Hearing

Stephanie Henry

Members of the House Ways and Means Committee today asked US Trade Representative Michael Froman about the potential impact of the Shanghai Free Trade Zone (FTZ) on US-China trade negotiations, and raised concerns over China’s agricultural restrictions, currency, and participation in international trade negotiations during a hearing on the Obama Administration’s 2014 Trade Agenda.   

On the Shanghai FTZ, Froman noted USTR is monitoring the openings there closely, and remarked that the FTZ and outcomes of the Third Plenum represented “positive signals” about future liberalizations in China’s market. Froman said particular attention is being paid to the level of ambition China applies to the negative list used in the FTZ -- a list that lays out sectors that are closed to foreign investment. The negative list format is one that will be used in China’s negotiations with the United States on a Bilateral Investment Treaty (BIT). The FTZ’s current negative list is extensive, and includes more restrictions than those laid out in China’s Catalogue Guiding Foreign Investment, though the government has advised it will revise and lessen sectors included on the list annually.

Froman also addressed the stalled Information Technology Agreement (ITA) negotiations under the World Trade Organization. The negotiations, which would expand the number of IT products subject duty-free treatment, were put on hold last year due to China’s limited offer. Froman emphasized that the decision to halt discussions was not unilateral; the European Union and Japan agreed that the negotiations should be put on hold until China could offer a more ambitious proposal. Froman added that the parties have made efforts to get China back to the negotiating table, but said that China had not responded positively to those efforts.

Froman was also asked about China’s current restrictions on US beef exports, and challenges to imports of biotechnology products into China. Froman said the issues were raised in the 2013 Joint Commission on Commerce and Trade (JCCT) discussions, and continue to be a focus of negotiations. On beef, Froman noted that US Secretary of Agriculture Tom Vilsack is following up on an agreement reached at the 2013 JCCT on allowing beef exports into China, and is pursuing technical negotiations on the topic to open the market this year.

In response to Chairman Dave Camp’s (MI-04) question on currency manipulation in international markets, Froman said China in particular had made “some progress” in achieving a more market-oriented currency – with the renminbi rising more than 30 percent since 2005, by USCBC estimates – but more work was left to be done. Rep. Lynn Jenkins (KS-02) asked about how congressional efforts to pass currency-related legislation affected the Administration’s negotiations. Froman responded indirectly, saying the Administration has many channels to tackle a variety of trade issues with China, including on currency.

Froman also emphasized the importance of investor-state dispute settlement in US trade agreements, including the US-China BIT.