Trump Threatens to Fine China for “Market-Distorting” Behavior

The Trump administration believes the U.S. erred in supporting China’s membership in the World Trade Organization because the country defies WTO open-market rules, Reuters reports.

China joined the WTO in 2001. But in an annual trade assessment to Congress, the White House complains that the country has failed to follow through on pledges to stop promoting state-led companies, abide by WTO trading rules and adopt a market-oriented economy.

The trade analysis also criticizes Russia—a WTO member since 2012—for having no intention of complying with its WTO obligations. The report describes Russia’s behavior as “very troubling.”

Membership is achieved through a multi-phased negotiating process capped by a vote to accept the applicant by two-thirds of current WTO countries. Membership typically requires a pledge to reduce or scrap protective import tariffs.

Reuters says President Donald Trump commented in an interview last week that he is considering a large “fine” against China for the country’s practice of forcing U.S. companies to transfer intellectual property to Chinese partners in exchange for permission to do business there.

It isn’t clear what Trump means by “fine.” Reuters notes that a 1974 trade law that enabled a probe into China’s intellectual property policies also permits the U.S. to impose sanctions, including retaliatory tariffs, on imported Chinese goods. Reuters says the U.S. is expected to decide on what action to take in a few weeks.