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Lawmakers urge firm U.S. line on China in bilateral talks

Committee Chairman U.S. Representative Dave Camp (R-MI) (L) and ranking member Representative Sander Levin (D-MI) (R) during a House Ways an
Committee Chairman U.S. Representative Dave Camp (R-MI) (L) and ranking member Representative Sander Levin (D-MI) (R) during a House Ways an

By Paul Eckert

WASHINGTON (Reuters) - U.S. lawmakers influential on trade policy urged the Obama administration on Tuesday to press China in talks this week to halt the theft of intellectual property and curb practices that discriminate against American companies.

The letter to Obama cabinet officials on the eve of the annual U.S.-China Strategic and Economic Dialogue contained a laundry list of complaints, from software piracy to market and regulatory barriers and forced technology transfer.

"We remain very concerned that China has halted - and in many cases reversed - its market reforms," the lawmakers said in the letter to Secretary of State John Kerry, Treasury Secretary Jack Lew, Commerce Secretary Penny Pritzker and U.S. Trade Representative Michael Froman.

"China must move away from an economic model dominated by state-owned enterprises, trade-distorting subsidies, and economic protectionism," the bipartisan group wrote.

"The theft of proprietary information threatens to undermine our economic relationship, is unacceptable, and must stop," they said, noting that much of the theft was done by cyber means.

The lawmakers voiced support for the five-year-old Strategic and Economic Dialogue process between the world's two biggest economies, but said China has been "woefully inadequate and incomplete" in implementing past agreements and called for more U.S. scrutiny.

The letter was signed by House Ways and Means Committee Chairman Dave Camp, a Republican; Senate Finance Committee Chairman Max Baucus, a Democrat; House Ways and Means Committee ranking Democrat Sandy Levin; and Senate Finance Committee ranking Republican Orrin Hatch.

The Obama administration must "use meaningful metrics to measure progress and to be aggressive in ensuring that China is fully implementing its commitments and doing so in a commercially meaningful way," said the letter.

Among the Chinese practices the lawmakers said required more U.S. pressure to change were "indigenous innovation" policies that require foreigners to transfer technology to China in order to sell into the market, unscientific barriers to beef and other farm goods and favoritism to China's state sector.

EXCHANGE RATE

They also repeated longstanding concerns that China deliberately keeps it currency undervalued to make its exports more competitive in international markets.

"China must stop intervening massively and in one direction in the foreign exchange markets, and move more rapidly towards allowing the renminbi exchange rate to be set by market forces," wrote the lawmakers.

There was no immediate response to the letter, but U.S. officials outlining Washington's priorities for the July 10-11 talks in Washington outlined a similar agenda.

"We'll continue to, of course, push on exchange rates and to try to push forward on the market determination of both exchange rates and interest rates," a senior Obama administration official told reporters on Monday.

The official said the U.S. delegation would also raise regulatory and financial favoritism toward Chinese state-owned enterprises and other policies "putting them at a competitive advantage and our companies at a disadvantage."

Beyond specific trade and financial issues, U.S. officials say they want to use this week's talks to learn more about economic reform plans circulating in Beijing under President Xi Jinping, who took office in March.

Kerry and Lew will host a Chinese delegation led by State Councilor Yang Jiechi and Vice Premier Wang Yang.

Lew, who visited Beijing shortly after Xi and a new cabinet led by Premier Li Keqiang took office, said he detected signs that some changes advocated by the United States were gaining traction in Beijing.

"If I had to guess, we're going to see the direction of change be clear, that the moves toward more market-oriented reforms will be clear," Lew told CNN, according to a transcript of an interview conducted on Monday.

"But the pace will probably be slower than we would like, or, frankly, than would be good for the Chinese people," he said.

China has concerns of its own about U.S. policy.

Beijing has long demanded that Washington ease Cold War-era controls on the export of high technology and clarify the approval process for Chinese acquisitions of America companies. Chinese investments in U.S. assets sometimes draw opposition from U.S. lawmakers.

(Additional reporting by Anna Yukhananov and Doug Palmer; Editing by Mohammad Zargham)

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