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China tightened trade regime in 2009: USTR

By Doug Palmer

WASHINGTON (Reuters) - The United States saw additional evidence in 2009 that China was moving toward a more restrictive trade regime, but talks with Beijing also produced concrete results, U.S. trade officials said on Tuesday.

"China continued to pursue industrial policies in 2009 that seek to limit market access for non-Chinese origin goods and foreign service suppliers," the U.S. Trade Representative's office said in an eighth annual report on how well China is complying with its World Trade Organization obligations.

"In some areas, it appears that China has yet to fully implement important commitments, and in other areas, significant questions have arisen regarding China's adherence to ongoing WTO obligations, including core WTO principles," it said.

The full report can be found at http://www.ustr.gov/webfm_send/1572

The report, the first issued by President Barack Obama's

administration, tempered its criticism by saying China made "concrete" progress this year on trade irritants in areas ranging from agriculture to clean energy to government procurement.

Based on that cooperation, "the United States is optimistic that significant progress is obtainable in 2010," USTR said.

Still, it expressed frustration that after years of U.S. complaints, some issues showed little progress.

"Despite repeated anti-piracy campaigns in China and an increasing number of civil IPR (intellectual property rights) cases in China, counterfeiting and piracy remain at unacceptably high levels," USTR said.

An estimated $3.5 billion in losses to U.S. software and music companies in China in 2008 "indicate little or no overall improvement from the previous year," the report said.

Even in areas like agriculture, where China has largely fulfilled U.S. market access hopes, it said unpredictable actions by Chinese officials were a concern.

"Capricious practices by Chinese customs and quarantine agencies can delay or halt shipments of agricultural products into China," while food safety rules based on questionable science and developed in secrecy "frequently bedevil traders in agricultural commodities," the report said.

China's progress toward market liberalization slowed noticeably in 2006 and evidence of a "more restrictive trade regime" continued to mount in 2009, the report said.

Some examples it gave include government "Buy China" policies, establishment of unique Chinese telecommunication standards and a new postal law that excludes foreign suppliers from a major portion of the express delivery market.

USTR said it preferred to resolve disputes with China through dialogue, but would not hesitate to take action at the WTO if necessary. It also said it would use its right under U.S. law to stop harmful import surges from China, as Obama did earlier this year against Chinese-made tires.

The U.S. trade deficit with China is expected to fall this year, along with the overall slump in world trade.

But it remains the largest the United States has with any country and is on track to total about $225 billion in 2009.

(Reporting by Doug Palmer; Editing by Vicki Allen)