(Yicai Global) May 9 -- China's Ambassador to the World Trade Organization (WTO) Zhang Xiangchen has accused the US of flagrant intimidation at the recent general council meeting, stating that the country was using the Section 301 investigation to obtain free market access to China, bypassing bilateral investigation negotiations.

Ambassador Zhang expressed concerns to the WTO three times over the US' unilateral measures brought against China, according to presentation materials from China, the US and the EU exclusively obtained by Yicai Global.

US President Trump initiated the Section 301 investigation in August last year to determine if Beijing improperly forces foreign firms to hand over technology. He signed a memorandum on March 23 to slap tariffs on a broad range of Chinese products (worth up to USD60 billion) and block investment deals in the US proposed by Chinese companies.

The three concerns raised by China, especially the first two, have received general support. However, Dennis Shea, the US ambassador to the WTO, strongly reaffirmed the country's past viewpoints on the three issues. The EU, a traditional ally of the US, expressed an ambiguous attitude, expressing both support for the WTO rules and concerns about the technology transfer of foreign-funded enterprises as well as other issues.

Zhang made six speeches largely related to China's call for WTO members to join hands to resist protectionism, including three speeches regarding the Section 301 investigation.

Since the WTO was established, the US has promised that it would not use the Section 301 unilaterally without the dispute settlement agency's ruling, otherwise, it would assume national responsibility, Zhang stated. The US is now ignoring these commitments when it announced large-scale sanctions against China, a typical example of unilateralism and trade protectionism, violating the most-favored-nation treatment and other core rules of the WTO.

"The Section 301 investigation is making a comeback 18 years later. Unfortunately, China is the first to suffer, but fortunately, China is strong enough," Zhang said before the WTO. "We cannot help but ask which country will be the next target."

Afterward, Shea asked four times "What is unilateralism?" At the first meeting in the afternoon, Zhang responded that China understands unilateralism as an action that violates multilateral rules and at the expense of the interests of other members. He added that this does not mean that any measures taken by an individual member can be labeled as unilateralist. Each country has its own economic policy, and there is a line between the legal policy space and unilateral action, i.e. a multilateral rule that each member agrees to. If a policy is consistent with WTO rules, then it is legal; otherwise, it is unilateral.

Zhang said that in his understanding, the US intends to acquire free market access to China through the Section 301 investigation but the objective should actually be achieved through bilateral investment negotiations rather than intimidation in such a flagrant manner.

In terms of China's development strategies, Zhang said that Shea gave China labels such as state capitalist and mercantilist, but these labels are not appropriate at all. China's economy has grown rapidly since its reform and opening-up 40 years ago, attributing to two principles: The first is to pursue market-oriented reform and unleash the potential of economic entities, and the second is to integrate globalization, open up its domestic market, and comply with international rules.

He said that Article 15 of China's Constitution stipulates that the country adopts a socialist market economy and the Article 16 stipulates that state-owned enterprises (SOEs) conduct independent operations in accordance with laws. They are legal achievements of the reform and opening-up efforts and also the institutional basis for China's future development. To achieve a sustainable and inclusive development, China needs to further improve its market economy system, reform SOEs, open up its domestic market, and strengthen intellectual property rights protection. Therefore, the country should improve government administration, eliminate defects in business operation of SOEs, remove barriers of market access, and strengthen intellectual property rights protection. The above defects are objectives of the deepening of reforms and opening-up rather than the "secret weapons."

The WTO general council meeting, held every two months, was held from 10 a.m. to 4 p.m. on May 8 in Geneva, during which China proposed several topics for the first time, including pushing ahead with the selection of members for an appeal body and raising concerns about Section 232 and Section 301 investigations. Shea, who became the US ambassador to WTO in early April, also attended this top-level meeting, it is generally believed that Shea remains hawkish towards trade with China.

Editor: William Clegg