UPDATE 4-U.S., China tout progress on trade irritants

Doug Palmer and Paul Eckert
Reuters Middle East

* China agreed to address U.S. concerns about piracy and


* U.S. pledged Chinese firms fair treatment in security

reviews of investment plans

* China complains about U.S. prejudice against state-owned


WASHINGTON, Dec 19 (Reuters) - After a year of clashes on

trade and investment issues, senior U.S. and Chinese officials

touted progress on Wednesday on a number of commercial irritants

as a sign of the commitment both countries have to building a

stronger relationship.

China agreed to take further steps to address U.S. concerns

about widespread piracy and counterfeiting of American-made

goods by strengthening enforcement of intellectual property

rights and promoting the use of legal software by state-owned

banks and state-owned enterprises, Chinese Commerce Minister

Chen Deming told reporters after the meeting.

Such recycled pledges are a staple of the annual U.S.-China

Joint Commission on Commerce and Trade (JCCT), but U.S.

officials said it was important to keep up pressure on the issue

because of the big potential payoff for U.S. firms.

"Some of these issues may seem a bit esoteric, but they can

make the difference between millions, billions of dollars of new

exports and jobs being retained here at home," U.S. Trade

Representative Ron Kirk told reporters.

The past year has been a particularly bumpy one for the

U.S.-China trade relationship, with the United States initiating

a number of trade complaints against China at the World Trade

Organization and slapping duties on high-value Chinese exports

such as solar cells and wind turbine towers.

During the recent U.S. presidential campaign, both President

Barack Obama and his Republican rival Mitt Romney also argued

about who would do a better job of standing up to Beijing and

fighting for U.S. jobs.

Chen said the United States made commitments in Wednesday's

meeting to promote exports of high-technology goods to China and

promised Chinese companies fair treatment when their plans to

invest in the United States are reviewed for national security


China has long pressed the United States to ease its

restrictions on exports of high-technology goods, and the Obama

administration is in the process of a comprehensive reform

effort that is expected to make it easier for many countries,

including China, to buy those items from American firms.

However, acting Commerce Secretary Rebecca Blank said that

would not apply to items on the U.S. munitions list because the

United States does not allow arms exports to China.

The JCCT is an annual forum launched in 1983 for the two

countries to address trade and investment concerns.


Some recent high-profile Chinese investments in the United

States have been rejected on national security grounds, although

U.S. officials say most projects are welcomed with open arms as

a source of new jobs and economic growth.

The head of the Chinese delegation, Vice Premier Wang

Qishan, took a shot at U.S. suspicions of Chinese state-owned

enterprises that dominate China's economy and the important but

often unclear role of the ruling Communist Party in those firms.

"You can't deny the fact that some Americans lack

understanding of China and have stereotypes about China," he

said in remarks at a dinner of officials and business leaders of

the two countries on Wednesday night.

Wang said he asked U.S. counterparts, "Can you conduct a

security check without doing a political background check? Do

you normally ask Americans what party they belong to?"

Kirk estimated total Chinese investment in the United States

at about $9 billion, up "over 600 percent" in last three years.

The U.S. trade deficit with China hit a record $295 billion

in 2011 and is expected to set a new record this year when final

figures are announced in February.

Chen said China also pledged not to force U.S. companies to

transfer technology as a condition for doing business in China

and negotiate "as quickly as possible" to join the WTO's

agreement on government procurement.

However, both U.S. and Chinese officials said China and

other WTO members remained far apart on the definition of public

works projects that would be covered in any market-opening


China also agreed to delay a proposed regulation that could

impede U.S. auto exports until the United States has a fuller

opportunity to express its concerns, officials on both sides


U.S. Chamber of Commerce official Jamie Waterman said

agriculture was another key concern for this year's talks.

In agriculture, "the absence of product approvals for

roughly a year is a serious concern and has the potential to

create real challenges for China," he said.

With ongoing leadership transitions in Beijing and

Washington it was important that working-level officials hold up

"the JCCT as one of the pillars of stability in this

relationship," said Kirk.

"The true success of this plenary will be judged by those

who rely on the JCCT to deliver measurable results that help

stabilize and enhance our trade and investment relationships,"

he said.

Obama is expected to bring in a new economic team for his

second term, which begins in January.

Meanwhile, Chinese Vice President Xi Jinping took over the

leadership of the Chinese Communist Party in November and will

become head of state at March at the annual parliament meeting.

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