VZCZCXRO6022
RR RUEHCN RUEHGH
DE RUEHGH #0483/01 3490331
ZNR UUUUU ZZH
R 150331Z DEC 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 8419
INFO RUEHBJ/AMEMBASSY BEIJING 3194
RUEHSH/AMCONSUL SHENYANG 2292
RUEHCN/AMCONSUL CHENGDU 2301
RUEHGZ/AMCONSUL GUANGZHOU 0758
RUEHHK/AMCONSUL HONG KONG 2470
RUEHIN/AIT TAIPEI 2091
RUEHKO/AMEMBASSY TOKYO 0828
RUEHUL/AMEMBASSY SEOUL 0617
RUEHGV/USMISSION GENEVA 0101
RUEHBS/USEU BRUSSELS 0034
RUEHCP/AMEMBASSY COPENHAGEN 0001
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 9083

UNCLAS SECTION 01 OF 02 SHANGHAI 000483 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
STATE ALSO PASS USTR FOR CHINA OFFICE 
STATE ALSO PASS DOJ FOR INTERNATIONAL ANTITRUST- CHEMTOB 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO SENV PGOV CH ECON
SUBJECT: USTR GENERAL CONSUL REIF VISITS SHANGHAI 
 
REF: STATE 124680 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary:  During meetings December with USTR General 
Counsel Timothy Reif, scholars from the Shanghai Municipal 
Government's WTO Center expressed worries about how to harmonize 
possible commitments to limit greenhouse gas emissions with 
existing trade policy regimes.  AmCham Shanghai members who met 
with Reif were generally upbeat about the business climate 
despite chronic problems related to intellectual property 
protection and regulatory transparency.  Shanghai Commerce 
Commission officials emphasized Shanghai's success in meeting 
Central Government standards for transparency but acknowledged 
Shanghai remains more conservative with respect to government 
openness than some other jurisdictions in China.  End Summary. 
 
========================================= 
WTO Center:  Overreach and Climate Change 
========================================= 
 
¶2. (SBU) On December 7, USTR General Counsel Reif, accompanied 
by AUSTR Tim Stratford and Claire Reade, Chief Counsel for China 
Trade Enforcement, met Shanghai WTO Affairs Consultation Center 
President Wang Xinkui to discuss concerns over WTO Appellate 
Body overreach and the growing nexus between measures to address 
climate change and trade policy.  General Counsel Reif began by 
asking WTO Center analysts for their thoughts on whether the WTO 
Appellate Body had overreached in certain cases.  The WTO 
Center's Professor Gong Baihua agreed that there had been 
instances of overreach, corresponding to an increased reliance 
by WTO members on the dispute settlement mechanism.  He was 
quick to point out, however, that overreach happened in both 
directions, and that it was often the losers of a case who 
claimed that the Appellate Body had overreached.  WTO Center 
President Wang suggested that the Appellate Body should be 
"restrained" to prevent overreach in the future, but conceded 
that the body, in spite of its faults, would continue to serve a 
useful purpose "as long as it prevents trade wars." 
 
¶3. (SBU) The discussion then shifted to a conversation over the 
expanding linkage between climate change measures and trade 
policy.  Wang noted that, on the eve of the Copenhagen Climate 
Change Conference, China had pledged to reduce its carbon 
emissions to 40-45% of their 2005 levels per unit of GDP by 
¶2020.  Wang questioned whether mandates coming out of the 
Copenhagen Climate Change Conference will be dealt with under 
existing WTO agreements.  General Counsel Reif stated that he 
was confident existing WTO rules will give us answers as to how 
to harmonize Copenhagen outcomes with WTO members' trade policy 
regimes, including whether the results of Copenhagen will be 
consistent with GATT Article III. Reif noted, however, that this 
conclusion depends on the terms of the actual agreement. 
 
============================================= ========= 
AmCham Shanghai: Indigenous Innovation and Procurement 
============================================= ========= 
 
¶4. (SBU) During a luncheon roundtable at the American Chamber of 
Commerce in Shanghai, several members raised concerns over 
China's "catalogue of indigenous innovation products for 
government procurement", which they claim discriminates against 
international companies, favoring "indigenous" products instead. 
The USTR delegation noted that Washington is carefully 
monitoring this issue, had coordinated an interagency response 
in Washington, and had drafted a demarche to be delivered in 
Beijing on December 10 (REFTEL). The USTR delegation appealed to 
Shanghai AmCham members to continue to supply the USG with 
specific and actionable information to support their complaints. 
 
¶5. (SBU) The AmCham members also cited continuing concerns over 
transparency, China's implementation of the Anti-Monopoly Law, 
and weak IPR protection.  In addition, insurance industry 
representatives raised national treatment and market access 
concerns.  Medical device manufacturers also expressed concerns 
over Chinese government procurement policy.  Despite their 
 
SHANGHAI 00000483  002 OF 002 
 
 
downbeat assessment of these non-tariff barriers, AmCham 
Shanghai members were upbeat when asked about the overall 
business climate; several members cited unexpected and 
unprecedented growth over the last quarter. 
 
============================================= ============== 
======= 
Commerce Commission: Government Transparency in Shanghai 
Improving 
============================================= ============== 
======= 
 
¶6. (SBU) In a separate December 7 meeting, Shanghai Municipal 
Commerce Commission Secretary General Gu Jiahe stressed the 
Municipal Government's efforts to expand transparency.  Shanghai 
has already implemented all of the "open government" regulations 
issued by the Central Government and is adhering to commitments 
made by China during the 2008 U.S.-China Strategic Economic 
Dialogue.  While Gu claimed that most municipal laws and 
regulations are already available on-line, he admitted that the 
process for commenting on draft regulations is only partially 
available to the public "due to their complexity."  Reif 
congratulated Gu on Shanghai's efforts and urged the Municipal 
Government to continue its work to expand transparency at the 
local level.  He added that allowing for public consultation in 
drafting of regulations helps increase confidence in the 
regulatory environment and improves the investment climate. 
 
¶7. (SBU) Gu enumerated many of the Municipal Government's 
accomplishments in improving access to information and stressed 
that all government offices have their own web sites, which 
provide the names of senior officials and relevant regulations 
and laws.  Gu was especially proud of Shanghai's system for 
attracting foreign investment.  He said that procedures for 
entering into joint ventures (JVs) or establishing wholly 
foreign-owned enterprises (WFOEs) are posted on-line and that 
investors receive a clear timeline from the municipal 
authorities to help them monitor the process of their 
applications.  If a JV or WFOE application is refused, the 
applicant will be given the reason for the refusal. 
 
¶8. (SBU) Reif asked about the current controversy surrounding a 
journalist's request for the publication of Shanghai's budget, 
which the Municipal Government refused, citing laws on state 
secrets. (Note: Guangdong Province, by way of contrast, 
responded to the same request by immediately posting their 
budget online.  End note.)  Gu demurred, reiterating that 
Shanghai had fully complied with the Central Government's open 
government initiative but conceded that, in this instance, other 
jurisdictions within China are more forward-leaning than 
Shanghai.  Reif asked how the Municipal Government handles cases 
in which the open-government initiative guidance conflicts with 
state secret laws.  Gu only acknowledged the existence of 
guidance but did not elaborate. 
 
¶9. (U) This cable was cleared by USTR. 
CAMP