Non-tariff trade barriers such as tax rebates, quotas, subsidies, lack of intellectual property rights protections, restrictive licensing systems and foreign equity limitations are all tools with which China discriminates against American manufactured and farm goods and services, according to the U.S. Trade Representative’s 2010 National Trade Estimate.

“The Obama Administration is following through on its commitment to call out and break down barriers to American exports worldwide,” U.S. Trade Representative Ron Kirk said in a statement following the release of the report. “This year, we’ve gone beyond obligatory reporting to focus on some of the toughest hurdles America’s farmers, ranchers, manufacturers, and service providers face when they try to sell overseas.”

The report says that China has been able to maintain an advantage against the U.S. in industrial goods through favoring protected sectors of the economy, local content rules and standards.

China has also encouraged domestic innovation through a policy referred to as “indigenous innovation,” which, in effect, favors products containing Chinese-developed intellectual property for government procurement, the report says.

“A troubling trend that has emerged, however, is China’s willingness to encourage domestic or “indigenous” innovation at the cost of foreign innovation and technologies,” it said.

China’s lack of intellectual property rights protection have hurt a myriad of U.S. businesses and products, including clothing, medical devices, information technology, films, music and publishing software among others.

“In China,” the report says, “sales of infringing goods displace legitimate goods, and reduce U.S. access to China’s market and other markets affected by China’s infringing exports.”

China has also been able to effectively keep foreign companies out of its service industry through prohibitions on foreign participation such as licensing restrictions and restrictions on the scope of business.

On thing the report fails to mention, however, is China’s extremely undervalued currency. Some estimates have put the yuan as undervalued by as much as 40 percent, providing Chinese producers with a huge advantage over their U.S. counterparts. The artificially low currency allows China to sell its exports cheaper and charge considerably more for imports.

The report also deals with trade barriers among other American trading partners, including the European Union, India, South Korea, Japan and Mexico.

Japan and South Korea, it says, have been able to exclude American autos from their markets through non-tariff barriers such as tariffs, standards, discriminatory taxes and lack of transparency in certification of fuel efficient technologies.

The reported cited Mexico’s lack of competition in the telecommunications sectors as a non-tariff barrier, India was chided for its steep and non-transparent tariffs and the European Union was singled out for providing subsidies to aircraft maker Airbus.

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