Rates will not change China, but the WTO could


AAll eyes at the G-20 summit in Buenos Aires this weekend will be on President Trump and Chinese President Xi Jinping. As trade tensions mount, global markets stagnate and new tariffs loom on the horizon, it is time to put in place a new strategy to address Beijing's trade policy practices. Instead of self-defeating and abusive tariffs, the United States should resort to the World Trade Organization to discipline China.

US tariffs on imports from China have gone through several stages in 2018. Together, they constitute a response to a report Bureau of US Trade Representatives, noting that Beijing was engaged in numerous trade policy abuses, ranging from forced technology transfers and intellectual property infringements to domestic subsidies and discriminatory licensing restrictions. For its part, Beijing responded by imposing tariffs on US exports, which led to a drastic reduction in agricultural exports to China.

To date, more than $ 250 billion of imports from China are subject to new tariffs, while $ 110 billion of US exports to China are subject to tariffs levied by Beijing . Declaring himself a "tariff person" in a recent interview with the Wall Street Journal, Trump also m said it is "very unlikely" that it suspends the additional rate increases that are to come into effect on January 1, 2019.

In an update report released last week at the end of last week, the USTR acknowledged that tariffs had not changed Beijing's business practices. Indeed, the report notes that "China has not fundamentally changed its laws, policies and practices relating to technology transfer, intellectual property and innovation, and … seems to have taken d & # 39; 39, other unreasonable measures in recent months. " Maybe the administration will use it as a pretext to go ahead with its planned rate increases, but this will inevitably result in more suffering for American consumers, families and businesses, who depend on products from China, without changing Beijing's abusive trade policy practices.

Other recent reports stress that a better way to combat China's trade practices would be through the WTO's dispute settlement mechanism. The Trump administration is skeptical of the WTO in general. He also doubts that the USTR has legal bases to target China in a global case under the WTO agreements.

But these are two wrong assumptions. The multilateral route in Geneva offers the best opportunity to discipline China.

First, the report of the China-United States Economic and Security Review Commission Annual Report Congress suggested that the USTR investigate whether it should file a lawsuit for "nullification or impairment of non-violation benefits" in the WTO against China. These non-violation allegations allow WTO members to challenge measures that do not explicitly violate WTO agreements, but "nullify or undermine" the expected benefits. The United States and its voluntary allies could claim that they expect China to further liberalize its economy when it joins the WTO in 2001, for example.

Likewise, a recent political analysis James Bacchus, Simon Lester and Huan Zhu of the Cato Institute show that the Trump Administration's skepticism about the WTO is not justified. China has actually complied with WTO rulings; in all 22 WTO cases against China, with the exception of one, Beijing has taken steps to remove the offending measure or move towards better access to markets. "[T]There is no case where China has simply ignored its decisions, "write the authors.

The Trump administration insisted that the United States and its allies have many WTO provisions to challenge China's trade policy practices comprehensively. The provisions, including those contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights and in China's Protocol of Accession, provide fertile, though not previously explored, avenues for appeal. WTO.

In addition to a global dispute at the WTO, the United States is expected to join the Trans-Pacific Partnership, which Trump recklessly abandoned shortly after its inauguration. China was the main beneficiary of the decision to withdraw from the TPP. US trade officials are also expected to restart negotiations on the transatlantic trade and investment partnership with the European Union. Strengthening trade relations with much of Asia and Europe can put pressure on Beijing to abandon poorly designed business practices and raise the standards of its business behavior.

The WTO is not a panacea for anything that hinders trade relations and investment between the United States and China. Nevertheless, a large-scale dispute at the WTO would almost certainly contribute more to improving market access and control of China's abusive practices than a costly unilateral pricing strategy.

Clark Packard (@clark_packard) is a contributor to Washington Examiner's Beltway Confidential blog. He is a commercial policy advisor for the R Street Institute.


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