Confront China on Trade | The hill
China is on a roll, but not in a good way. He has largely recovered from COVID-19, and his rate of growth has been substantial. But in Hong Kong, China’s stated commitment to “One country, two systems” principle turned into a country, a system, with erased democracy and independent press to close. In Xinjiang, whether or not the Chinese exploitation camps for Uyghurs conform to the legal definition of genocide, large-scale human rights violations are clearly in progress. China continues to expand in the South China Sea and threatens to invade Taiwan.
The Trump administration has drawn our attention to China’s trade policy. But his attempts to resolve these issues have been unproductive. Its main target, the total US trade deficit, widened and US services exports, which were on an upward trajectory, declined. Unilateral actions and bilateral agreements did not work. The Biden administration needs to be more efficient in confronting China on trade.
It is important to note that there is still significant leeway to deal with some of China’s trade issues under the current structure of the World Trade Organization (WTO). For example, the United States has been able to bring disputes against China and to win. In addition, it is widely noted among trade policy professionals that in every case that China has suffered a loss in the dispute settlement process, it has amended itself.
For this reason, the United States under the Biden administration must re-engage in the WTO dispute settlement system. The Trump administration’s goal was to sabotage it, but it worked to America’s disadvantage. The re-engagement of the dispute settlement system is the first step in confronting China commercially.
When China joined the WTO in 2001, it did so through the Membership protocols. The WTO dispute settlement process has since established that the Protocols are “justiciable”. In other words, China can be held accountable for commitments it has made beyond standard WTO agreements. The United States should review these protocols of accession and use them whenever possible.
For example, Article 7.3 of China’s Accession Protocols prohibits China from using forced technology transfer as a trade-related investment measure, a major sticking point in interstate trade relations. United and China.
A recurring problem is the role of state-owned enterprises in the Chinese economy. Unfortunately, the language of the WTO on SOEs is not quite adequate to solve this problem. Trade policy researchers Petros Mavroidis and André Sapir have carefully analyzed this question, concluding that a legislative amendment to the WTO is needed on the role of public enterprises. The process of introducing such an amendment is complicated, but starting it as early as possible and building consensus along the way will be critical to the success of SOEs.
Speaking of consensus, rather than infuriating our allies over trade as the Trump administration often did, the United States should revive the Trilateral Commission with the EU and Japan by developing an effective response to China. This would allow for a more coordinated and forceful way of approaching China’s trade problems.
For example, the United States could find a common cause with the 2019 report of the European Commission “EU-China: a strategic perspective” in its trade-related fields. In particular, Section IV, on “Building a More Balanced and Reciprocal Trade and Investment Relationship”, contains many areas of overlap with US concerns. This includes potential WTO reforms on subsidies and forced transfer of technology. A stronger trilateral approach would be more effective than going it alone.
Regarding forced labor in china, while it is a difficult problem for the WTO, at the ministerial meetings in Singapore in 1996, WTO members reaffirmed their commitment to the core labor standards of the International Labor Organization. In addition, Article XX of the General Agreement on Tariffs and Trade (GATT) explicitly allows the application of trade remedies to products based on prison labor. As far as it can be shown that the Uyghur camps in China produce products such as solar panels, trade remedies can be legitimately invoked.
There are ways to confront China on trade more productively than the Trump administration. The Biden administration must seize them quickly, re-engage with the WTO, and work with allies. China is on a roll, and we should be too.
Kenneth A. Reinert is Professor of Public Policy at the Schar School of Policy and Government at George Mason University.