US-China tensions cut efforts to resolve global trade disputes

WASHINGTON — Rising tensions between the United States and China are hampering efforts by World Trade Organization members to repair their ability to resolve international trade disputes.

China’s entry to the WTO 20 years ago this month came with expectations that Beijing would gradually adopt Western free trade practices.

But instead of integrating China into the global trading system, the WTO is accused allow Beijing to flood the market with low-priced, subsidized products.

With divisions deepening among members, the group has struggled to enforce existing rules, let alone update them to reflect changes in the world economy over the decades. recently.

The US accuses China of failing to comply with its commitments, including failing to protect intellectual property and dumping cheap steel on global markets, claims Beijing denies.

In a recent sign of how frictions have affected the WTO’s dispute settlement function, the US has since 2019 blocked new appointments for the seven-judge Appellate Body that reviews cases. commercial disputes. This is the central function of the group, which is designed to make final decisions in trade disputes between the 164 WTO members.

The United States says it acted because the court has a history of being overly approachable, although many of its specific complaints relate to its disputes with China. The lower management still hears cases brought by members, but any appeals by those who are not satisfied with the original decisions there’s nowhere to go.

Countries including Australia and Mexico are pressing the US to lift the freeze, and US Trade Representative Katherine Tai said the US has begun dialogue with some members. However, both the US and China complain that the other side has not changed its course even when asked to do so by WTO judges.

The US and other Western nations accuse China of flooding the global market with products including steel; a steel company near Shanghai.



Yang Mujun / Sipa Asia / Zuma Press

David Bisbee, the US representative to the WTO in Geneva, said in a statement as the WTO released its review of China’s trade policy, “We won’t win in every case that has been decided. , but many of them were meaningless. He was referring to the cases the US has filed against China over the years. “Even as China changes the specific practices we’ve challenged, China often doesn’t change its underlying policies, and China’s meaningful reforms remain elusive.”

China said the US had also failed to implement the agreed changes in the cases related to the US’s imposition of anti-dumping duties on Chinese products.

One example China cites is the 2011 dispute over US import restrictions targeting what it considers state-owned enterprises. The Appellate Body sided with China’s narrow interpretation of such features, making it difficult for the United States to use such steps including anti-dumping duties.

Tu Xinquan, dean of the China Institute of WTO Studies at the University of International Business and Economics in Beijing, said: “The US implementation does not please China. “As a result, Chinese companies are still struggling.”

The Office of the United States Trade Representative was not immediately available for comment.

Tensions between the US and China increased during the Trump administration when it imposes tariffs tens of billions of dollars in Chinese imports annually to reduce the US trade deficit with the country.

The frictions have continued under President Biden, who extended the former administration’s tariffs on many Chinese goods, and this week announced a diplomatic boycott of the Beijing 2022 Winter Olympics.

China’s accession to the WTO in 2001 with US support. But over time, friction has grown between the two sides, and both countries use the WTO to resolve trade disputes with each other.

China recorded a sharp economic slowdown in the third quarter as the pandemic’s return fades – and for now, Beijing is tackling longer-term issues including household debt and consumption. energy. WSJ’s Anna Hirtenstein explains what investors are watching. Photo: Long Wei / Sipa Asia / Zuma Press

Of the 22 complaints that China pursued at the WTO, 16 filed against the US related to poultry, light trucks and major tariffs imposed by the Trump administration, among other issues.

The US has filed 27 lawsuits against China since 2001 on issues ranging from auto parts and rare earths to government subsidies. More broadly, the US and other Western nations accuse Beijing of flooding the global market for products like steel and solar panels through the use of state-owned enterprises and subsidies.

“The WTO system was never designed to discipline an economy as opposed to its own,” said Charlene Christefsky, a former US Trade Representative who led the negotiations that led to China’s joining the group. it. “In the case of China, the state-led model is completely incompatible with the market, incompatible with the rule of law, incompatible with transparency, incompatible with all of China’s own rules. WTO.”

The Chinese embassy in Washington did not immediately respond to a request for comment.

US businesses and government officials cite a case involving an electronic payment service as an example of China’s failure to comply with WTO dispute rulings.

“The WTO system was never designed to discipline an economy as opposed to it.”

– Charlene Christefsky, former US Trade Representative.

In 2012, a WTO panel ruled that China had used “discriminatory and discriminatory measures” to limit China’s access to its credit and debit card markets. National for US companies such as Visa, Mastercard and American Express.

The panel also found that Beijing ensured market dominance by its own company, China Union Pay. Despite the complaint settlement agreement, it is not until 2020 that China allow the entry of US financial services firms into its market.

China also agreed to change its policies after the Appellate Body found in 2009 that Beijing’s intellectual property policies were inconsistent with WTO obligations, awarding victory to China. The United States accused China of failing to protect and enforce copyrights to movies, music, and software. .

More than a decade later, intellectual property rights are one of the biggest contentious issues between the two economies.

“The WTO has made it very clear that IPR is protected. However, 85 percent of counterfeit goods arriving in any county are from China,” said Craig Allen, President of the US-China Business Council, adding that this “seriously distorts the institutional code, WTO rules and procedures”.

Ms. Tai, the US Trade representative, has in recent weeks expressed the Biden administration’s willingness to engage in negotiations to overhaul the system.

“While we have already begun working with some of the members, I would like to hear from others on how we can move forward,” she said.

Tu of China University of International Business and Economics said he did not expect the US to engage in serious efforts to fix the Appellate Body, which he considers a “professional function”. and independent” has served many members.

He said China agrees with the US position that the Appellate Body needs reform and that steps such as increasing the number of judges and extending their terms from the current four years will improve the effectiveness of the courts. benefits all members including the US and China.

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. US-China tensions cut efforts to resolve global trade disputes

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