By Chuin-Wei Yap
HONG KONG--President Biden has said he plans to work with allies
to keep pressure on China, but at the World Trade Organization the
U.S. will be facing a rival in Beijing that has become a more
dominant force in recent years.
Skepticism toward the WTO in successive U.S. administrations
translated into policies, such as blocking judges to its top court,
that have largely gutted its ability to serve as an international
arbiter of trade disputes.
At the same time, Beijing has cast itself as a defender of the
WTO and its top court, fueling its stature within the organization.
That has helped China to blunt calls for changes to its
state-controlled economy, which other members say distort the
"For the foreseeable future, China will partake actively in WTO
discussions and initiatives, without offering major concessions at
the negotiating table," said Harvard University law professor and
trade expert Mark Wu.
Mr. Biden's team has said he would lift the U.S. blockade on
judges but that the pandemic and U.S. economic recovery could take
precedence over trade.
A delay would be a mistake, said James Bacchus, a former
Democratic congressman from Florida who served twice as the
chairman of the WTO's Appellate Body, its top court. "The rest of
the world is not going to wait for the U.S.," he said.
Beijing's influence has grown as it shows signs that, after a
long history of losing its cases before the WTO's court, its record
might be improving, particularly as it challenges U.S. trade
policies imposed under President Donald Trump.
China won a landmark ruling against the U.S. in September. A WTO
panel agreed with Beijing's charges that Washington's 25% tariffs
levied in June and September 2018 breached the WTO's
most-favored-nation rule, which prohibits discrimination among
trading partners. The U.S. is appealing the ruling.
"Most of the trade measures taken against China by the Trump
administration are illegal under the WTO," said Mr. Bacchus, who
was critical of Mr. Trump's trade policies. "I anticipate China
will win many of those cases."
The U.S., starting with the Obama administration, has long
criticized the WTO for rulings against Washington's use of certain
trade remedies, such as the U.S. methodology for calculating
penalties in trade dumping cases. Accusing the tribunal of
overreach, Washington began to block the selection process for
judges to the WTO court in 2016.
The Trump administration, which argued that the WTO's
dispute-settlement system needed an overhaul, extended the
blockade, making the court inoperable in December 2019.
"The U.S. objects to any arrangement that would perpetuate the
failings of the Appellate Body, which the U.S. has cataloged in
detail," Mr. Trump's WTO ambassador, Dennis Shea, wrote in a letter
to the WTO in June, opposing efforts to revive its judicial
In the past decade, China has been using the WTO's
dispute-resolution system more frequently and getting more involved
in other cases. Largely a bystander when it joined 20 years ago,
China is now the world's most active participant in disputes at the
Beijing has lodged 13 complaints since 2011, after filing eight
in the prior decade. It joined 54% of all cases as a third
party--meaning a noncontestant who is permitted to influence
hearings--twice that of the U.S. since 2001.
It is embroiled in 39 disputes with the U.S., trailing only the
number of disputes between Washington and Brussels. The clash
extends even to the continuing contest over the next WTO
director-general, as Beijing and the Trump administration backed
China has also been dealt numerous setbacks at the WTO. The most
prominent among these was Beijing's high-stakes bid, filed in
December 2016, to end China's status as a nonmarket economy at the
WTO. The label gives its trade adversaries wide authority to impose
punishing anti-dumping duties--as high as 1,700%, worth billions of
dollars--whenever they win.
Beijing sent high-level emissaries--including China's WTO
ambassador, Zhang Xiangchen--to the opening of the panel reviewing
its status in Geneva in December 2017. "Normally, I do not attend
panel hearings in disputes," he said.
Then, in May 2019, on the verge of a ruling, China requested
that the panel be suspended. Analysts say it is likely that the
panel was poised to reject China's complaint, reaffirming a bedrock
of international trade law designed to account for the
price-distorting potential of a state-controlled economy. Beijing
didn't explain its retreat, and its Foreign Ministry declined to
Despite the setbacks, Beijing has cast itself as a linchpin of
defending the WTO's top court. China backed the European Union last
year in establishing an interim process to resolve disputes, which
Washington opposed and Tokyo didn't join.
The measure provides an appeal hearing for members until the WTO
court is restored and began seating judges in August. It is
available only to members who sign up. Signatories have risen to at
least 23 from 16 since its launch in April, including U.S. partners
such as Australia, New Zealand and Canada.
The U.S. and the EU had hoped that admitting China to the WTO in
2001 would spur an overhaul of its economic policies but have made
little headway against Beijing, which has campaigned for only
As Beijing has worked more closely with Europe on WTO issues in
recent years, Brussels has indicated that its appetite for pushing
Beijing to make changes may be waning.
It wouldn't be helpful "for the EU to focus its proposals for
common initiatives on bilateral issues that are controversial for
the EU and China, such as trade-distorting subsidies for
state-owned enterprises and the trade impact of forced technology
transfer," the EU said in a May position paper on EU-China trade
China and the EU agreed in principle last month on an investment
accord promising Europe greater access to Chinese markets in
exchange for commitments from Beijing to end forced technology
transfer and improve transparency on subsidies for companies. U.S.
officials have expressed concerns that the pact could help China to
deflect pressure for a broader overhaul of its policies.
President Xi Jinping has put an emphasis on the WTO as central
to its efforts on global trade, saying in 2017 that the group is
crucial to "promoting China's transformation from a big trading
nation to a powerful one."
"For our nation, WTO reform is a complex and difficult
multilateral game, with a long way to go," said Huo Jianguo, a
former trade negotiator for China, now vice chairman of state-run
think tank China Society for WTO Studies. "We must expose in this
the narrow-minded intentions of the U.S."
Write to Chuin-Wei Yap at firstname.lastname@example.org
(END) Dow Jones Newswires
January 25, 2021 07:14 ET (12:14 GMT)
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