China was moving to provide a decisive role for the market in the economy. Let me say as well, and obviously this is a key topic of our discussion today, the Chamber certainly vigorously supports and defends the WTO. I identify a Chinese company that I’d be willing to do business with. There are, at this point, dozens of cases in the WTO that have been resolved under the subsidies’ agreement where such subsidies have been found to be illegal, and where countries have then withdrawn them. It is not to impose new tariff barriers. Certainly, the WTO is in need of improvement and modernization. The Chinese have professed, over and over again, their support for the WTO and for free trade. Erin, I agree with you absolutely. Their recent retreat from market forces to more state control of the economy, I think, will not produce lasting economic growth or technological advances. Still, the accession process has not been an unqualified success. We’re told that there’s simply no recourse in WTO rules for challenging requirements of the Chinese for technology transfer, yet if you look at the Accession Agreement that China signed, it binds China. Indeed, in some respects they have a better record of compliance than the United States of America, which drags its feet endlessly in compliance. Building on whatever worked there, it might not be replicable in every sector, but certainly we can build on that. United States should enlist the European Union, Japan, Canada, and others that are equally concerned about some of these issues. The United States should be bringing the claims it has against China in WTO dispute settlement. They can be challenged and there is a whole string of WTO cases in which local content requirements have been held to be in violation of WTO rules. In part, because the disciplines, again, are probably not nearly as robust as they need to be. We need to re-imagine the WTO. These kinds of approaches are “China First.” What we want, both here in the United States and China, is a level playing field. He was very excited. And there is not much, if any, case law in that space. There are questions about China’s compliance with the terms of its 2001 WTO accession. This would be a tragedy if it happens. Jeremie Waterman: Just one issue that I neglected to mention in my comments, which I think relates to the incentives, or lack thereof, for using dispute settlement, and I’m speaking specifically in a China context. That, in itself, denotes that you are somehow different from all of the other companies that are operating in the market. China is a part of some of them, but, of course, most notably is not part of the government procurement agreement, which it had pledged to join as soon as possible back in 2001. I’ve also been of the view that it would be a mistake to take such a case to the WTO. When the United States defends its own policies against Chinese complaints, it also gets good results: China has won only about one-third of the cases it has brought against the United States, with six cases currently pending. Also at the end of this dispute, these periods of time of three to four years include the time of implementation after there is a ruling. Or is this legitimately what the other party wants? First, obviously, there’s the current impasse we have in U.S.–China relations over trade issues. And both countries should comply with the rulings. However, these were narrow cases addressing very specific violations. On the last point, it’s my view that most of the serious, even urgent, concerns in the world cannot be resolved unless China and the United States are working together to help resolve them. I think the Administration has a similar list, quite frankly, that would ensure that competition is truly open, and that the playing field is level and fair. Jeremie Waterman: Walter, thank you. Pushing others to live up to our standards rather than bringing ourselves down to a lower standard is the right way to approach those things. Unlike many other economies, China’s membership was not grandfathered in, as was the case with “original members” that joi… Look, for example, at the “Made in China 2025” industrial strategy of the Chinese. I know it’s still in the talking points of people in Washington, but I don’t think the facts reflect the reality there. The Chinese have an excellent team of trade lawyers in Beijing. Thanks. Because for many governments, but also more specifically for companies that have to provide the information to the governments, of course there’s a real risk of retaliation. Erin has been with the U.S.–China Business Council for more than 10 years. First, soon after China joined the WTO, the world economy was hit by a global financial crisis and a recession, which affected China and its main trading partners very differently. Obviously, the President’s remarks yesterday at the U.N. General Assembly were strong. I’m Walter Lohman, director of the Asian Study Center here at Heritage. That easy narrative then fuels the trade dispute that we have with the Chinese. On the trade and economic side, it becomes more difficult. While I think that the Administration’s focus on fairness as the standard is one that’s very hard to define, I do think that it’s one that the trilateral effort that the European Union and Japan and the United States are undertaking are trying to put some perimeters around. How broad is the definition? The stock market has not yet internalized what’s happening in international trade. The vast amount of the economic growth in China over the past generation has come from the embrace of private enterprise and the innovations of a growing private sector in China. We can hardly do it justice in the time we have left. It would put this Chinese pledge to the test. United States and China can certainly compete economically. Openness has benefited us as an economy. I think most governments around the world, certainly we here in the United States, have traditionally had a narrower definition. Walter Lohman: Thank you. The World Trade Organization (WTO), created to provide an arena for the peaceful settlement of trade disputes, is at the center of much of the debate over U.S. trade policy toward China. Erin Ennis: I’ll actually harken back to a point that Jim made about the bilateral investment treaty. Moreover, the Obama administration placed numerous anti-dumping and coun­tervailing duties on Chinese goods starting in 2009. Yet it also takes too long. He denounced the WTO again yesterday in his remarks at the United Nations. There are some creative reasons suggesting why they have not done so. A couple of questions. The average time for the resolution of a WTO dispute is usually about three years from beginning to end. Government subsidies are automatically illegal under WTO rules. Subsidies provided by the Chinese can be challenged by many aspects of the subsidies agreement where they are conditioned on export performance, or where they’re conditioned on using local inputs, not foreign inputs, into the making of products. I know that in studying President Lincoln he can be reminded of what is truly great about America. But the reason for the rules is to try to build fairness, so that one government isn’t doing it at the expense of another and distorting the markets for prolonged periods, because that’s what we’ve determined is in the global interest. And it’s my belief that, if China is found to have violated these obligations in the WTO treaty, and if China then complies with the rulings of the WTO as it has generally done quite well over the past 17 years, then China will be more likely to grow economically and the Chinese people will be more likely to rise. In fact, the view of the American business community has been that we need a plurilateral approach. One, I’d like to know why you think we didn’t. I advocate addressing all of the issues he mentioned and a whole lot more. Should we not be stepping up and pursuing a world court in terms of addressing our legal concerns? Walter Lohman: Great. The Chinese, when they have been brought to the WTO and found not to have acted consistently with their obligations, have had a good record of complying with WTO rulings against them. China used to be one of the few countries that avoided most international affairs and shunned most international norms. They are undermining the trading system that we have worked together in the world to create over the past 70 years. As to the exchange rate issues, currency issues, you are right. The Chamber of Commerce has a great website, it’s actually very catchy and very simple—www.thewrongapproach.com—which highlights the counterproductive effects of the impact of tariffs across our country on a state-by-state basis. I think it is. National Security Advisor Bolton had strong remarks. I certainly agree with the Congressman about tariffs. History did not, in terms of U.S.–China economic and commercial relations, begin anew in November 2016 when President Trump was elected. In sum, WTO dispute procedures work to enforce existing US rights under the world trade rules. And then, perhaps most importantly, data flows. The U.S. should rely more on the WTO. And, can we remedy that? I think it feeds into a very misplaced narrative that we see setting in on the Chinese side, where the Chinese side increasingly sees an effort to contain China, which is something that I would say is, in fact, not accurate. And the United States’ reluctance to have further definition of what national security is, out of fear that it would constrain how the U.S. wants to define it. Walter Lohman: Thank you very much, Erin. And where there is a subsidy that is specific to certain industries or enterprises and that has adverse effects in the marketplace, those subsidies are also illegal under WTO rules. 1. What are the potential scenarios? And as a consequence, you cannot force me to transfer my technology or to localize it in order to be able to invest.”. American Businesses Are Responding to the Crisis in Xinjiang, Three Seas Initiative Could Pay Dividends for Decades, Biden Administration’s Approach to “Buy American” Will Harm Taxpayers. And so, I think that, in part, explains why there is this ongoing effort, an effort that we very much support at the U.S. Chamber, and I think that the broader business community supports, to work with allies and update the international trading system. The Nation suggests that the operating principles of the global economic and financial system today are but potential menaces, and do not necessarily … In that circumstance, it does make a difference whether you can, as a company, own 100 percent of what you’re doing in the market. Why now is the moment to reform the WTO to deal with the China issues US imports from China covered by special protection by sector, 1980-2018 Source: Chad P. Bown, The 2018 US -China Trade Conflict After Forty Years of Special Protection But some US-China problems fall outside the WTO rulebook, so there is a strong need to update international trade obligations to address current disputes over investment, intellectual property rights, and other issues. The direction seems to be helping domestic companies: Made in China 2025, the 13th Five-Year Plan, data as a national strategic resource. The fight against global terrorism is another. But the actual practice of the WTO is to allow a period of 15 to 18 months to implement a ruling. If you did these two things alone, you could cut a year off both processes. For compiled data on the cases brought by the United States and China against each other, see appendices A and B at https://piie.com/system/files/documents/schott-jung-appendices-3-12-2019.xlsx. It’s been a little longer for some disputes. I think there’s an Article 15.4 in the WTO agreement that would cover that, and they would have to go to the IMF. It says you must protect intellectual property rights. This assurance should be put to the test. We’re concerned about the loss of trade secrets, and we should be. Chad P. Bown (PIIE) and Melina Kolb (PIIE), Chad P. Bown (PIIE) and Eva (Yiwen) Zhang (PIIE), Subscribe to the PIIE Insider Weekly Newsletter. The other day, I got an e-mail from my Chinese student who had quoted the Gettysburg Address to me. So, I very much want to get to Q & A, but there’s one question I have to ask Jim Bacchus: I wanted to give you an opportunity to respond to Jeremie’s point about where the WTO is not well equipped, because that’s very much the heart of the issue. When China finally joined the WTO in 2001 after years of knocking on the door, it made huge concessions and changed thousands of domestic laws to conform to global trade standards. It must be great again. And if the WTO is falling short of those things, or if we cannot get those things achieved through a bilateral discussion, then we need to work with our trading partners.