U.S. – China Trade Relations — Recent Developments – Good or Bad?

Here’s some recent data and developments in trade relations with China:
  • China has been the target of the most antidumping and subsidy cases globally over the last 16 years. (China Daily)
  • Since 2001 China has been the target of 602 trade remedy cases worldwide worth over $38.98 billion. (China Daily)
  • The U.S. International Trade Commission ruled last week, in the solar panel case against China alleging dumping and subsidies, that U.S. industry has been injured.
  • Last week China opened its own antidumping investigation concerning imports from the U.S. of material needed for solar-panel production in China.
  • China is considering antidumping and countervailing duties against the import of U.S. autos, a very sensitive area of global commerce.
Here are some of my observations concerning China’s U.S. – China trade relations:
  • There are few currency laws governing trade relations. If enacted the pending bill in the Congress concerning undervaluation of foreign currencies would be inconsistent with U.S. obligations under the WTO.
  • The U.S. has been aggressive under both President Bush and President Obama in pursuing litigation against China in the WTO.
  • China generally responds confrontationally to aggressive use of trade measures and greater WTO litigation by the U.S.
  • China has generally complied with most recommendations made by the WTO panels and Appellate Body against it.
  • China has prospered in the global trading system since its accession to the WTO because of its WTO membership.  
  • China has changed various internal institutions and rules to comply with its obligations under its accession agreement.
  • China has used the WTO domestically as a rationale (threat) to persuade domestic interests to reform internal practices, which would probably not have been changed without having the cover of the WTO argument.
  • For example, the adoption of various aspects of international commercial law would have been much more problematical.
  • China has also adopted rules governing competition, a bit outside of the WTO area of competence,  to provide more competition domestically. China is investigating two state-owned enterprises (China Telecom and China Unicom) in order to promote consumer choice in the Internet access market.
  • As trade increases between China and the U.S. more trade disputes will arise. There is now in place a normal process of resolving them — the WTO and its dispute resolution system.
  • It was American resolve that helped to formulate a rules-based trading system incorporating an international judicial process to resolve trade disputes.
  • The negotiation and passage of the WTO was a bipartisan success story.
  • With billions to invest in both corporate and sovereign funds, Chinese investment is needed in the U.S. to promote economic development and jobs. State governors recognize this and so should those in Congress.
     In light of recent developments and my assessment, I suggest that U.S. – China trade relations should not become a whipping boy this presidential election season. It’s not beneficial to anyone. China is participating actively in the international system and is adapting to the rules of the road. This is beneficial to everyone.
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About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (School of Public Policy).
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