全球性国际经济组织

第一节　全球性国际经济组织

Section 1　Global International Economic Organizations

【The Fundamental】

I. World Trade Organization (WTO)

A. Introduction

Simply put, WTO deals with the rules of trade between nations at a global or near-global level. But there is more to it than that. There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules.

1. A negotiating forum.

Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).^[1]The WTO is currently the host to new negotiations, under the “Doha Development Agenda”^[2]launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in somecircumstances its rules support maintaining trade barriers—for example to protect consumers or prevent the spread of disease.

2. A set of rules.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.

The system’s overriding purpose is to help trade flow as freely as possible—so long as there are no undesirable side-effects—because this is important for economic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.

3. Helping to settle disputes.

This is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.

4. Born in 1995, but not so young.

The WTO began life on 1^thJanuary, 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)

It did not take long for the General Agreement to give birth to an unofficial, de facto^[3]international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations.

The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, theWTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).

B. Principles of the trading system

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

1. Trade without discrimination.

(a) Most-favored-nation (MFN): treating other people equally. Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favor (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members. This principle is known as most-favored-nation(MFN) treatment. It is so important that it is the first article of the GATT, which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services(GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO.

Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group—discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners—whether rich or poor, weak or strong.

(b) National treatment: Treating foreigners and locals equally. Imported and locally-produced goods should be treated equally—at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is also found in all the three main WTOagreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.

National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.

2. Freer trade: gradually, through negotiation.

Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. From time to time other issues such as red tape and exchange rate policies have also been discussed.

Since GATT’s creation in 1947-48 there have been eight rounds of trade negotiations.^[4]A ninth round, under the Doha Development Agenda, is now underway. At first these focused on lowering tariffs (customs duties) on imported goods. As a result of the negotiations, by the mid-1990s industrial countries’ tariff rates on industrial goods had fallen steadily to less than 4%.

But by the 1980s, the negotiations had expanded to cover non-tariff barriers on goods, and to the new areas such as services and intellectual property.

Opening markets can be beneficial, but it also requires adjustment. The WTO agreements allow countries to introduce changes gradually, through “progressive liberalization”. Developing countries are usually given longer to fulfill their obligations.

3. Predictability: through binding and transparency.

Sometimes, promising not to raise a trade barrier can be as important as lowering one, because the promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition—choice and lower prices. The multilateral trading system is an attempt by governments to make the business environment stable and predictable.

In the WTO, when countries agree to open their markets for goods or services, they“bind” their commitments. For goods, these bindings amount to ceilings on customs tariff rates. Sometimes countries tax imports at rates that are lower than the bound rates. Frequently this is the case in developing countries. In developed countries the rates actually charged and thebound rates tend to be the same.

A country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. One of the achievements of the Uruguay Round of multilateral trade talks was to increase the amount of trade under binding commitments. In agriculture, 100% of products now have bound tariffs. The result of all this is a substantially higher degree of market security for traders and investors.

The system tries to improve predictability and stability in other ways as well. One way is to discourage the use of quotas and other measures used to set limits on quantities of imports—administering quotas can lead to more red-tape and accusations of unfair play. Another is to make countries’ trade rules as clear and public (“transparent”) as possible. Many WTO agreements require governments to disclose their policies and practices publicly within the country or by notifying the WTO. The regular surveillance of national trade policies through the Trade Policy Review Mechanism^[5]provides a further means of encouraging transparency both domestically and at the multilateral level.

4. Promoting fair competition.

The WTO is sometimes described as a “free trade” institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted competition.

The rules on non-discrimination—MFN and national treatment—are designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.

5. Encouraging development and economic reform.

The WTO system contributes to development. On the other hand, developing countries need flexibility in the time they take to implement the system’s agreements. And the agreements themselves inherit the earlier provisions of GATT that allow for special assistance and trade concessions for developing countries.

Over three quarters of WTO members are developing countries and countries in transitionto market economies. During the seven and a half years of the Uruguay Round, over 60 of these countries implemented trade liberalization programmes autonomously. At the same time, developing countries and transition economies were much more active and influential in the Uruguay Round negotiations than in any previous round, and they are even more so in the current Doha Development Agenda.

At the end of the Uruguay Round, developing countries were prepared to take on most of the obligations that are required of developed countries. But the agreements did give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions—particularly so for the poorest, “least-developed” countries. A ministerial decision adopted at the end of the round says better-off countries should accelerate implementing market access commitments on goods exported by the least-developed countries, and it seeks increased technical assistance for them. More recently, developed countries have started to allow duty-free and quota-free imports for almost all products from least-developed countries. On all of this, the WTO and its members are still going through a learning process. The current Doha Development Agenda includes developing countries’ concerns about the difficulties they face in implementing the Uruguay Round agreements.

(Adapted from http://www.wto.org/)

II. International Monetary Fund (IMF)

The IMF currently has a near-global membership of 188 countries. To become a member, a country must apply and then be accepted by a majority of the existing members. Upon joining, each member country of the IMF is assigned a quota^[6], based broadly on its relative size in the world economy. The IMF’s membership agreed in November 2010 on a major overhaul of its quota system to reflect the changing global economic realities, especially the increased weight of major emerging markets in the global economy.

With its membership of 188 countries, the IMF is uniquely placed to help member governments take advantage of the opportunities—and manage the challenges—posed by globalization and economic development more generally. The IMF tracks global economictrends and performance, alerts its member countries when it sees problems on the horizon, provides a forum for policy dialogue, and passes on know-how to governments on how to tackle economic difficulties.

The IMF provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty. Marked by massive movements of capital and abrupt shifts in comparative advantage, globalization affects countries’ policy choices in many areas, including labor, trade, and tax policies. Helping a country benefit from globalization while avoiding potential downsides is an important task for the IMF. The global economic crisis has highlighted just how interconnected countries have become in today’s world economy.

A. Key IMF Activities

The IMF supports its membership by providing: (a) policy advice to governments and central banks based on analysis of economic trends and cross-country experiences;(b) research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets; (c) loans to help countries overcome economic difficulties;(d) concessional loans to help fight poverty in developing countries; and (e) technical assistance and training to help countries improve the management of their economies.

B. Original Aims

The IMF was founded more than 60 years ago toward the end of World War II.^[7]The founders aimed to build a framework for economic cooperation that would avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s^[8]and the global conflict that followed.

Since then the world has changed dramatically, bringing extensive prosperity and lifting millions out of poverty, especially in Asia. In many ways the IMF’s main purpose—to provide the global public good of financial stability—is the same today as it was when the organization was established. More specifically, the IMF continues to provide a forum for cooperation on international monetary problems facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction; promote exchange rate stability and an open system of international payments; and lend countries foreign exchange when needed, ona temporary basis and under adequate safeguards, to help them address balance of payments problems.

C. An Adapting IMF

The IMF has evolved along with the global economy throughout its 65-year history, allowing the organization to retain its central role within the international financial architecture

As the world economy struggles to restore growth and jobs after the worst crisis since the Great Depression, the IMF has emerged as a very different institution. During the crisis, it mobilized on many fronts to support its member countries. It increased its lending, used its cross-country experience to advise on policy solutions, supported global policy coordination, and reformed the way it makes decisions. The result is an institution that is more in tune with the needs of its 188 member countries.

1. Stepping up crisis lending.

The IMF responded quickly to the global economic crisis, with lending commitments reaching a record level of more than US$250 billion in 2010. This figure includes a sharp increase in concessional lending (that’s to say, subsidized lending at rates below those being charged by the market) to the world’s poorest nations.

2. Greater Lending Flexibility.

The IMF has overhauled its lending framework to make it better suited to countries’individual needs. It is also working with other regional institutions to create a broader financial safety net, which could help prevent new crises.

3. Providing Analysis and Advice.

The IMF’s monitoring, forecasts, and policy advice, informed by a global perspective and by experience from previous crises, have been in high demand and have been used by the G-20^[9].

4. Drawing Lessons from the Crisis.

The IMF is contributing to the ongoing effort to draw lessons from the crisis for policy, regulation, and reform of the global financial architecture.

5. Historic Reform of Governance.

The IMF’s member countries also agreed to a significant increase in the voice of dynamicemerging and developing economies in the decision making of the institution, while preserving the voice of the low-income members.

(Adapted from http://www.imf.org/external/index.htm)

III. World Bank Group (WBG)

The World Bank Group consists of five organizations: (a) the International Bank for Reconstruction and Development (IBRD) which lends to governments of middle-income and creditworthy low-income countries; (b) the International Development Association (IDA) which provides interest-free loans—called credits—and grants to governments of the poorest countries; (c) the International Finance Corporation (IFC) that provides loans, equity and technical assistance to stimulate private sector investment in developing countries; (d) the Multilateral Investment Guarantee Agency (MIGA) which provides guarantees against losses caused by non-commercial risks to investors in developing countries; and (e) the International Centre for Settlement of Investment Disputes (ICSID) that provides international facilities for conciliation and arbitration of investment disputes. Collectively, the World Bank Group is the world’s largest funder of education, the world’s largest external funder of the fight against HIV/AIDS, a leader in the fight against corruption worldwide, a strong supporter of debt relief, the largest international financier of biodiversity projects, and the largest international financier of water supply and sanitation projects.

A. Member Countries

The organizations that make up the World Bank Group are owned by the governments of member nations, which have the ultimate decision-making power within the organizations on all matters, including policy, financial or membership issues. To become a member of the Bank, under the IBRD Articles of Agreement, a country must first join the International Monetary Fund (IMF). Membership in IDA, IFC and MIGA are conditional on membership in IBRD.

B. Strategy

Six strategic themes drive the Bank’s work, focusing on the poorest countries, fragile and conflict-affected states, the Arab world, middle-income countries, global public goods issues, and delivery of knowledge and learning services.

There are also strategies for the key areas in which the Bank works: (a) thematic andsector strategies, which guide its work to reduce poverty in a specific sector or aspect of development; (b) country assistance strategies, which identify the key areas in which it can best support a country in reducing poverty and achieving sustainable development.

C. Financial Products and Services

The Bank provides low-interest loans, interest-free credits, and grants to developing countries. These support a wide array of investments in such areas as education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. Some of the projects are co-financed with governments, other multilateral institutions, commercial banks, export credit agencies, and private sector investors. The Bank also provides or facilitates financing through trust fund partnerships with bilateral and multilateral donors. Many partners have asked the Bank to help manage initiatives that address needs across a wide range of sectors and developing regions.

D. Innovative Knowledge Sharing

The Bank offers support to developing countries through policy advice, research and analysis, and technical assistance. Its analytical work often underpins World Bank financing and helps inform developing countries’ own investments. In addition, it supports capacity development in the countries it serves. It also sponsors, hosts, or participates in many conferences and forums on issues of development, often in collaboration with partners.

To ensure that countries can access the best global expertise and help generate cutting-edge knowledge, the Bank is constantly seeking to improve the way it shares its knowledge and engages with clients and the public at large.

(Adapted from http://www.worldbank.org/)

[The Reflections]

1. What is WTO and what does WTO do?

2. What are the fundamental principles of the WTO agreements?

3. How do you understand WTO agreements’ special provisions on developing countries?

4. What is IMF and what does IMF do?

5. What is WBG and what dose WBG do?

【The In-depth】

United States-China Trade Litigation in the WTO

The two most intriguing aspects of today’s global trading system are the convergence of the role of the World Trade Organization (WTO) litigation and United States-China bilateral trade relations. The U.S. has made WTO litigation a major component of its trade policy of“active engagement” to meet the new challenges of East Asia. A response to the historic change of control within the Congress at the 2006 mid-term elections, the policy has become a central aspect of U.S.—China trade policy.

The U.S. government has initiated a trade offensive against China in the WTO, mainly in response to the shift of congressional control from the Republican Party to the Democratic Party. This offensive has serious implications beyond the bilateral trade issues concerning the U.S. and China. It foreshadows the governance of global trade moving from negotiations toward more litigation.

This change and its effects raise two broader questions. First, what are the implications of this U.S. trade offensive against China for global trade relations? Second, is resorting to WTO litigation a default position because of the failure of international negotiations?

My approach is to focus primarily on recent WTO litigation involving the U.S. and China while noting recent international negotiations and pending Congressional legislation.

A. WTO Litigation

Since the midterm elections, the United States has launched an assault on China using WTO litigation. In 2007, the United States filed three cases in the WTO against China.

The first case, filed on February 2, 2007, targeted a range of export subsidies. (Exemption from Taxes as to Domestically Produced Goods) The U.S. contends that China is violating the Subsidies Agreement and National Treatment Principle. Specifically, the U.S. argues that China provides various tax rebates to a range of Chinese firms amounting to export subsidies. Mexico filed a similar case and a panel was established in September 2007. The U.S. case was suspended in November after the parties reached a settlement.

On April 10, 2007, the United States filed twin cases. The first of these cases involved an alleged failure to enforce intellectual property rights. (Protection ＆ Enforcement of Intellectual Property Rights) The U.S. alleges that China is violating the Intellectual PropertyAgreement (Trade-Related Aspects of Intellectual Property Rights, or TRIPS) by not enforcing its intellectual property obligations. For example, the U.S. argued that the threshold to establish trademark counterfeiting and copyright piracy under China’s criminal procedures is too high. Moreover, the U.S. argues there is a lack of procedures and penalties. A panel to determine this matter was established in September 2007.

The second of these cases targeted market access and distribution restrictions on films and audiovisual products. The U.S. argues that China maintains restrictions on the import of films and restricts foreign companies from distributing films and DVDs. The U.S. contends these restrictions violate market access obligations under the 1994 General Agreement on Tariffs and Trade (GATT) as to imports, as well as the Services Agreement concerning domestic distribution. A panel was requested in October 2007.

Neither of these cases had third parties joining the U.S. Apparently, no foreign governments wanted to be associated with either the merits of the cases or their timing, given their foreign policy or other global trade considerations.

Prior to the 2007 WTO litigation, the U.S. filed two WTO cases against China. The earlier filings indicate that the U.S. began choosing WTO litigation against China as an important trade tool several years prior to its most recent actions.

The first case, filed on March 18, 2004, (VAT ＆ Integrated Circuits), was settled in the consultation stage by a “mutually agreed-upon solution” prior to full litigation. The U.S. contended that China was violating the National Treatment Principle of the GATT, and argued that the refund of the value added tax to Chinese manufacturers (or when Chinese designed chips were imported) violated the GATT. The second case, filed on March 30, 2006, (Imports of Auto Parts) had the U.S. and the European Union arguing that the import of auto parts are subject to tariffs equal to those on completed cars. They argued that they should be charged the lower rate for parts, rather than the higher rate, for completed automobiles and that failure to classify the parts properly violates the GATT and the Trade-Related Investment Measure Agreement. A panel has been requested.

While not currently involving WTO litigation, a U.S. Court of International Trade decision of 2007 (High-Gloss Paper/NewPage Corporation) further complicates the trade disputes between China and the United States. China has recently threatened to bring full litigation against the U.S. in the WTO concerning subsidies levied pursuant to this case. This case marks the first by China as a sole complainant. Consultations were requested in September. On March 29, 2007, the U.S. Court of International Trade in New York upheld theGeorge W. Bush administration’s (Department of Commerce) change of trade policy, bringing subsidy actions against Chinese imports. The administration decided as a matter of policy to allow subsidy actions concerning goods from non-market economies. This ruling reversed the 1980’s Georgetown Steel and U.S. trade policy of the last twenty years, both of which did not allow bringing subsidy cases involving nonmarket economies, principally China.

China has consistently argued that the cases filed by the U.S. on these issues were unjustified. “U.S. filing complaints in the WTO over alleged commercial piracy in China will badly damage cooperation.” In the U.S. Court of International Trade case, China has taken an even stronger position. “The Chinese government expresses strong dissatisfaction about the U.S. decision to impose penalty tariffs against the imports of Chinese coated free sheet paper.”

Ambassador Susan C. Schwab, the U.S. trade representative, says bringing trade actions should not be viewed as a failure in trade relations. “We have brought four formal WTO cases in the past fourteen months and we are determined to press our cases vigorously in the months ahead. This should not be regarded as a failure in our trade relationship with China. Quite the contrary. Resorting to dispute settlement is itself a form of engagement. It is evidence of two countries working to resolve disputes about obligations through neutral, legal mechanisms. WTO dispute settlement is designed to prevent trade wars rather than fuel them.”

B. International Negotiations

The reliance of the U.S. on WTO litigation points to faulty international negotiations. In May 2007, the Second China Strategic Dialogue in Washington, D.C., the more recent negotiations in Beijing and the Group of Seven (G-7) meeting (even though it stepped up pressure on China in currency valuation) failed to produce any significant results. Neither has the older U.S.-China Joint Commission on Commerce and Trade produced any important outcomes. This failure of negotiations is occurring while China remains the target of the largest number of antidumping actions brought by countries worldwide (thirty-six during July to December 2006). The EU is considering filing newer cases and adopting a more aggressive approach. European steel makers recently asked the European Commission to impose antidumping duties on steel, and this appears to be an opening shot in a looming trade war with China.

C. Congressional Legislation

While the Bush administration is moving forward with its trade litigation, there are various bills in Congress proposing a host of stronger actions against China. Each could have potentially serious consequences for trade with China. Describing them is like photographingthe sand on a beach during a windstorm. However, what is particularly unique is that congressional legislation for the first time would include WTO litigation as a sanction.

The Senate Finance Committee bill (sponsored by Max S. Baucus, Charles E. “Chuck”Grassley, Charles E. Schumer and Lindsey O. Graham) defines dumping by considering undervaluation of foreign currency. This approach is tamer than earlier bills. However, this bill would require the United States Trade Representative (USTR) to file a WTO action within a year of the Department of the Treasury determining that a nation’s currency is “misaligned.”Leading Democratic presidential contenders (Hillary Clinton and Barack Obama) have signed on to this approach. The Bush administration opposes this strategy. “Public opinion polls show rising discontent with globalization among Republicans and Democrats alike.”

Given the time it will take for enactment of the legislation, required Treasury Department action, the USTR request to the WTO, and the WTO’s process of panels and appeals, late 2010 is the earliest any WTO action could occur. This lengthy timeline for possible action under this bill indicates that passing legislation is not necessarily the most efficient or effective way to address these trade issues. Reinvigorated negotiations become more attractive, with a promise of a quicker resolution.

The earlier Senate bill (sponsored by Schumer and Graham) would authorize 27.5 percent duties on all imports to counter the undervaluation of the yuan. This bill also presents a novel possibility—action in the WTO. The bill declares that as a general principle the undervaluation of currencies amount to an export subsidy.

The Senate Banking Committee bill (sponsored by Christopher J. Dodd and Richard C. Shelby) requests the Treasury Department to take actions over global currency imbalances and currency manipulation. This measure is clearly aimed at China.

A bill in the House of Representatives (sponsored by Arthur G. Davis and Philip English) would allow subsidy actions as to nonmarket economies. It would codify both the Bush administration’s policy and the decision of the U.S. Court of International Trade in the High-Gloss Paper authorizing subsidy actions against imports coming from nonmarket economies.

The Bush administration has warned against all of the above legislation. It emphasizes China as a source of affordable consumer products and a marketplace for American exports. In particular, the administration has supported negotiations with litigation as a central component of its trade policy. Recently, the Bush administration denied a Section 301 petition seeking to launch a WTO case against China concerning the valuation of the yuan.

D. Assessment

In summary, the U.S. filed two cases against China in the WTO soon after China’s accession in 2001. Since the midterm elections in 2006, the Bush administration has launched a more aggressive trade policy against China in the WTO, filing an additional three cases. Panels have been established and decisions are expected by late 2008.

The Bush administration’s newer trade policy is in response to the swing in power in the Congress. The Democrat-controlled Congress has become more resistant to President Bush’s trade policies, which have involved opposition to fasttrack extension and the approval of various bilateral trade agreements (with South Korea, Panama, Peru, and Colombia). The Bush administration’s approach is an obvious response to the Democratic Party’s focus on a “new populism,” emphasizing “trade and jobs.” This shift joins a growing popular resistance to globalization and trade, growing concern over product and food safety, and increasing Republican Party resistance, as well. Congressional backlash is in large part based on continuous failure by the Treasury Department to determine that China has manipulated the yuan and declare such manipulation to be a prohibited trade restriction.

The Treasury Department failed to take this action again in its semi-annual report to Congress on foreign exchange, issued in June 2007. However, the Treasury Department’s cautionary position is understandable. The provisions of the WTO agreements do not consider currency valuation in the context of a trade restriction, let alone declare them as inconsistent with the WTO.

The Bush administration’s policy also is a reaction to international diplomacy failures. Bilateral negotiations with China and the Doha trade negotiations have been disappointments. Successful bilateral trade talks hold the promise of resolving difficult disputes. Success in multilateral negotiations offers the possibility of adoption of newer rules for the general trading system. Developing and clarifying rules through multilateral negotiation is the optimal solution. U.S. trade efforts should be focused on this approach.

Of course, this newer U.S. trade policy is in the context of myriad international economic and political factors. China’s economic development and growth is huge. China’s gross domestic product in the first quarter was a twelve-year high at 11.9 percent. China could well grow this year at the fastest rate since 1993 and bring it closer to overtaking Germany as the world’s third-largest economy. China has an overvalued currency, and global economic balances persist. The U.S. economy is slowing. China’s demand for imports isfueling a global economic expansion. China is on course to lead the world in initial public offerings. The initial public offering of the Industrial and Commercial Bank of China in July 2007 made ICBC the world’s largest bank by capitalization. Two months later, this IPO was surpassed by that of China Construction Bank Corp. China’s stock market has reached an all-time high (six thousand in October 2007). In November, after its public offering, PetroChina became the world’s first $1 000bn company. A day later, the public offering of Alibaba.com made it the world’s second largest Internet company. China now leads the world in publicly traded companies with more than $200 billion in market capitalization. China’s sovereign wealth fund, the China Investment Corporation, is preparing to invest globally.

Within a geopolitical context, China is becoming of great importance and concern to the United States. For example, there has been increased cooperation between Russia and China in Central Asia within the new Shanghai Cooperation Organization. China has been a key participant in the nuclear negotiations with North Korea. “[C]hinese nationalism backed by economic strength—poses obvious foreign policy dilemmas for the west.” The ideological battles over which model is best for economic development will continue. “Authoritarian nationalism” is challenging the Western political model that embraces liberal democracy.“State capitalism” seems more appropriate for defining the market in China.

The new U.S. trade actions against China in the WTO could easily spill into a larger trade war. Initially, it could lead to new Chinese restrictions on U.S. multinationals investing in China and China’s investment in the U.S. The U.S. multinationals doing business in China and U.S. exporters to China would pay the price for U.S. import restrictions. This possibility is particularly worrisome since China is generating significant earnings in a generally slowing U.S. economy. The U.S. economy is “decoupling” from the global economy as the economic locomotive of global growth. “The global economy is moving into a newer era in which growth in developing parts of the world becomes the key component of economic expansion.”

Ultimately, the trade conflict could affect the U.S. political and national security relations with China. Changing some specific practices of China or tweaking U.S. trade law are not going to change the fact that China is a rapidly developing, emergingmarket powerhouse. China is poised to become the largest trading nation in the world. There is a need to develop other remedies for the U.S.-China trade conflict. Developing less unilateral and confrontational actions on both sides is preferable.

The bigger issue still warrants discussion. Has WTO litigation become the weapon of choice for the United States because there has been a failure of diplomacy within the WTO system? The answer is yes. The possible implications of this reality are huge. Litigated decisions are applicable only to the individual parties to a case. While litigation does hold the promise of coaxing states back to the negotiating table litigation simply does not hold the answer for developing general rules addressing ever more complex issues of trade relations—rules that are applicable to all WTO members. Is it better for global trade relations to be centered on the WTO Dispute Settlement Understanding system than on the seemingly never-ending Doha negotiations or bilateral negotiations over trade disputes? Here, the answer is no. Trade disputes are better settled within the dispute resolution system. While individual or a range of trade disputes may be settled by bilateral negotiations, it is crucial for trade relations to be grounded in multilateral negotiations through which policy choices are made by the parties for the benefit of themselves and the global trading system. Professor Robert Z. Lawrence of Harvard University states, “The shift from bilateral to multilateral enforcement helps secure the legitimacy of the trading system and reduces the political costs associated with bilateral dispute settlement.” He concludes, “There are other reasons to be wary of an aggressive move toward tougher enforcement.... the dispute settlement system reflects a subtle amalgam of the legal and diplomatic approaches...”

This grounding means reinvigorating the current round of WTO negotiations to develop newer rules for both broader and more technical trade issues. As trade relations continue to evolve, these issues will undoubtedly encompass a greater range of economic relations than does the existing rules-based system. It also means taking greater advantage of the consultation stage in the dispute resolution system, where it can be more effectively utilized to settle contentious cases involving specific and divisive trade issues. This stage requires traditional diplomatic negotiations to occur in a confidential context. This reliance on more vigorous negotiations would be better for U.S.-China bilateral relations and enhance global governance of trade. Furthermore, it would strengthen the rules-based multilateral system. The WTO Director-General Pascal Lamy recently concluded, “The WTO is an engine, a motor energizing the international legal order...a catalyst for international mutual respect towards international coherence and even for more global governance, which I believe is needed if we want the world we live in to become less violent...”

(Written by Stuart S. Malawer, Virginia Lawyer, Vol. 28, 2007)

[The Terms]

1. VAT: 增值税

2. Department of Commerce: 商务部

3. Non-market economy: 非市场经济

4. U.S.-China Strategic and Economic Dialogue: 美中战略与经济对话

5. Group of Seven (G-7): 七国集团(美、英、法、德、意、加、日)

6. U.S.-China Joint Commission on Commerce and Trade: 美中商贸联合委员会

7. Senate Finance Committee: 参议院金融委员会

8. United States Trade Representative (USTR): 美国贸易代表

9. Department of the Treasury: 财政部

10. Senate Banking Committee: 参议院银行委员会

11. House of Representatives: 众议院

[The Discussions]

1. WTO litigation as a central aspect of U.S.-China trade policy.

2. China’s response to meet the new challenges of China as U.S. makes WTO litigation its trade policy.

3. WTO litigation as an international diplomacy failure or not.

【The Further Sources】

1. Yu, Peter K., Chang, Gordon G., Cohen, Jerome, Economy, Elizabeth C., Hom, Sharon and Li, Adam Qi, China and the WTO: Progress, Perils, and Prospects. Columbia Journal of Asian Law, Vol. 17, p. 1, 2003.

2. Farah, Paolo, Five Years of China WTO Membership: EU and US Perspectives About China’s Compliance With Transparency Commitments and the Transitional Review Mechanism. Legal Issues of Economic Integration, Kluwer Law International, Vol. 33, No. 3, August 2006.

3. Mitchell, Andrew D. and Hawkins, Jennifer K., China’s Currency and IMF Issues (May 8, 2012).

4. Easterly, William, The Effect of IMF and World Bank Programs on Poverty (December 2000).