Why The U.s. And China Couldn`t Settle On A Trade Agreement

U.S.-led talks with China on a trade deal at first had fueled a deadlock around Thanksgiving, and raised fears that a deal would collapse again – and thus hope of a nearly two-year-old end to the trade war. However, an important counter-argument – and that the United States prematurely abandoned the settlement of formal disputes – is that it has not appealed the WTO non-counterfeiting clause (NVNI) (Staiger and Sykes 2013). The indeterminate NVNI is a legal provision by which the WTO could make China guilty of harming the commercial interests of the United States, even without violating explicit WTO rules. Nevertheless, few attempts have been made to use such an argument. With respect to China, it would also be necessary for ABs to look at economic models in order to assess the negative impact of complex political interactions in a non-market economy on U.S. economic activity. It is not so easy to ask the AB if a Chinese policy has crossed a red line. [8] In late 2016, the Obama administration filed a WTO dispute against Chinese aluminum subsidies, which the Trump administration did not want to pursue. The United States had insisted on a multilateral OECD forum to address global (Chinese) steel overcapacity, but that was also little progress.

A final argument against the settlement of formal disputes is the length of the process. Horn et al. (2011) note that an average of three years elapses between the opening of the litigation, the expenses of the panel and the report of the appellate body and the outcome. To Chinese negotiators who dealt with a president they thought was unpredictable, Kushner`s words at least offered security, say people familiar with the episode. They also recognized a chance: the agreement would not force them to make economic policy changes that Washington had long insisted on. Trump said in an Oval Office speech that negotiators had reached a “phase 1” agreement that would take several weeks to write and that both sides could formally sign by November. The WTO dispute settlement is not yet complete, nor is the 2018 trade war. But if both are the two, any assessment of the effectiveness of the U.S. strategy will also require a thorough evaluation of the new dispute resolution system that will replace it. And to do that, we have to address what the WTO system, the will see and everything it has done.

About two weeks later, the two sides announced the compromise to be signed Wednesday at a White House ceremony.