The Biden administration announced its trade policy and relaunched trade talks with China. Washington has officially complained that Beijing is using massive government subsidies and numerous state-owned companies to evade and ignore World Trade Organization (WTO) rules.

There is a simple solution: restore the binding trade organization dispute resolution system that the Trump administration has sterilized. Then use it to challenge China for violating its commitments.

The World Trade Organization’s Appellate Body ceased to exist on December 10, 2020, when its last member left. Over the past four years, the Trump administration has repeatedly blocked the selection of new tribunal members when the terms of their predecessors expire. As a result, the WTO lost its first tribunal – a first in its history.

It’s the same tactic former Zimbabwe president Robert Mugabe used against the 15 members of the Southern African Development Community after a ruling against him. But the US obstruction is much worse as Washington has destroyed an international tribunal that covers most of the world, including all the great powers.

Many expected the Biden administration to end the paralysis. Despite its declared affinity for multilateralism, the White House has so far taken the same positions as the former President TrumpDonald TrumpOvernight Defense & National Security – Presented by Boeing – Milley warns of “Sputnik moment” for China – without the tweets. He refused to consent to new appointments to the tribunal, dismissing repeated appeals from more than 120 members of the World Trade Organization.

It is time for the Biden administration to drop its opposition. This would serve to further the American vision of the multilateral trading system. Here’s why:

First, Washington is better positioned to challenge Beijing’s system of state capitalism with a functioning WTO dispute settlement system than without it. The Trump administration has turned to unilateral action, violating US commitments. It raised average tariffs on Chinese products, for example, from around 3% in January 2018 to around 21% today.

In retaliation, China proportionately increased tariffs against U.S. products, while lowering tariffs for other trading partners. The result has been a decline in the competitiveness of the United States due to more expensive imports into America used in production and discriminatory tariffs against American products abroad.

But if Washington instead challenges China’s practices and wins in WTO dispute settlement, Beijing would have to comply or face authorized retaliation. This would allow Washington to coordinate a response with American allies also affected by the illegal practices. Without a binding WTO dispute settlement system, this is not possible.

Consider: The United States won a key WTO panel ruling that China’s growing use of “industrial policies, five-year plans and other government support programs” supported a conclusion of “unanticipated development” in safeguards investigations conducted by the United States International Trade Commission.

This decision should allow Washington to impose tariffs on Chinese products, without retaliation. It also paves the way for more WTO complaints against China’s practices. This should justify US pressure for serious WTO reforms on the grounds that China has reneged on its commitments to market mechanisms under President Xi Jinping.

Without the Appellate Body, however, China was able to appeal the ruling “in a vacuum”, turning the United States’ hard-won victory into an unadopted panel report of little value. Given that the United States plans to challenge China’s subsidy regime and its use of state-owned enterprises at the WTO, it is crucial to restore binding WTO dispute settlement.

At a minimum, the Biden administration should signal that it is ready to actively engage in clarifications of the WTO Dispute Settlement Understanding as a condition of re-establishing binding dispute settlement. Such a move would help repair Washington’s damaged reputation which was sadly tarnished during the Trump era.

When President BidenJoe BidenBiden to meet with House Dems ahead of trip to Europe: Report 21 House Democrats are calling for removing IRS banking reporting proposal from overnight health care expense bill – Brought to you by Altria – The Vulnerables House Dems push the PLUS drug pricing plan took office, he announced to the world, “America is back. So far, the administration has done little to back up this claim about trade. By actively working to revive binding trade dispute resolution, the White House will help restore US leadership in world trade.

The WTO is due to hold its ministerial conference from November 30 to December 3 in Geneva – the first conference in four years. Despite the modest agenda, there are signs the deal even on its short list of items will be stuck. This could not only damage the credibility of the WTO; this could further weaken the global economy affected by the pandemic. A commitment by the United States to restore binding dispute settlement at the WTO could help rekindle hope in multilateralism and global cooperation.

It’s time to bring back the “rules-based system” that the Biden administration trumpets.

Gregory Shaffer is Chancellor’s Professor at the University of California, Irvine School of Law, and President-elect of the American Society of International Law. Follow him on twitter @gregorycshaffer.

Henry Gao is Professor of Law at Singapore Management University and Dongfang Scholar Professor at Shanghai University of International Business and Economics. Follow him on twitter @henrysgao.



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