WTO 'Not Equipped' to Handle Market-Distorting China, Lighthizer Says
The World Trade Organization is “not equipped” to mitigate the economic effects spawned by the large, mercantilist Chinese economy, which poses unprecedented challenges for international commerce, U.S. Trade Representative Robert Lighthizer said during an address Sept. 18 at the Center for International and Strategic Studies. “I believe that there is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China,” Lighthizer said. “The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.”
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There’s an “awful lot” to indicate “a problem here,” regarding the effects of Chinese forced technology transfers on U.S. businesses, but the Office of the U.S. Trade Representative isn’t “pre-judging” the results of its ongoing Section 301 investigation into such practices of that country, which it launched Aug. 18 (see 1708210024), Lighthizer said. Section 301 of the Trade Act of 1974 gives the president broad authority to retaliate against restrictions found to “burden or restrict” U.S. commerce and the interagency Section 301 Committee will hold a public hearing on Oct. 10 on the investigation. The Trump administration is looking to protect U.S. intellectual property, one of this country’s fundamental competitive advantages, Lighthizer said. If the administration finds WTO violations through its review, it will file a case, he said.
As for consideration of how the U.S. should approach trade with free trade agreement partners, USTR’s review of U.S. FTAs should come out “in another month or so,” Lighthizer said. President Donald Trump on April 29 signed an executive order tasking USTR and the Commerce Department with reviewing all trade agreements to which the U.S. is party (see 1705010018). The administration is currently considering whether to resume Transatlantic Trade and Investment Partnership negotiations, as well as what bilateral trade agreements it will seek with Asian countries as the executive branch looks to remain engaged on the continent, Lighthizer said. “We have to determine when we’re going to do it and what the order will be, and the like,” he said. “There is interest in various countries in that.”
The April executive order also directs USTR and Commerce to examine trade relations with non-FTA-partner, WTO members with whom the U.S. has significant trade deficits in goods. Lighthizer sounded pessimistic about the prospect of reaching substantive progress in WTO negotiation rounds, saying it is “our view” that the WTO’s 11th Ministerial Conference set for Buenos Aires in December will not lead to negotiated outcomes. “There are a number of areas where we would be willing to engage, but there seems to be something blocking it in every case,” Lighthizer said. “Hopefully, we’ll end up with a good conference, one that we decide what the upcoming agenda will be, and there’ll be agreement on that.”