Containers stacked at the Port of Los Angeles during the U.S.-China trade war in June 2019.
The U.S. and Europe have already said on different occasions that they will work together to confront the threat posed by the Chinese Communist Party in the geopolitical, economic and trade fields, among others. Former U.S. Deputy Trade Representative Shea wrote an article warning that the U.S. and Europe need to work together to confront the Chinese Communist Party (CCP) and recognize the CCP’s non-compliance with international norms on three fronts, and that if all hopes are placed on WTO reform in dealing with CCP’s unfair trade practices, it is likely to be played by the CCP so as not to solve the problem.
Dennis Shea is serving as Deputy U.S. Trade Representative from 2018-2021, as well as U.S. Ambassador to the World Trade Organization. Recently, he published an article in The Hill titled “U.S., Europe must go beyond WTO to meet China’s challenge. The article praised the U.S., Europe and Japan for establishing trilateral cooperation to fight the Communist Party, but at the same Time cited the Chinese Communist Party’s various broken promises and warned that the U.S. and Europe need to develop a broader strategy to go beyond WTO reform to contain the challenges and threats posed by the Chinese Communist Party’s bad behavior.
China’s repeated violations of the promise of Shea: WTO can not contain the evil behavior of the Chinese Communist Party
Shea began by agreeing that the EU’s latest trade policy includes a reassuring call for greater cooperation among transatlantic countries to meet the economic challenges posed by Communist China. In particular, the EU proposes to reinvigorate the trilateral system of cooperation, a joint economic circle of the United States, the European Union and Japan, aimed at developing new international trade rules to curb the economic penetration of Communist China.
China has a non-market economy, in which the Communist government recklessly uses industrial subsidies of a state nature to help Chinese companies compete with Western companies, and a disproportionate share of its state-owned enterprises, and Shea believes that past international trade rules have struggled to meet the economic challenges posed by the Communist Party.
“Building on the trilateral system of cooperation, new rules were further introduced into the WTO. But it would be a mistake to use the WTO (World Trade Organization) only as a base for reform, or to rely only on the trilateral cooperation system to deal with the Chinese Communist Party. In fact, if all hopes are placed on the WTO, it is likely to play right into the hands of the Communist Party and be played by it.” He said.
Shea explained that even if new WTO rules were developed to address the “negative spillover effects” of subsidies, the EU trade rules define government subsidies to businesses too narrowly to get to the root of the problem. China’s economic system, with its unique blend of public, private and Communist resources to achieve its industrial policy objectives, is inconsistent with the WTO guidelines of transparency, non-discrimination, reciprocity and market orientation. This hard fact needs to be acknowledged and confronted.
If a solution centered around the WTO is adopted, it is premised on the premise that the CCP must abide by international rules.
But Shea says there is overwhelming evidence that this is not the case. He cited as examples: the CCP’s failure to comply with the timely reporting requirements of the World health Organization’s International Health Regulations, which undoubtedly contributed to the CCP virus (COVID-19) pandemic; the CCP’s terrorist actions against the Uighurs in Xinjiang, which are inconsistent with the Universal Declaration of Human Rights; the CCP’s imposition of the National Security Law in Hong Kong, which violates the Sino-British Joint Declaration guaranteeing Hong Kong a high degree of autonomy; the CCP’s South China Sea with its expansive territorial claims in violation of the Law of the Sea Treaty.
“We have seen this pattern of behavior (by the CCP) repeated in international trade. The Office of the U.S. Trade Representative has documented that the CCP’s record of compliance with WTO rules has been poor. A major problem is the general lack of transparency in the CCP’s trade policies and practices.” He said.
CCP often kidnaps trade as geopolitical leverage
Shea also pointed to another CCP non-compliance with international norms, namely using its trade power as a bargaining chip. For example, he said, because Australia dared to call for an independent investigation into the origins of the Communist Party’s viral pandemic, triggering retaliation by the Communist Party against Australian exports, a clear violation of WTO rules. Japan, South Korea and the Philippines have also suffered similar trade retaliation because their actions were not recognized and accepted by the CCP.
A recent example is Taiwan‘s pineapples, which became the latest casualty of cross-strait tensions. on February 26, the CCP Customs refused to continue importing Taiwanese pineapples without warning on the grounds that they were infested with pests. Taiwan’s Ki Progressive Party questioned the Chinese Communist Party for kidnapping Taiwan with agriculture again.
The Taiwan Ki-Pin Party said, “It has long been China’s (CCP) usual tactic to ‘weaponize’ trade goods as a means of retaliation when it does not suit political interests.” The Ki Progressive Party also mentioned the FreedomWine incident that caused the Chinese Communist Party to ban the import of Australian wine last year because it demanded a thorough investigation into the origin of Wuhan pneumonia (Chinese Communist pneumonia) stepping on the sore spot of the Chinese Communist Party.
China’s negotiation is a trap WTO consensus principle can not contain the Chinese Communist Party
If one were to rely solely on the World Trade Organization (WTO) to solve problems, one would have to assume that the body has the ability to develop meaningful rules within a reasonable timeframe to resolve issues related to trade disputes with China. But the WTO’s consensus principle requires unanimous acceptance by all 164 WTO members before a resolution can be adopted. At the WTO, the CCP strongly opposes new subsidy-related rules, which it considers to be “direct shackles that restrict China’s development. Even if the CCP were willing to negotiate with the WTO, it could convince other WTO members to block consensus on new rules. In the most optimistic scenario, the end result is likely to be a very weak and lenient set of rules that largely accommodate the interests and feelings of the CCP.
And don’t expect negotiations with the CCP to be completed any time soon. A multilateral negotiation currently underway at the WTO to limit fisheries subsidies is 19 years in the making. Enforcing existing rules could take just as long. The subsidy dispute between Boeing and Airbus lasted 16 years before it was finally resolved by the WTO.
Matt Pottinger, a former deputy national security adviser, told the Biden administration on Feb. 3 that he hoped they would not fall into the Communist Party’s negotiating trap.
He said the Chinese Communist Party is very good at negotiating with a delaying policy, and that a key U.S. strategy under the Trump administration has been not to allow the Communist Party to stretch negotiations out too long.
“For the United States, we want to put pressure on China (the Chinese Communist Party) to resolve as quickly as possible those things that China (the Communist Party) is doing that are harmful to our national security, our prosperity and our democracy.” Bomen said, “So don’t fall into the trap that Beijing has set time and time again, which is to try to lure the United States into long-term, formal mid-level negotiations.”
In 2017, Lighthizer, the Trump Administration‘s trade representative, showed a chart for his cabinet showing these various conversations the U.S. and China have gotten into over a 20-year period, yet the U.S. trade deficit with China and China’s (Communist Party of China) intellectual property violations have escalated.
Shea’s advice for the U.S. and Europe to work together against the Communist Party
If we are in a new era of transatlantic cooperation to address the CCP, it is reasonable to ask: Do the interests and goals of the U.S. and the EU align? Do we assess the Chinese Communist challenge in the same way? Are we willing to work together to put pressure on the CCP to discipline its bad behavior and encourage it to change its behavior, which would also come at a cost to us? Answering these questions will help define the relationship and the ambition of this cooperation to reach our goals.
Today, the United States and the European Union appear to be viewing the CCP through different lenses. It is mind-boggling to hear key European leaders still invoking the “change China through trade” mantra. The recently concluded China-EU Comprehensive Investment Agreement (CIA) also raises questions about whose interests the agreement is serving. At the WTO, the EU has so far taken an overly cautious approach, refusing even to cosign a U.S.-drafted statement reaffirming the centrality of market economies in the global trading system. The EU’s concern is that the statement would somehow imply that China (the Chinese Communist Party) cannot be part of the organization.
Only time will tell if the desire for cooperation will bear fruit. But there are many ways in which the transatlantic trade organization can effectively address the CCP challenge as an alternative to the development of new WTO rules. These areas include jointly imposing sanctions on Chinese companies that engage in predatory or illegal practices; establishing common countermeasures in the face of retaliatory trade actions by the CCP; working together to improve supply chain resilience for key products; jointly developing technical standards for future dominant industries; and coordinating the development of tariff policies.
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