Disciplining China's Trade Practices at the WTO: How WTO Complaints Can Help Make China More Market-Oriented

Abstract

The Trump administration has argued that the World Trade Organization (WTO) has failed to address China's "unfair" trade practices. While it is true that China's economic rise poses a unique challenge to the world trading system, WTO dispute settlement has more potential to address China's practices than the administration believes. If the Trump administration really does want the Chinese economy to be more market-oriented, it should consider making better use of WTO rules by filing more complaints against China. While it is often accused of flouting the rules, China does a reasonably good job of complying with WTO complaints brought against it. There are a number of policy areas where additional complaints are possible. The U.S. Trade Representative's Office (USTR) has been gathering detailed information on China's practices for years, and should file complaints on this basis, coordinating these efforts with key allies. And for those areas that are not well covered by WTO rules, such as state-owned enterprises, the United States should work with these allies to develop new rules. So far, the Trump administration has mainly relied on unilateral tariffs to open the Chinese market, but these are likely to hurt Americans, while not having much effect on Chinese trade practices. The multilateral route is a better approach to disciplining these trade practices and making China more market-oriented.