Outlaw nation

The US continues to flout the law, while (hypocritically) demanding that other countries adhere to international agreements:

The World Trade Organization has ruled that US tariffs imposed on Chinese goods, starting in 2018, violated global trade rules — in a rebuke of Donald Trump’s multiyear commercial confrontation with Beijing.

The decision by a panel of judges from the WTO’s dispute settlement body, which was revealed on Tuesday, found that the US had flouted its commitments to the Geneva-based trade body on several counts when it imposed levies on $360bn of Chinese imports.

The WTO panel ruled that US tariffs were discriminatory and excessive, and Washington did not justify an exemption that would have allowed them. It also rejected the US claim that it was pursuing a settlement with China outside the WTO, saying instead the negotiations between Washington and Beijing were parallel to the legal proceedings.

Here is Scott Lincicome on China’s willingness to comply with WTO rules:

Furthermore, Bacchus, Lester, and Zhu demonstrate that when China loses WTO disputes, it tends to comply with the decisions:

“Of the 27 matters litigated against China, 5 are still pending, 12 were litigated all the way through, and 10 were resolved through some kind of settlement, or not pursued after the measure was modified. These cases addressed a wide range of issues: export restrictions, subsidies, intellectual property protection, discriminatory taxes, trading rights, services, and trade remedies. In all 22 completed cases, with one exception where a complaint was not pursued, China’s response was to take some action to move toward greater market access.”

Chinese compliance is not perfect (nor is any other WTO member’s), but it is arguably better than that of the United States, which has famously shirked WTO rulings on subsidies, antidumping rules, and internet gambling.



6 Responses to “Outlaw nation”

  1. Gravatar of Carl Carl
    16. September 2020 at 07:36

    Is your argument that we’ve been a banana republic for a long time or that we have recently become a banana republic, because when I look at the list of WTO cases under the last few administrations, https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm, I don’t see a change in the rate of cases brought against us.

  2. Gravatar of ssumner ssumner
    16. September 2020 at 08:53

    Carl, It’s been getting worse over time. We are increasingly willing to just ignore WTO rulings, although it’s been a problem for quite some time.

  3. Gravatar of Carl Carl
    16. September 2020 at 10:15

    Ok. Either way, I appreciate you calling this out in your posts. I hadn’t researched our track record before. It’s embarrassing for a country that should be the world’s greatest defender of open markets.

  4. Gravatar of Ray Lopez Ray Lopez
    16. September 2020 at 12:34

    A moment’s reflection will tell you why China complies with WTO rulings more than the USA: the US is a monopsony, so the Chinese have to sell to the US. By contrast, the export market to China is relatively tiny for American companies, making American compliance with WTO less urgent. Source: internet, US exports to Canada and Mexico are $600B for 2016 but only $170B to China ($120B in 2018 and $500B for China exports to USA, a 4:1 ratio).

  5. Gravatar of Carl Carl
    16. September 2020 at 14:17

    @Ray Lopez
    That makes sense but it doesn’t excuse us from breaking trade agreements.

  6. Gravatar of Matthias Görgens Matthias Görgens
    17. September 2020 at 00:04

    Ray, I’m not quite sure the numbers you quoted buttress your claim that the US is a monopsony.

    The Chinese sell more to the US than vice versa. But the ov tall Chinese balance of trade is pretty even. So there are some other countries that export a lot of China.

    (The Americans export a lot of financial assets, which don’t show up in the balance of trade like normal goods. But there are not necessarily all that much different from a specialition or division of labour perspective.)

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