China-US trade relations are seeing an interesting trend in the context of the trading system. While both countries effectively use the WTO dispute settlement mechanism to their national advantage, they have been increasingly embroiled in trade disputes in recent years. From tyres to solar panels to automobiles, the disputes have centered around dumping and subsidies.
A testimony before the Congressional-Executive Commission on China of the Assistant USTR For China Affairs makes interesting reading,
"China's WTO membership offers an important tool for managing the increasingly complex U.S.-China trade relationship. A common WTO ‘rule book’ and an impartial body in Geneva have helped the two sides resolve differences when dialogue fails. The United States has not hesitated to pursue its rights with China through WTO dispute settlement. In the last 3 years alone, the United States has brought five cases to the WTO to address harmful subsidies in wind power, concerns about misuse of trade remedy law, discriminatory barriers in the electronic payments sector, and trade-distortive export restraints on crucial raw materials."
It is clear that both member countries use the dispute settlement mechanism to further the interests of their economy and domestic interests.The testimony referred to above states :
"These disputes – combined with the enforcement work we pursue in the Joint Commission on Commerce and Trade, the Strategic and Economic Dialogue, and through other trade tools like Special 301 – help ensure that U.S. businesses, workers, farmers, ranchers, service suppliers, and consumers derive the full promise of China’s WTO membership." (emphasis added).
Domestic interests do clearly stand out.
The recent decision by China to impose new tariffs on imported automobiles reported here, here, here and here is seen as part of an increasing trend of retaliation and use of the "WTO" rule book to further domestic economic interest. Without going into the merits of the case in any of these instances, what lessons does this have for other countries in the WTO? Membership in the WTO is seen as a surrender of national interests to an international, free trade propelled multilateral system. However, this is a simplistic understanding of the system. The WTO rule book allows members to exercise their rights and obligations in the context of the Agreements. Whether a claim to a right is justified under the Agreement would depend on the facts of each case, but the use of the rules to pursue one's economic interest should not be viewed as per se "protectionist". Regarding China's moves to invoke rule book, it has been aptly commented that China is capable of intervening "politically" in it's markets. An interesting piece about China acting according to its own interest is found here.
Case of political economy in the international legal system ?