For all the criticism heaped upon the World Trade Organization, the much-maligned agency offers a good vehicle for resolving trade disputes with China, according to John Frisbie, president of the U.S.-China Business Council.
"If it's well-defined and it's a clear WTO violation and if good-faith efforts haven't worked, the WTO is there to offer a neutral fact-based resolution process," Frisbie said.
Although the WTO's decisions cannot be enforced, countries often decide that it is not worth their while to ignore them. For example, on the matter of Chinese export subsidies, if a future appellate body recommends in favor of the U.S., China can weigh the pros and cons about how to respond. In any case, "It shifts the debate back to the offending party," said Daniel Ikenson, associate director of the Cato Institute's Center for Trade Policy.
The new anti-WTO alliance is made up of environmentalists, labor unions and old-line industries. "Each one of these has its own reasons to oppose the WTO," said Richard Cunningham, an international trade attorney. These factions are supporting U.S. legislation to make it easier to retaliate against China for allegedly unfair trading practices.
Assuming Congress approves such legislation, the best-case scenario is that China and the U.S. public will be convinced that Washington is getting serious about pressuring China. This kind of action against China's regulatory regime combined with efforts by China to strengthen intellectual-property protection could lead to slow narrowing of the U.S.-China trade deficit. But some free traders fear that Congress will expect too much, too soon from this kind of legislation.
Nevertheless, if the U.S. trade deficit with China continues to grow, protectionists in Congress and the private sector could push for the U.S. to take unilateral retaliatory measures against China. Or they could look for more help from the WTO. Flawed as the WTO is, this lightning rod of anti-globalists may provide the best hope for avoiding an ugly trade war.Shipping Digest
