Chad Bown on U.S.-China WTO disputes:
While many trade policy observers focus on signs of life from the Doha round of negotiations, arguably more important to the long-run relevance of the WTO is how the United States and China politically manage a number of currently ongoing formal trade disputes. The cases are likely to become political flashpoints not only because they involve major U.S. exporting industries such as Hollywood, music and other media, as well as the struggling automobile firms, but because a full process WTO trade dispute—that would include targeted and WTO-sanctioned U.S. threats of retaliation—would be China’s first such experience in the limelight.
We provide a road map of what to expect from both countries in this WTO process, and we also identify a number of new issues likely to confront Washington and Beijing along the way. While we do draw lessons from how countries have used earlier WTO disputes to manage tensions in bilateral relationships, we also pinpoint limitations as to what can be learned from these earlier episodes given the complexities of trading with China. The politics of handling these particular disputes is especially critical for the international trading system in the context of a global resurgence of protectionist pressures amid the deepening economic crisis.
From the paper:
... it would not be surprising to see China turn to a strategy that has been employed by other developing countries at the conclusion of their WTO cases. For example, Ecuador, after winning its parallel Bananas dispute against the European Community, did not follow the U.S. lead by also seeking permission from the WTO to retaliate with tariffs against Louis Vuitton handbags or pecorino cheese. Instead, Ecuador threatened to stop enforcing European firms’ intellectual property rights and requested WTO authorization to legally violate its obligations under the TRIPs Agreement. It is worth noting that the United States currently faces two other disputes for failing to comply with WTO legal rulings in which the developing country plaintiff has received or is ready to receive WTO authorization to retaliate by failing to enforce the intellectual property of American firms—the tiny island nation of Antigua and Barbuda in the Internet Gambling case, and the major emerging economy of Brazil in the Cotton Subsidies dispute.
