The Missing Legal Strategy for the US-China Trade War
Steve Charnovitz
23 May 2019
The Trump Administration's strategy against China suffers many flaws, the most serious of which is the failure to use judicial procedures in the WTO. As my recent study https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3390659 explains, the Trump Administration his lodged only three WTO cases against China, when assuming the various allegations to be true, dozens of cases should have been lodged.
In talks in legal and business circles, I have often heard the excuse that cases against China cannot be easily brought and prosecuted because companies are not willing to go on the record to make claims against alleged Chinese practices such as "forced" technology transfer. Time after time, I have heard that companies won't publicly disclose specific acts of abuse by Chinese officials out of a fear of formal and informal Chinese governmental retaliation.
This argument ignores the relaxed rules of evidence before WTO panels and the panel's broad power to seek information outlined in DSU Article 13.
Had the United States brought WTO legal cases against China, evidence of an improper Chinese government role could have been presented in the form of anonymized questionnaire data to US (and non-US) companies suffering from abusive practices by the Chinese government or related entities. The US government could also have presented reports from independent experts who themselves spoke with private sector victims.
Then in a judicial proceeding, the panel would have been able to seek whatever information it needed to verify or refute the US prima facie case. As DSU Article 13 explains, the panel would have been able "to seek information and technical advice from any individual or body which it deems appropriate." This could have included the Chinese government as well as market participants and independent experts pursuant to DSU Article 13.2. As DSU Article 13.1 notes, the panel would have been enable to establish procedures to identify and prevent disclosure of any information given to the panel confidentially.
As I noted in a recent piece in the Wall Street Journal, the Trump Administration has shown little interest in putting law at the centerpiece of its China strategy https://www.wsj.com/articles/u-s-china-talks-ignore-global-trade-rules-11558123934.
With no interest in law as the central means of regulating anti-competitive governmental behavior, Trump's USTR has shown no evidence of even thinking about how to solve the alleged factfinding problems that the business community routinely points to as an explanation for why it may be difficult to bring and win legal cases against China at the WTO.
My study (now posted on SSRN) of the Trump Administration's strategy on US-China economic relations shows how the Administration has missed the opportunity to more clearly define what China is doing wrong and to articulate the norms that may be needed to regulate state capitalism or state socialism.
