This is the comment section, and we do have a couple of comments. Still, we need to say a bit more about how Mr. Lighthizer would approach the challenges posed by what he called China's "non-economic" overcapacity. Confronting the Chinese on the issue in the Global Forum on Steel Overcapacity is one action that can and should be taken, Mr. Lighthizer said. It seemed to us that he put even greater weight on the need for finding ways to make China's production even less economic. Of course, that means using the trade remedies of U.S. law to limit imports of dumped or subsidized products from China. But it also means encouraging America's trading partners to do the same. The logic of such an approach seems to us unassailable, but it may be tough to put it into practice.
We chose today's quote because in it Mr. Lighthizer put his finger on something he sees as a WTO limitation. The organization is not set up to deal with the kinds of industrial-policy challenges that China poses for the United States and others. That said, we did not hear in Mr. Lighthizer's testimony any threat to the WTO from the Trump Administration. There were plenty of references to using the organization, but yes, he was saying, it has its limits.
Insofar as we are dealing with both China and the WTO, there is some merit in looking back to Mr. Lighthizer's 2010 testimony before the U.S.-China Economic and Review Commission on the consequences of China's entry into the WTO.
In his written statement, he highlighted the disparity between what was expected from China becoming a part of the World Trade Organization and the results. It was a harsh judgment:
In fact, between 2001 and 2009, the United States shuttered 42,400 factories, including 36 percent of factories that employ more than 1,000 workers, and 38 percent of factories that employ between 500 and 999 workers.
It seems clear that the U.S. manufacturing crisis is related to our trade with China.
June 9, 2010
Does this mean China should never have been allowed to become a member of the WTO? Our own view was that membership was close to inevitable then, and now, of course, it is an accomplished fact. We doubt America would have gained much by barring the door to China's entry, especially in view of the circumstances of November 2001 -- two months after 9-11.
At this point, it may also be worth recalling that in the age of the GATT, that is, before the WTO Dispute Settlement System, some of America's big trade challenges -- steel, autos -- were dealt with largely outside the Geneva system. Whether the past can be prologue, however, is an open question.
All that said, it is time to cast a cold eye on what these changes have meant for America, for China, and for the WTO.