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THURSDAY, JANUARY 31, 2019
Click
HERE for Tuesday's quote from Heidi Brock
of the Aluminum Association.
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"The great task, it seems to me, of the world trade community should be to try to get the United States to resume its faith in the WTO as the basis for a rules-based system that will solve the problems that it sees as the serious problems."
"The obvious thing ... to be considered - and it's a risky consideration for a lot of countries - is, for the major trading countries - the EU, Canada, Australia, Japan - to join with the U.S. in a comprehensive WTO case against the Chinese practices."
Richard O. Cunningham
December 19, 2018
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The last GBD event of 2018,
"When Giants Quarrel," focused on third-country reactions to the trade conflict between the United States and China. There were three diplomats on the panel:
Elisabeth Bowes of Australia,
Shige Watanabe of Japan, and
Philip Houlding from New Zealand.
Tami Overby of McLarty Associates was the private sector voice. These pages have highlighted one of those presentations and are likely to focus on others in the coming weeks. Today, however, as we await the outcome of the first high-wire U.S.-China trade negotiation in the Trump era, we are drawn to something that was said in the concluding discussion with the audience.
Dick Cunningham, one of Washington's most distinguished trade lawyers, was in the audience. Two elements of his intervention are highlighted above, but it is worth sharing in its entirety. This is presented below. As a question, it really could not be answered on the 19th of December. For one thing, it involves a bargain that has yet to be struck - China cooperation for dispute settlement continuation - and may never be. As a proposal, however, it lingers. Mr. Cunningham framed it this way.
DICK CUNNINGHAM
"I am Dick Cunningham with Steptoe and Johnson. The source of all of my trade wisdom is, of course, the American baseball player, Yogi Berra, who famously said, "It's always dangerous to make predictions, especially about the future." And the corollary of that is, it's always dangerous make predictions, especially about Donald Trump. But I think there are three things that are safe to predict.
"One is that this Administration has as its great cause in international trade and economics
the subduing of a broad spectrum of Chinese practices in both technology and in subsidies that they feel are essentially antithetical to U.S. interests.
"The second thing that it is worthwhile and useful to understand is [that]
they have concluded that the WTO won't do it for them. I submit to you this is not just because they have a discouragement with WTO procedures. It is because they do not see the membership of the WTO, including even the people like Japan and Europe that are now in discussions with them about NME [non-market economies] as being essentially willing to go to bat with them at the WTO to address these issues.
"And the third thing you need to keep in mind, I think, is that everything, everything, this administration does in trade shouldn't be taken at face value. It should be taken as, how do they see this as leverage? And what do they see it as leverage for?
"Let me tell you where I am going with that and ask you to react to it.
The great task it seems to me of the world trading community should be to try to get the United States to resume its faith in the WTO as the basis for a rules-based trading system that will solve the problems that it sees as the serious problems. The obvious thing, it seems to me, to be considered - and it's a risky consideration for a lot of countries - is, for the major trading countries - the EU, Canada, Australia, Japan - to join with the U.S. in a comprehensive WTO case against the Chinese practices.
"That should be done, it seems to me, only
with the corollary that you have to let the WTO system survive. And they are in the process of dismantling it now by dismantling, by the end of this coming year [2019], the WTO dispute settlement mechanism. And they would have to agree to allow the WTO dispute settlement system to revive.
"The problem with that is, of course, is that it makes this a binary world for us, with the U.S. and its allies against China. The effect of that on China is difficult to see. The effect on your relations with China is difficult to see. But I pose that to you as the problem that you need to deal with here, unless you just want the U.S. to say, We're going to continue to deal with this unilaterally.
"And it probably won't work, and when it won't work, we'll do something more severe. I suggest to you that you have to consider radical things like that. And if you don't, we have a lot of trouble ahead of us. I'd ask whether any of you have any views on whether that is even possible for the major powers to consider?"
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We did not mean to suggest that the panel did not respond. It did. Mr. Watanabe agreed that the issues in the controversies between the United States and China concern a number of countries, not just those two, and said Japan is actively working to resolve them. Ms. Bowes said she thought WTO members are willing to address the issues of concern to the United States, adding that she believed that, in the end, America's unilateral approach would not be successful.
Tami Overby, unconstrained by the burden of speaking for a government, offered perhaps the most forthright response to Dick Cunningham's proposal. She said:
I wish they [the Trump administration] had come in and focused on China first and built that coalition rather than, basically, going after all of our friends and allies first and then getting to China. It's important to note that there is bipartisan support in this town for the attention on the challenges with China. And with all the Asian governments I speak with, they are in agreement that this is a challenge that we need to work on together.
For our part, we have nothing but admiration for those who are earnestly trying to manage the enormous trade policy challenges of these first decades of the 21st Century. In terms of the issues discussed above, our guess is that whatever role the WTO may play in resolving the tensions between the United States and China, it will be supplemental to bilateral arrangements. It cannot supplant them. Would the kind of cooperation within the WTO proposed by Dick Cunningham be helpful? Of course it would. Failing that, the question is, can the United States be persuaded that the WTO cares as much about restraining unfair trade as it does about restraining the responses to it?
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On C-Span is a link to the C-Span video recording of the GBD event "When Giants Quarrel," which includes the Q&A segment between Mr. Cunningham and the Panel.
On GBDINC.Org takes you to the page of the GBD website with information from or relating to the December 19, 2018 event.
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©2019 The Global Business Dialogue, Inc.
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R. K. Morris, Editor
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