It has been suggested that the case has no practical meaning because, given that the United States could appeal, and given that there is at present no functioning Appellate Body, the panel’s findings are at best a curiosity on the back shelf of global trade’s legal library.
We would agree but with this caveat: we don’t believe that having a functioning Appellate Body would make any difference. Yes, it might give China yet another rhetorical victory, but it would probably have no effect on how China treats the United States or how the U.S. treats China. The relationship is almost purely bilateral now, governed, not by the WTO, but by the calculations of each vis-à-vis the other. That fragile status quo is summed up by this assertion in USTR’s press release of September 15:
“It is important to note that this [WTO] report has no effect on the historic Phase One Agreement between the United States and China, which includes new, enforceable commitments by China to prevent the theft of American technology.”
To be sure, the panel report will be used as further evidence that the United States is a rogue country, acting without regard to the legal system it helped to create through the GATT and the WTO. Yet the larger question remains: has the rapid pace of commercial reality rendered obsolete the constraints of the GATT, especially as they relate to China?
We don’t claim to have an answer to that question. We would note, however, that authors of the the panel report we have been talking about were keenly aware of the limitations under which they operated. Why else would they have commented that:
The Panel is very much aware of the wider context in which the WTO system currently operates, which is one reflecting a range of unprecedented global trade tensions.
And adding:
It is not the role of this Panel to draw any legal conclusions or make recommendations on any matters other than those it has been specifically tasked to deal with through these dispute settlement proceedings.
As for developments in the wider world, there was a story in today’s Wall Street Journal which underscored that China’s economic system is proving to be a challenge for more than just the United States. The headline was “China, Once Germany’s Partner in Growth, Turns Into a Rival,” and the story detailed area after area where German firms, once (and still) suppliers to China, are now losing out to Chinese rivals. One German executive, for example, marvels at the low prices China is able to offer and says, “It’s surprising for Europe how quickly they [the Chinese] have come."
Near the end of the story, the reporter, Tom Fairless, quotes Jeromin Zettelmeyer, a former German government official, saying, “U.S. aggressiveness is useful because it means Germany can take positions that would have looked aggressive two years ago but now look reasonable.”
***
Edna St. Vincent Millay (1892 – 1950) would no doubt be appalled by our efforts to rope her into the trade policy debates of the 21st century. And yet again a sonnet of hers comes to mind as we think about the frustration of looking to the WTO for solutions to the largest of today’s trade challenges. It is the sonnet that ends:
Pity me that the heart is slow to learn
What the swift mind beholds at every turn.
