Use WTO rules with China, US urged
The US should resort to rules of the World Trade Organisation (WTO), not unilateral trade tools such as Section 301, to resolve trade disputes with China, a former White House economist has said in Washington.
US President Donald Trump was set to direct the US Trade Representative today to determine whether to investigate China’s trade practices under Section 301 of the Trade Act of 1974, senior administration officials said on Saturday.
Section 301, once heavily used in the 1980s and the early 1990s, allows the US president to unilaterally impose tariffs or other trade restrictions against foreign countries.
But the US has rarely used the trade tool since the WTO was created in 1995. “It became no longer necessary really for the US to use that law, because now we have an effective dispute settlement system under the WTO,” said Chad Bown, a senior fellow at the Washington DC-based Peterson Institute for International Economics.
It will become difficult for the Trump administration to defend the use of Section 301 today as the US government “acted as a police force, prosecutor, jury and judge” in the process, according to the trade expert.
“A decision to trigger Section 301 is problematic because it would provide additional fuel to the already simmering argument that the Trump administration is undoing the American commitment to rulesbased trade and decades of work to establish international co-operation,” he said.
If the Trump administration moves away from resolving trade disputes through the WTO and instead starts taking unilateral actions, the US could face retaliation by other trading partners.
The Chinese Ministry of Commerce has urged US authorities to abide by WTO rules in its trade measures and to resolve differences with China through dialogue.
Notwithstanding the latest move by Washington, the US and China need to negotiate a new trade deal, on issues such as the steel and aluminium industries, investment, stateowned enterprises and intellectual property rights, said Bown.