The chinese economic model has also revealed the

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The Chinese economic model has also revealed the limits of the WTO. Combined with other challenges the institution has faced, the effects of China on the world trading system have
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The US-China economic relationship: A comprehensive approach 23 undermined U.S. faith in the institution. However, while the WTO is not able address all the issues that China poses, it remains central as the only global set of trade rules which both reflect core U.S. values, such as non-discrimination, transparency and rule of law, and provide a forum to discipline Chinese economic practices. To address the challenges China poses, this brief argues that the U.S. should thus undertake a comprehensive strategy including bilateral, multilateral, unilateral actions, and work with allies. Bilateral negotiations should be the key forum for making progress. Here, the challenges are both agreeing on a substantive agenda and developing mechanisms that create incentives for Chinese compliance. Mere reaffirmation by China of commitments already made is insufficient. The U.S. and China should consider using WTO arbitration as an enforcement mechanism and seek a WTO waiver of any bilateral deal that includes WTO inconsistent measures, such as tariff snapbacks or WTO plus commitments, to maximize compliance and minimize impacts on the rules based system. The U.S. and China should renew efforts to complete a comprehensive bilateral investment treaty (BIT) with an aggressive nine-month schedule. It is also important that the U.S. not simply agree to Chinese offers to buy more exports. This strategy would yield short-term gains but would require the U.S. to co-opt managed trade with China, at the cost of the U.S. commitment to WTO consistent, market-based international trade outcomes. At the WTO, the U.S. should work through the institution to expose where China’s economic practices depart from its WTO commitments and where possible, the U.S. should increase its use of WTO dispute settlement to challenge China’s WTO non-compliance. The U.S. should work with its allies and China to reintroduce the China specific safeguard and ensure China’s continued treatment as a non-market economy for trade remedy purposes. In addition, China and the U.S. should commit to use any bilateral deal as a launching point to make rapid and comprehensive progress on new trade rules at the WTO in areas, such as reformed dispute settlement, technology transfer, SOEs, and digital trade. The U.S. should not take on these ambitious plans alone. It needs to work closely with allies to develop new trade rules and to create incentives for China to reform its economy and trade practices. Joining the CPTPP would be the quickest way to reinforce a range of new trade rules important to the U.S., including on IP protection, SOE reform, and digital trade. Expanding CPTPP membership would increase the costs to China for non-participation, creating an incentive for China to reform. If re-entry into the CPTPP proves elusive, the U.S. should undertake an ambitious bilateral FTA policy to achieve similar ends.
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