Identified in chinas recent industrial policies such

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identified in China’s recent industrial policies, such as robotics, high-speed rail production, new energy vehicles, and batteries. 4 The impact on the WTO While President Xi continually affirms China’s commitment to the multilateral rules-based trading framework, China continues to renege on its WTO commitments. 5 Moreover, China’s economic model makes it difficult to use the WTO and its dispute settlement system to challenge non- compliance. 6 For instance, state control over public and private businesses makes it difficult to distinguish between what is a public body and what is private, thereby making unclear whether the there is a rule or regulation issued by a public entity that is subject to WTO rules. In addition, the state’s role in the judicial and administrative system, including the use of informal notices and verbal demands on foreign businesses, undermines the ability to show that a WTO-incon- sistent measure exists. More broadly, China’s industrial policy—which distorts the playing field in favor of Chinese companies—is at odds with most WTO members’ market-based systems. Given these challenges, there is a real question as to the capacity of the WTO to respond to the China challenge. While the WTO is not able to address all the issues that China poses, in the context of a comprehensive approach to the China challenge, the WTO remains central, contingent on strong U.S. leadership. The WTO is the only global set of trade rules that both reflects core U.S. values, such as non-discrimination, transparency, and rule of law, and forms a baseline on which to build global support to critique and push back against Chinese economic practices. Making progress in U.S.-China economic relations In seeking mutually beneficial outcomes, the U.S. should take a comprehensive approach to the negotiations based on market-orientated solutions, which strengthen the global trading system and rule of law. Bilateral negotiations U.S.-China bilateral outcomes need to be verifiable, enforceable, and market-based—not simply a restatement of prior Chinese commitments such as to do better on IP protection and enforce- ment or forced technology transfer, or to buy more U.S. products. The bilateral track should include commitments from China to implement all of its WTO commitments. Additional WTO-plus commitments should be negotiated in areas such as SOEs, cross-border data flows, and determining the application of nonmarket economy (NME) status for trade remedy purposes. Where feasible, enforcement should be through the WTO dispute settlement mechanism, and recourse to arbitration under Article 25 of the Dispute Settlement Understanding (DSU) could be used to produce speedier results. 2 OECD. Excess capacity in the global steel industry: The current situation and ways forward. 2015. - global-steel-industry.pdf.
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