Reforming China’s unfair practices at the WTO will level the global playing field
By Rep. Darin LaHood (R-IL) and Rep. Anthony Gonzalez (R-OH)
August 4, 2020
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When operating properly, the World Trade Organization raises the standard of living around the globe, including in the United States, by creating transparent rules for conducting trade. The U.S. was a key author of these rules, which discipline unfair and distorting trade practices by reducing barriers to goods and services, protecting intellectual property, and challenging subsidies that distort trade. These rules have created new markets for American-made goods and services to drive our economy and create U.S. jobs.
Despite these admirable intentions and the clear benefits that we’ve seen from our leadership at the WTO, it has become abundantly clear that the WTO needs significant reform, especially to hold China accountable for its predatory trade practices and abuse. The White House, with the help of Congress, is leading the charge because reform of the WTO is needed.
An important component of this reform is to tighten the WTO rule that allows any country to self-declare, without any standards, that it is a “developing” country and therefore entitled to “special and differential treatment.” The People’s Republic of China and other countries are abusing this rule, which undermines the legitimacy and usefulness of the WTO and hurts countries that truly are developing.
Developing country status is intended to allow less-developed countries greater flexibility to adjust when implementing trade agreements agreed to by WTO members. This status provides them a path to open their economies as they open their markets to us and raise their standards.
China is now the world’s second-largest economy behind the U.S. with a $13 trillion GDP, yet it is allowed to declare itself a developing country at the WTO and receive all the benefits thereof. This status might have been appropriate when China joined the WTO 20 years ago, but there is no question that it is no longer the case. China in 2020 should no longer receive such special treatment, as if it were one of the poorest or smallest economies in the world.
For far too long, China has taken advantage of international trade laws, harming American workers, technology, and businesses — as well as the global economy. Its failure to forego this form of special treatment, even though it is so advanced economically, is an important example of this abuse. China is taking advantage of developed and developing countries that, in contrast to China, have taken on full commitments to the economic rule of law. And so many undeserving WTO countries follow China’s lead in refusing to update their commitments to reflect their economic reality. This WTO rule must be reformed to restore credibility to the institution.
In 2019, the Trump administration made a commonsense proposal that the WTO establish objective criteria for “special and differential” treatment under any future agreements. Under this proposal, a WTO member would be ineligible for “developing” status if it is classified as a high-income country using objective and well-recognized standards or if it accounts for at least 0.5% of global trade in goods. Since then, U.S. Trade Representative Robert Lighthizer has made important progress. Brazil, Costa Rica, Korea, and Singapore have each publicly agreed to forego this special treatment in future negotiations. We urge all other WTO members to work with the U.S. to end the abuse of this status by China and other WTO members.
The House Ways & Means Committee easily passed a bipartisan resolution, H.R. 746, to reaffirm strong congressional support for the WTO and insistence that other WTO members work with us to achieve much-needed reforms. In addition to tightening the developing country definition, these reforms include improving the speed, predictability, and scope of dispute settlement and its appellate mechanism and holding our trading partners, particularly China, fully accountable for their commitments to us.
Our mission as members of the China Task Force is to develop forward-thinking solutions and a global strategy to take on China. Republicans are aligned in our mission to reform the WTO and to negotiate ambitious trade deals that strengthen American agriculture, manufacturing, services, and workers and allow our innovative companies to compete and win. As we rebuild our economy in the wake of COVID-19, this strategy is essential to the economic health of the public. Reforming the WTO to hold China accountable can help secure our economy for American innovators, technology, supply chains, and agriculture for generations to come.
As members of the House Republican China Task Force, we are committed to enacting reforms that maximize opportunities for the U.S. and its allies and prevent China from taking advantage of international trade laws. We must level the playing field in the global economy.