A New and Controversial Approach to Dispute Resolution Under the U.S.-China Trade Agreement of 2020

Abstract

The United States has hailed the 2020 U.S-China Economic and Trade Agreement (USCTA) as a breakthrough in suspending the trade war between the United States and China. Under the USCTA, China committed to purchase $200 billion of U.S. goods and services and to implement significant new protections for U.S. intellectual property rights. However, the true significance of the USCTA lies in its role in as part of a larger U.S. scheme to usurp the role of the World Trade Organization in resolving international trade disputes. The USCTA is an ominous portent of the future of the WTO.

The United States scheme has a three part design: first, cripple the WTO dispute settlement process so that WTO obligations become unenforceable; second, create a parallel dispute resolution mechanism in the USCTA to resolve USCTA and WTO disputes involving China that is under complete U.S. control; and third, induce China into violating its WTO obligations by granting the United States special privileges that can no longer be challenged by other WTO members due to the paralysis of the WTO dispute settlement system.

Although proponents of the WTO have stated that the paralysis of the WTO dispute settlement system is a life or death moment, these proponents must realize that this is only the first step in a larger U.S. scheme against the WTO. The United States is continuing to erode the WTO through its use of trade agreements that create an alternative mechanism allowing the United States to enforce WTO obligations. Each country that signs such an agreement, like China, becomes an accomplice in the U.S. plot to usurp the WTO. Each new agreement represents a fresh deterioration of the WTO system, which will only accelerate as the United States induces more nations to violate the WTO.

The only way to save the WTO is for leading WTO nations to call for a full scale multilateral negotiation on the WTO dispute settlement system that involves all WTO members. Proponents of the WTO must realize the urgency of the present crisis and act now before the decline of the WTO becomes irreversible.

Keywords: International Trade Law, International Law, World Trade Organization, Dispute Resolution, China

JEL Classification: K2, K33, K41