Info Service on WTO and Trade Issues (Dec18/03)
7 December 2018
Third World Network
China faces defining moment in safeguarding its "development
Published in SUNS #8811 dated 6 December 2018
Geneva, 5 Dec (D. Ravi Kanth) - China faces a defining moment in safeguarding
its trade and economic "development model", as the United
States intensifies its transactional trade war with Beijing, threatening
to impose extraordinary sanctions, including a ban on the entry of
Chinese high-technology products into the American market.
On Tuesday (4 December), the US President Donald Trump and his advisors
issued several threats in case China did not agree to the US demands
on market access and dismantling the trade and economic policies pursued
by the Chinese government.
Even before the start of the actual negotiations, following the understanding
reached on 1 December at the Xi- Trump talks during the G20 meet at
Buenos Aires on a standstill agreement for not imposing tit-for-tat
tariffs on each other, US President Donald Trump has already resorted
to issuing dire threats that he would intensify the tariff war with
China if Beijing refuses to concede to his demands.
Trump declared himself as a "Tariff Man" in a tweet issued
on 4 December.
Subsequently, in a series of tweets, he warned that tariffs "will
always be the best way to max[imize] out our economic power."
"We are right now taking in $ billions in tariffs. MAKE AMERICA
In a final tweet issued on Tuesday evening, Trump said he will "happily
sign" a "fair" deal with China "that does all
of the many things we know must be finally done."
"We are either going to have a REAL DEAL with China or no deal
at all - at which point we will be charging major Tariffs against
Chinese products being shipped into the United States," Trump
Trump's tweets followed what some of his officials warned at the Wall
Street Journal's CEO forum on 4 December.
The US National Security Advisor John Bolton, known for his jingoistic
and unilateral utterances, said: "we need to see some major changes
in their [Chinese] behaviour."
Bolton indicated that the best way to stop the theft of US intellectual
property is to ban the import of Chinese stolen-IP products.
"How about a rule or policy that says there will be no import
into the United States of any products or services that are based
on the theft of American intellectual property," Bolton suggested.
"I think it's an idea that should be considered," the National
Security Advisor opined, according to Washington Trade Daily (WTD)
of 5 December.
The White House National Economic Council Director Larry Kudlow expressed
caution (over the impending China-US trade talks), saying, "I'm
not sure we'd get there in 90 days with China."
"But I think on specific matters we can move the ball,"
Kudlow pointed out, according to WTD. "But it's got to be a good
deal and it's got to be verifiable," Kudlow said.
The US Treasury Secretary Steven Mnuchin said that "our expectation
is there will [be] specific deliverables, there will be specific timelines
and we have an agreement that there will be penalties if China does
not meet those timelines and those commitments."
The Trump administration wants an eventual agreement that would cover
more than 142 separate issues, including enhanced intellectual property
rules, technology, cybersecurity, currency, agriculture, and energy.
"If we can get the structural changes, US companies are going
to sell a lot more goods with growing China middle class, [and] if
we can get this right it is one of the biggest economic opportunities,"
Mnuchin said, according to a report in the Wall Street Journal of
Speaking at the same meeting of the Wall Street Journal's CEO forum
on Tuesday, the World Trade Organization Director-General Roberto
Azevedo said that World Trade Organization rules need to be reformed
to better deal with the rise of countries like China.
"But at the same time, members must understand that the WTO is
"not the silver bullet" that can solve all the problems
in the global trading system," Azevedo said, according to WTD
of 5 December.
Significantly, the stock market fell nearly 800 points in New York
after Trump's tweets and pronouncements by his officials about the
recent meeting with China in Argentina.
In a statement issued on Wednesday (5 December), a spokesperson of
China's Ministry of Commerce said the latest meetings between the
presidents of China and the United States on economic and trade issues
was "very successful."
"We are confident about the implementation [of the consensus
from the meeting]", China's MOC (ministry of commerce) spokesperson
"In 90 days, economic and trade teams of both sides will actively
push forward the consultation following clear schedule and roadmap,"
the spokesperson said.
"China will start with implementing the specific aspects of the
newly reached consensus as soon as possible," according to the
Chinese President Xi Jinping and his US counterpart Donald Trump also
instructed "the economic teams of the two sides to step up negotiations
toward the removal of all additional tariffs and reach a concrete
agreement that would lead to win-win results," according to the
Clearly, China faces several challenges during the negotiations, said
a trade envoy, who asked not to be quoted.
The deal that was struck by the two presidents on 1 December to defer
the imposition of tariff increases on the Chinese goods and continue
talking for the next 90 days was described as a welcome development
in several media reports.
The White House summary of the dinner says that President Trump "will
leave the tariffs on $200 billion worth of product at 10% rate, and
not raise it to 25% at this time".
In return, China will purchase an unspecified amount of agricultural,
energy, industrial and other products from the US to reduce the trade
imbalance bet ween the two countries.
According to the White House summary, the two countries "have
agreed to immediately begin negotiations on structural changes with
respect to forced technology transfer, intellectual property protection,
non-tariff barriers, cyber intrusions and cyber theft, services and
If the two sides are unable to conclude a deal on these make-or-break
issues within the next 90 days, the current 10% additional duties
on Chinese goods of $200 billion will be raised to 25%, the US claimed.
The Chinese statement on the Trump-Xi meeting was somewhat different
from that of the US.
Initially, China said there was no deadline agreed for the talks at
China said: "They [the two leaders] reached consensus not to
impose new additional tariffs and agreed to instruct the economic
teams of the two sides to step up negotiations toward the removal
of additional tariffs."
More crucially, Beijing has also emphasized that "it will work
to open its market, expand imports and resolve economy- and trade-related
issues in China-US relations in the process of a new round of reform
and opening-up and in line with the needs of its domestic market and
In a position paper issued last week in Geneva before the US-China
meeting in Buenos Aires on 1 December, China called for respecting
"members' development models", implying that countries cannot
be unilaterally targeted for pursuing specific developmental models.
"The (WTO) reform should prohibit discrimination against enterprises
or certain members in investment security review and anti-trust investigations"
and reforms "should address the abuse by developed members of
export control measures in obstructing technology cooperation",
It called on WTO members to "oppose special and discriminatory
disciplines against state-owned enterprises in the name of WTO reform".
Last month, China's trade envoy Ambassador Zhang Xiangchen rejected
binding provisions for free cross-border data flows, preventing data
localization and protection of source code among others.
The WTO reform, according to China, "should address the abuse
by developed members of export control measures in obstructing technology
China said it "opposes special and discriminatory disciplines
against state -owned enterprises in the name of WTO reform and the
inclusion of issues based on groundless accusations in the WTO reform
Barring this major issue of allowing countries to pursue their "development
models" without being penalized, China's concept paper is largely
aimed at preserving the current WTO architecture in the face of a
relentless assault by the US administration, which is aided and abetted
by other industrialized countries in select areas of the WTO reforms.
"The trade nationalists want to move production back to the US,
make it harder for the Chinese to compete with US-based high-tech
firms, and divert China-based supply chains to other countries,"
wrote Professor David M. Trubek, an academic from the University of
Wisconsin, in the International Economic Law and Policy (IELP) blog
"But the hawks want China to fundamentally alter its system of
economic organization, abandon strategies that have benefited millions,
and give up its ambition to become a world leader in high tech industries,"
Trubek said, suggesting that China will not accept those changes.
In short, China now faces a defining moment, either conceding to the
US demands that would bring an end to its specific economic model
or stand up to call the bluff of Washington by sticking to its economic
and trade policies.
The great helmsman of China Mao Zedong had famously used the phrase
"paper tiger" to describe the American hegemony and its
[It remains to be seen whether President Xi will follow the Mao line
vis-a-vis threats by Trump or hew his own path. SUNS]