Trump Enforcement Vow to Complicate U.S.-Sino Relations

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By Bryce Baschuk

Nov. 9 — International trade officials said they expect President-elect Donald Trump will make good on his threat to challenge China's “illegal” trade policies at the World Trade Organization and label Beijing as a currency manipulator.

As president, Trump would have nearly unlimited authority to impose new retaliatory trade tariffs and antidumping measures that could benefit U.S. steel and aluminum producers such as the United States Steel Corp. and Alcoa Inc.

“The Trump administration will threaten and likely take aggressive action to open trade markets using new WTO cases, especially against China,” said Tim Brightbill, a partner at Wiley Rein LLP in Washington, D.C.

“I would expect a focus on trade enforcement from the outset,” said Scott Miller, a senior adviser at the Center for Strategic and International Studies.

Beijing Concerned

The top Chinese ambassador in Geneva said he's concerned that Trump would unfairly target Chinese trade policies and complicate Beijing's $659.4 billion annual trade relationship with Washington.

“We are a big trading partner of the U.S. and this creates some complications,” Yu Jianhua told Bloomberg BNA in an interview at the WTO.

Trump has promised to label China a currency manipulator and bring new trade cases against Beijing “both in this country and at the WTO,” according to Trump's official campaign platform.

The Trump campaign promised to use “every lawful presidential power to remedy trade disputes if China does not stop its illegal activities.”

Trump also pledged to challenge “China's unfair subsidy behavior,” which he argued is prohibited by the terms of its entrance to the WTO.

The U.S. recently filed a WTO dispute against China that challenged Beijing's alleged use of more than $100 billion in “illegal” government subsidies for producing rice, wheat and corn.

Market Economy Status

The Trump administration is unlikely to grant China market economy status or modify the way it calculates Chinese antidumping duties after a key provision in China's WTO accession protocol expires this year.

The current terms of China's accession agreement permit WTO members to use “analogue” market-based prices or costs in calculating antidumping investigations that often result in higher prices and higher antidumping duties.

When Article 15(a)(ii) of the Chinese accession protocol expires Dec. 11, WTO members must determine whether or not they will use Chinese prices or costs in antidumping investigations.

A senior trade official familiar with the matter said both Democrats and Republicans are aligned in their view of taking a tough line against China on the market economy issue.

The Obama administration recently argued that China's WTO agreement does not necessarily require the U.S. to drop its “analogue” antidumping methodology, which would reduce Washington's ability to protect U.S. industries with higher dumping margins based on comparable market prices.

Plurilateral Negotiations

It remains unclear whether Trump would approve either the Trade in Services Agreement (TiSA) or the Environmental Goods Agreement (EGA), as he has not specifically signaled his opposition to such deals.

“It's plausible that a Trump administration will re-examine the U.S. role in the WTO and could try to renegotiate either existing WTO agreements or pending negotiations like the TiSA,” Brightbill told Bloomberg BNA.

The goal of the TiSA negotiations is to liberalize trade for 70 percent of the $55 trillion global services marketplace by increasing market access for more than a dozen services sectors among 23 negotiating parties.

The EGA seeks to reduce tariffs on environmental products such as solar panels, water filters, electric motors and hydraulic turbines. Once completed, the deal could increase global exports of such goods by $119 billion a year, according to U.S. trade officials.

U.S. negotiators are currently working to complete both deals before the end of the year and have scheduled back-to-back ministerial meetings in Geneva to ideally complete the proposed accords.

To contact the reporter on this story: Bryce Baschuk in Geneva at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton in Washington at jashton@bna.com

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