In One Sentence

• At the United Nations General Assembly, U.S. President Joe Biden said that the U.S. will continue to lead World Trade Organization (WTO) reform and “make global institutions more responsive, more effective, and more inclusive.”
• U.S. Trade Representative Katherine Tai later said the U.S. is “thinking creatively” beyond a traditional negotiation mindset with regard to WTO reform discussions and proposes “alternatives to litigation” like “good offices, conciliation, and mediation.”
• China’s State Council released a White Paper that calls for “a new type of economic globalization” where countries “explicitly oppose” “protectionism” and “unilateral sanctions” and work together to engage in mutually beneficial cooperation. 
• The White Paper also notes a “widening gap between developed and developing countries, and that within developed countries” and argues it is a result of the current “zero-sum game,” “winner-takes-all” mindset.
• China previously said that it would appeal the WTO panel report that rejected China’s retaliatory measures against the U.S. Section 232 tariffs on steel and aluminum, advancing the issue to the now-paralyzed Appellate Body. 
• Citing the significance of emerging and foundational technologies such as generative AI, U.S. Secretary of State Antony Blinken said the U.S. seeks to “advance our vision for the technological future” and to “shape the rules of the road” through “tech diplomacy.”

Mark the Essentials

• According to USTR Tai, the U.S. is “asking” WTO members to engage in “interest-based” conversations and discussions as opposed to traditional “position-based or end-result-based” negotiations. Tai said that the latter process is “positional”, “uncreative” and “constipated” whereas the former is “inclusive” and would reflect interests of all members of the WTO, including the U.S. and its “developing-country partners.” 
• Three WTO committees have adopted proposals to improve the “functioning” of its bodies through procedural reforms such as implementing e-Agendas, providing streamlined agendas and providing convening notices further in advance of scheduled meetings. 
• According to survey results from the American Chamber of Commerce in Shanghai, American companies in Shanghai have worse business results and a historically low outlook for the China market amidst the U.S.-China bilateral economic tensions and macroeconomic pressures. Although companies say they are delaying or canceling investment decisions in China, only fewer than 6% plan to reshore back to the U.S. 
• Former officials and researchers have warned that the current expansion and escalation of export controls between U.S. and China could fuel nationalism and a “me-first” mindset, thereby suppressing multilateralism and threatening the global trade order. Researchers also cautioned that if U.S. companies such as in the semiconductor industry are prohibited from selling to China, it could lead to reduced sales, smaller margins, less hiring and less spending on research and development.
• Defending the U.S. proposal for a transatlantic arrangement for global sustainable steel and aluminum, USTR Tai said that the proposal should be compatible with WTO rules but admitted that the arrangement may face challenges at the WTO in the same vein as the EU’s carbon border adjustment mechanism. 

Keeping an Eye On…

• USTR Katherine Tai’s approach to reform of the WTO’s dispute settlement system appears to be going the same way as her approach to the review and modification of the U.S.’ Section 301 tariffs—i.e., lots of seemingly earnest talk of seeking consensual pathways forward backed however by zero intention to actually deliver a workable solution. Fifteen months after the Section 301 tariff review was initiated, the process continues to meander along, with little expected by way of material modification to the tariffs once the review is completed. More to the point, the review was necessitated for statutory reasons and hence had to be conducted. Left to her own devices, the tariffs would not even have been reviewed (although she would never have conceded that), given that the tariffs have become a hot potato within the body politic. In much the same way, USTR Tai’s serious-minded talk of creative ways forward on reform of the WTO, including of its dispute settlement system, is pure hot air. There is little-to-no intention of restoring the functioning of the WTO’s Appellate Body, and the only reason that she indulged in her seemingly earnest talk is because the vast membership of the WTO would like the matter to be actively dealt with at the forthcoming 13th Ministerial Conference (MC13) in Abu Dhabi in February 2024. Absent this driver, she would not even be mentioning dispute settlement system reform. And why would she? Almost every major U.S. external-facing trade and investment measure in recent times, from the Section 232 and Section 301 tariffs to the Inflation Reduction Act’s tax credit provisions to the proposed Global Arrangement for Sustainable Steel and Aluminum, falls afoul of WTO law. If disregarding multilateral trade law is the price to be paid to decouple from China, politely referred to as building supply chain resilience, then so be it. For those inclined to push for forward progress at MC13 in Abu Dhabi, they would be better off turning their attention to the issues of food security, ecommerce/digital trade, and the outstanding matters related to fisheries subsidy disciplines that were unresolved at MC12 (S&DT flexibilities for least developed countries; exceptions for certain subsidies). 

Expanded Reading

• Why the Developing World and All of Us Need Trade and the WTO, event at the Center for Strategic & International Studies, September 22, 2023
• Transatlantic Forum on GeoEconomics, event at the Atlantic Council, September 22, 2023
• Full Text: A Global Community of Shared Future: China’s Proposals and Actions, State Council Information Office of the People’s Republic of China, September 2023
• Remarks by President Biden Before the 78th Session of the United Nations General Assembly | New York, NY, The White House, September 19, 2023
• The costs of export restrictions to the global economy, Hinrich Foundation, September 19, 2023
• U.S. trade and investment restrictions: laudable but costly goals, Yeutter Institute International Trade Policy Review, September 19, 2023
• AmCham Shanghai Releases Report on Business Climate in China, AmCham Shanghai, September 18, 2023