Another WTO case challenging Chinese restrictions on U.S. film exports led to a partial opening of China’s market. But China was able to maintain strict limits on how many major movie releases can be shown there each year, and studio box-office receipts are capped far below levels that prevail in the United States and other major markets.
The Obama administration has put enforcement of trade agreements at the heart of its approach toward China, the world’s second-largest economy and an aggressive economic competitor. The Geneva-based WTO, which oversees the world’s major trade treaties, is central to that effort.
The WTO offers a neutral forum where a country can call out another for cheating. This was supposed to help keep nations honest when they trade with one another, fostering freer and fairer commerce and fueling economic growth all around. For the United States, the WTO was meant, in part, to help it navigate a thicket of economic challenges from China and other rapidly developing countries.
While President Obama and GOP presidential candidate Mitt Romney have been swapping accusations over who is tougher in tackling Chinese economic policies, there is more to the debate than scoring political points. The shared concerns over Chinese competition point out the limits of the WTO. Over the decade since China joined the organization, it has become increasingly clear that it is a flawed tool for prying open China’s massive market to American exports.
Major sections of the Chinese market, for example, remain out of the WTO’s reach. China was allowed to join the organization in late 2001 without opening its government procurement to foreign companies, and it promised to negotiate a deal on this issue in the future. But China has yet to make an offer that the United States and other WTO members will accept.
In other areas of the economy, the Obama administration, like the George W. Bush administration, has proven adept at mounting successful challenges. Of 14 complaints brought by the United States against China, 11 have essentially prevailed. Three cases are pending. China has won three cases it brought against the United States and lost a fourth.
But winning in the courtroom is often only the start of the battle. What typically follows are negotiations between the two sides that determine what changes the losing side will make in its trade practices. Early cases won discrete benefits for the United States — such as the lifting of tax preferences that China offered its local companies — but later cases have bogged down in settlement talks.