All World Trade Organization members, including China, must “notify” the WTO when they create subsidy programs. China often fails to do so to avoid WTO challenges by other countries. Thus, steps to stiffen the penalty for nondisclosure would open the door to vital international scrutiny.
Japan and the European Union share U.S. concerns and are working jointly to strengthen WTO penalties for nondisclosure, such as an automatic finding of “injury” to Western firms. This would allow more immediate tariff retaliation for rules violations. This group also seeks to prohibit the most egregious subsidies that enlarge capacity beyond commercial demand and sustain failing companies.
China can see the handwriting on the wall. It would consider carefully a U.S. proposal to phase in enhanced transparency and subsidy limitations in the coming months.
The United States should seize the opportunity for important steps now and leave larger ambitions for another day.
Sherm Katz, Washington
The writer is a senior fellow at the Center for the Study of the Presidency and Congress.