u.s. false wto claims

The 20th anniversary of China’s accession to the World Trade Organization on December 11 has once again highlighted long-standing debates about how well China has lived up to its WTO obligations, and whether any deviation from its commitments boosts or slows its economic growth. This discussion affects many countries’ views on whether the current global trading system should be built up or pulled down.

Former US President Donald Trump was bent on pulling down the WTO, by rendering inoperative its dispute-adjudication system and launching trade wars that the body ruled illegal. And his successor, Joe Biden, has so far done little to improve the WTO’s functioning. The United States claims that China routinely violates its WTO obligations, and that the body is ineffectual at changing Chinese behaviour. But the data do not support such assertions, and the misperception that this narrative has created is hurting the global trading system.

To be sure, there are still many distortions in the Chinese economy. For example, China has an industrial policy for shipbuilding that has been in place for a decade and a half. Helped by multiple subsidies for land use, cost of capital, production, and investment totalling about CN¥540 billion ($85 billion), China has gone from being an insignificant player in the industry to becoming the world’s largest exporter of commercial ships.

Many in both the US and China seem to regard this rapid increase in market share as a sign of the success of Chinese industrial policy (though the US believes it is an unfair way to promote economic growth). But to assess its effect on China’s growth, we also need to know the opportunity cost of the subsidies and the spillover effect from having a large shipbuilding industry. According to an excellent 2019 paper by Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur, the subsidisation policy has given Chinese shipyards an additional profit of about CN¥100 billion, and Chinese shipowners another CN¥18 billion.

But these gains are less than half of the subsidy’s cost. And while there is no reliable estimate of the spillover effect, a generous guess might be CN¥100 billion. That would imply that this industrial policy has destroyed value in the aggregate, and therefore dragged down, not lifted up, China’s overall economic growth.

Notwithstanding some persistent economic distortions, China has also lowered entry barriers for both domestic private firms and international companies. It is these reforms, and not state intervention, that have given rise to the country’s rapid economic growth.

Assessments of China’s compliance with WTO rules also are rife with misjudgement. The Trump administration’s trade officials often repeated the claim that China has actively evaded its WTO obligations much more frequently than other member countries. Because China is not bound by the organisation’s rules, the argument goes, the US must use tactics outside the WTO system, such as import tariffs, to address Chinese transgressions. The WTO, according to this view, is useless or worse.

In fact, China’s WTO compliance record, while imperfect, is broadly comparable to that of other member countries. The WTO system has been generally effective in ensuring that China remains as open as it promised to be when it joined in 2001.

WTO data on trade disputes — in particular, the number of legal complaints brought by other member countries against China — provides some objective support for this conclusion. Since 2001, there have been 47 complaints lodged against China, accounting for 12.2 per cent of all WTO dispute cases during that time. Over the same period, there were more than twice as many complaints against the US, accounting for 28.4 per cent of the total. In other words, other WTO members regard China as only half as likely as the US to have violated its obligations under the organisation’s rules.

China also has a reasonable record of complying and modifying its policies when a WTO dispute panel rules against it. One indication of non-compliance is when the original complainants must file a second WTO case against a country on the same or a similar issue. Out of the 47 cases against China, only two required a second filing. By the same measure, the US appears to have ignored 15 rulings against it.

The data therefore do not support the notion that China is an off-the-chart violator of its WTO commitments and unchecked by the body’s processes. China’s trade policies and practices often are challenged at the WTO, but not more frequently than those of some other large economies. And the country’s record of complying with WTO rulings is not that of a rogue outlier.

This has huge implications for how to save and improve the rules-based global trading system. If we believe that clearer and stronger rules on subsidies, intellectual-property rights protection, or the conduct of state-owned firms can further reduce distortions in the Chinese economy, then the best way to ensure this is to revise the rulebook accordingly, through multilateral or plurilateral negotiations. The rules in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which cover many such issues, offer a possible model. China’s recent formal application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership signals a willingness to modify its policies in these areas as well.

Meanwhile, the US can also strengthen its adherence to its WTO obligations, improve its compliance with the body’s rulings, and loosen its stranglehold on the appointment of WTO Appellate Body judges. Doing so would greatly improve both US credibility and the effectiveness of the global trading system.

The WTO system has worked better than many have claimed. It must not be pulled down. But it can, and should, be made better still.

JAPAN SHAFTED BY THE U.S.

 

In the 1980's Japanese investment in Hollywood was the big new thing. They bought out a few major studios, but after the take-over, it seems every studio produced flop after flop! Rumours in Hollywood were that the studios, under American management did this deliberately to milk the Japanese! Perhaps one front on the economic war on Japan. Matsushita finally had to sell MCA/Universal at a $2 billion dollar market loss. Sony managed to hold on and still owns Columbia/Sony Pictures.

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How Japan got mugged in Hollywood… in 1989 Sony paid $3.4 billion for Columbia Pictures, owner of the Columbia and Tri-Star studios, and in 1990 Matsushita paid $6.1 billion for MCA, owner of Universal Studios -- still the biggest-ever Japanese takeover in America.....Neither Sony nor Matsushita is likely to get a decent return on its investment in Hollywood in this century, if ever.

JAPAN POST WAR

 https://www.youtube.com/watch?v=p5Ac7ap_MAY&t=929s

kennan cold war white supremacy

 Kennan was a Russia expert, not an Asia expert. He epitomized the State Department viewpoint that MacArthur had always criticized, of seeing everything through Eurocentric eyes--indeed, racist eyes (as the release of Kennan's white supremacist diary entries after his death makes obivious).

k

 

Stealing technology from Japan

It is true that the Japanese government has taken steps to open its government funded laboratories to the United States — largely because of pressure from the U.S. government and private U.S. interests angered by the imbalanced flow of scientific information. But access to publicly funded research in Japan does not really compare with access in the United States: The U.S. government funds 40 percent of all U.S. research, while the Japanese government finances only 20 percent of all Japanese research. Moreover, Japan's publicly funded research is not nearly as well regarded as America's. In Japan, government research budgets have been cut significantly, and while the nation's equipment and facilities are top-notch, there are not enough qualified scientists to use them. By most accounts, Japan's publicly-funded science is sub-par. One journalist in Tokyo calls Japanese university research "probably the poorest Japan has to offer." Another offers this forecast: It is likely that while the quality of Japan's publicly funded research programme will improve at the margins . . . there is little prospect of the transformation of universities into genuine centres of scientific excellence.

The best Japanese research is to be found in the laboratories of Japan's major corporations. Although some Japanese companies have opened their doors to American scientists, most have not. The Japanese companies that do permit U.S. scientists entree, moreover, tend to be in industries which have more to learn from U.S. research — biotechnology and aerospace engineering, for example — than vice versa. As for the rest of Japanese industry, a 1990 survey by the National Science Foundation found that half of the Japanese respondents were unwilling to let in American "investigators."

While it is true that Japanese science is, on the whole, less accessible than American science, it is also true that American scientists probably do not take full advantage of research opportunities that exist in Japan. Most American scientists do not speak Japanese, and many are unwilling to relocate so far away to continue their work. Still, the U.S. government does not believe that existing opportunities for American scientists in Japan are adequate. Phyllis Genther, the director of the Commerce Department's Japan Technology Program, says that U.S. negotiators continue to press for "equal technology transfer from Japan."50 According to Genther, the ability of Japanese interests to utilize America's most prominent scientific asset — its basic research program — warrants similar access for American interests to Japan' s best-known scientific asset — its system of commercialization. In particular, Genther says, the Department of Commerce would like to see Japan open its doors and let American scientists participate in the development of optical device technology, process technology, and robotics.

 

Japan U.S. puppet

 

Although the US was happy for Japan to act as its proxy, seeing its close involvement in China’s reform as pushing the country towards capitalism, it consistently opposed this role leading to any closer political integration of Japan with East Asia. Since 1945 the US has maintained ‘implacable opposition to any moves towards Japanese involvement in an East Asian community’ or any proposed reorientation of Japan’s policies in Asia that might tend to make Japan more politically independent. For example, when the Cold War ended Japan put forward a proposal for ‘cross recognition’ whereby China and Russia would normalise relations with South Korea, while Japan and South Korea normalised relations with North Korea, with the aim of laying the basis for a new ‘East Asian commonwealth’. The US intervened to ‘caution’ against this and reasserted its veto over any independent Japanese diplomatic initiatives in the region.

Similarly, the US objected when Japan’s response to the Asian financial crisis of 1997 was to propose an independent Asian Development Fund as a source of loans and short-term liquidity outside of the IMF, whose prescriptions Japan believed had deepened the crisis. It dropped the suggestion. It also gave in to US pressure to stay out of the AIIB.

This ultimate subordination to the demands of the US was most starkly illustrated by the failure of the 2009–12 Democratic Party of Japan (DPJ) government’s short-lived attempt to plot just such an ‘Asian’ course. The electoral success of Hatoyama’s DPJ in 2009 – virtually the sole break in the dominance of the pro-US LDP in post-war Japanese politics – was achieved on a platform of pursuing a foreign policy more independent of the US, symbolised by its pledges to close the base at Okinawa, to improve relations with China and seek to develop a regional trade bloc with South Korea and China, an ‘Asia-Pacific community’ modelled on the EU.

The DPJ’s ‘new growth strategy’, which was based on this turn towards Asia, made sense at many levels given the complementarities of China and Japan’s economies and the stagnation in Japan’s exports to the US. But the attempt foundered in the face of intransigent US hostility. Locked out by the US, snubbed by Obama and forced to concede on Okinawa, Hatoyama was gone before 2010 was out, an outcome largely put down to the US. The DPJ government limped on for a further two years, but resumed Japan’s previous course, adopting the harsher toned policy towards China demanded by the US’s rising priority to corral its Asian allies into a bloc against China. With the return to power of the LDP in 2012 all suggestion of a political and economic ‘turn to Asia’ was abandoned, and instead Abe took Japan into the TPP negotiations.

The result has been that, despite the synergies between Japan’s economy and those of China and its other neighbours, rather than emerging in the twenty-first century to play a leading role within a group of successful East Asian economies, instead Japan is politically distanced from its neighbours and a rather isolated if powerful presence in the region.