Witherspoon’s Memorandum on Current Legislation

Thank you. I am delighted today to share the State Department’s position on the current legislation being considered by the Foreign Relations Committee.

During the Obama Administration, the United States has brought eight dispute settlement cases against China and China has brought five against the United States (Lawrence 2013). It is important to note that the rules of the World Trade Organization are commitments that have been made amongst trade partners (WTO 2014). This ensures that free and fair trade opportunity exists within the international community, and thereby, discourages discrimination.

The first article of the General Agreement on Tariffs and Trade (GATT) introduces a principle referred to as Most-favored-nation (MFN) which is also present in the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) requiring that favors extended to one country must be extended to all. However, some exceptions are allowed and countries are permitted to change their bindings on certain occasions (WTO 2014). The World Trade Organization serves to “establish what is fair or unfair” and explains how governments can respond to “unfair trade” (WTO 2014).

Article 20 of GATT, particularly allows the U.S. to break trade commitments in an effort to protect U.S. citizens. Likewise, considering our standards are grounded in National Security-based and other relevant sciences, there will be no obstacles preventing us from raising tariffs against imports from China. However, according to Dr. Scissors (Heritage expert), increasing tariffs (raising taxes) on Chinese imports will hurt the American people because many of the imports are not luxuries, but every day necessities (2012). Nevertheless, he further notes, “By illegally taking our ideas and our technology, China undermines our biggest advantage in trade. When this occurs, trade becomes far less beneficial” (Scissors 2012).

If China wishes to strengthen its trade relations with the U.S. it must begin to actualize its security commitments. Applying more pressure to North Korea’s denuclearization could offer implicit assurance. China must decide if ranting about protectionism is enough to protect its own economy, or, if cooperating with the security demands of the U.S. is mutually beneficial. China must understand that none of our trade partners will be allowed to undermine our national security and our compensation for loss of trade is preferable to exchanging vulnerability for cheaper imports. Additionally, China must understand that we reserve the right to restrict other countries’ access to companies that are essential to our defense and technology systems.

Prohibiting importation by rule breakers red-flagged by the Secretary of Commerce or Health and Human Services for violating consumer safety, would work well to codify Article 20 of GATT into our domestic policies. Still further, China must understand that any backsliding on its commitment to de-nuclearize North Korea would be viewed as further evidence of intent to undermine U.S. security through economic strategy. Finally, it is the view of this department that such legislation will pave the way for other policies that will help us cut back on excessive consumption.

References

Lawrence, Susan V. “U.S.-China Relations: An Overview of Policy .” fas.org. August 1, 2013. http://www.fas.org/sgp/crs/row/R41108.pdf (accessed April 8, 2014).

Scissors, Dr. Derek. “The U.S. and China: Jobs, Trade, and More.” Heritage.org. 2012. http://www.heritage.org/research/reports/2012/10/the-us-and-china-jobs-trade-and-more#read-essay (accessed April 9, 2014).

World Trade Organization. Chronological list of disputes cases. 2014. http://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm (accessed April 08, 2014).

 

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