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Section 421: China's WTO noncompliance and the protection of U.S. corporate interests.

  I. INTRODUCTION
 II. BACKGROUND
       A. The WTO
       B. Sino--U.S. Trade Relations Overview
           1. China's WTO Accession
           2. United States--China Relations Act of 2000
       C. Possible Remedies for U.S. Companies
          1. The General Safeguard Provision: Section 201
             a. Legal Standard
             b. Procedure
          2. China-Specific Safeguard Provision: Sectios 421
             a. Legal Standard for Imposing Safeguards
                i. Differences Between Sections 421 and 201 in Legal
                   Standards
             b. Procedure for Imposing Section 421 Safeguards
                i. Procedural Differences Between Sections 201 and
                   421
       D. The Comparative Success Rates of Sections 421 and 201
          Investigations
       E. The Tires Decision
III. ANALYSIS
       A. Why China's Compliance with WTO Obligations Is Important
       B. China Has Failed to Meet Its WTO Obligations
          1. Intellectual Property Rights
          2. Services
          3. Industrial Policy
       C. China's Noncompliance and the Future of Section 421
 IV. RECOMMENDATION
       A. Create a Monitoring System .
       B. Companies Should Petition the ITC Now
       C. Investigate the Section 421 Negotiation
  V. CONCLUSION


I. INTRODUCTION

The United States continues to be a major global force, but the United States' relative power is in decline as the developing world continues its economic and political growth. The United States must increasingly collaborate with emerging powers and rely on the authority of international organizations such as the World Trade organization (WTO). china, particularly, is one of the emerging powers the united States frequently must coordinate with and consult. China's economic and political rise is the major geopolitical issue for the 21st century. china is already a powerful force in the global economy, and trade with what will soon be the world's largest economy is essential for sustained U.S. economic growth.

China's membership in the WTO creates vast opportunities, but also vast potential costs for the United States. U.S. companies will have access to a massive market of goods and services. Yet, china will try to shape the WTO to its own advantage at the expense of other WTO members, including the United States. (1) The WTO regulates international trade law and promotes free trade worldwide. The WTO creates "a more prosperous, peaceful and accountable world." (2) China is failing to implement WTO obligations on schedule, and its noncompliance poses a threat to world trade and global prosperity if China continues to experience no significant negative consequences for its WTO noncompliance.

One way the United States can combat China's WTO noncompliance is through section 421 of the 1974 Trade Act. In 2001, the United States enacted section 421 to protect U.S. companies from Chinese exports as long as China is not in compliance with WTO obligations. (3) In 2009, President Obama became the first President to provide import relief under section 421. (4) On September 5, 2011, the WTO Appellate Body decided in favor of the United States on all counts in a dispute over U.S. measures to stop a surge in Chinese tires. (5) WTO Appellate Body's Tires decision unequivocally validated section 421 as a legal, effective tool in U.S. trade policy with China. Section 421 expires, however, on December 11, 2013, leaving the United States without a powerful, China-specific trade remedy. (6)

President Obama emphasized the importance of section 421 in his 2012 State of the Union Address, saying that "[o]ver a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more." (7) President Obama also vowed to expand U.S. capabilities to combat unfair trade by creating a Trade Enforcement Unit and various other measures. (8)

This Note explores both the implications of the Tires decision and how the Tires decision fits into the United States' reinvigorated effort to protect U.S. companies and consumers from unfair trade practices. Part II of this Note examines U.S. trade law and gives a targeted history of Sino--U.S. trade relations. Part III details China's WTO compliance and its relationship with section 421. Part IV recommends that the President work with the WTO to create a monitoring system, that U.S. companies seek import relief from Chinese imports from the President, and that the President investigate the section 421 negotiations for error.

II. BACKGROUND

The background establishes the essential facts surrounding the Tires decision and its impact on U.S. trade policy. First, this Part describes the WTO and its role in global trade. Second, this Part gives a history of Sino--U.S. trade relations. Third, this Part overviews U.S. trade remedies and highlights section 421's unique role in U.S. trade law.

A. The WTO

Since 1995, the WTO has acted as the permanent governing body for world trade. (9) The WTO is the sole international organization dedicated to global trade rules. (10) Its goal is to "improve the welfare of the peoples of the member countries." (11) The WTO works to achieve its goal through trade agreements, which create the legal framework of international commerce among member countries--a group that includes a sizeable majority of the world's trading nations. (12) The WTO encourages equal treatment of all countries, allows countries to resolve disputes legally, aids economic development, and promotes domestic reform. (13) The impact of the WTO and the rule-based trading system on member countries' economies is undoubtedly positive. (14)

B. Sino--U.S. Trade Relations Overview

A brief overview of the history of the frequently tense trade relationship between the United States and China can best place the Tires decision in context. (15) The Trade Act of 1974 (Trade Act) provides a convenient starting point because it is still a major piece of legislation that governs trade relations between China and the United States. (16) When the United States enacted the Trade Act in 1974, communist countries did not enjoy normal trade relations with the United States. (17) The Jackson--Vanik Amendment to the Trade Act presumed that the United States did not have normal trade relations with any country that placed restrictions on its citizens' ability to emigrate, effectively targeting communist countries. (18) The President could, however, grant any country a year-long waiver and establish normal trade relations through Title IV of the Trade Act. (19)

The United States established diplomatic relations with China in January 1979, and the two countries signed a bilateral trade agreement in July 1979 (1979 Agreement). (20) The President used Title IV to create normal trade relations with China every year after the 1979 Agreement. (21) While the United States granted China a waiver every year, China felt the United States held it hostage by asking for various concessions in return for the waiver. (22)

1. China's WTO Accession

The next major phase in Sino--U.S. trade relations was China's WTO accession process, which began in 1986. (23) The accession process was contentious and drawn-out, but China was determined to join the WTO because it had much to gain. (24) Though the Communist Party only partially embraced market reforms, the technocrats at the helm of Chinese policy saw WTO membership as "golden handcuffs." (25) China was willing to constrain its own future policy choices in order to gain the wide array of political and economic benefits that the WTO's market-oriented reforms would bring. (26) WTO membership would symbolize China's growing power, enable China to influence WTO rule development, give China access to the WTO dispute resolution process, and create permanent normal trade relations (PNTR) with the United States. (27) Not only would WTO membership have great economic benefits for China, it would be a "historic breakthrough in China's modernization drive." (28) In return, China's membership in the WTO would increase the WTO's legitimacy as a truly global organization. (29)

China's accession document illustrates the difficulty of China's accession. (30) Generally, acceding countries are in full compliance with WTO obligations by the time they join. (31) Accession documents note exceptions to WTO compliance and are usually short. (32) The abnormally long duration of China's accession process and the complexity of its accession document "attest to the wide array of practices within China that remain non-WTO compliant at the time of accession as well as the concerns of existing WTO members on how well China's economic system would mesh in fact with underlying WTO obligations." (33) China's accession negotiations took 15 years, and its accession document is 103 pages long. (34) In contrast, Taiwan has the second-longest accession document at seven pages. (35) The accession documents of all other WTO members, as of 2002, were three pages. (36)

The question of whether China would accede as a developed or developing country was a roadblock to China's accession. (37) The WTO provides special benefits to developing countries that it does not give to developed countries. (38) Developing countries have more time to implement obligations, they have fewer WTO obligations to meet, and they receive technical assistance from developed countries. (39) Moreover, developing countries have economic advantages in the WTO. (40) Developing countries may impose safeguards for two years, but developed countries cannot do the same without meeting strict requirements. (41) Essentially, the WTO allows developing countries to erect certain tariffs and safeguards to protect domestic industry that would be illegal for developed countries to erect. (42) The United States argued that the WTO should classify China as a developed nation, like Japan and the United States, because of China's strong economy. (43) China argued that it was still a developing country. (44) After protracted negotiations, the WTO ultimately classified China as a developing country. (45)

The WTO accession negotiations also focused on Chinese laws about trade flow, tariff levels, intellectual property rights, restrictions on foreign investment, and a host of other issues. (46) Each WTO applicant must negotiate with each WTO member, and then with the WTO as a whole, on its accession terms to create its accession protocol. (47) China finally completed its agreement with the United States, the Bilateral Agreement on China's Entry into the WTO Between the United States and China (Bilateral Agreement), on November 15, 1999. (48) China then joined the WTO on December 11, 2001. (49)

2. United States--China Relations Act of 2000

President Clinton signed The United States--China Relations Act of 2000 (2000 Act), creating PNTR between the United States and China. (50) The United States would have violated WTO obligations had it not extended PNTR to China because all WTO members must enjoy PNTR with one another. (51) The 2000 Act thus abrogated the Jackson--Vanik Amendment's applicability to China, eliminating the United States' annual review of China's trade status. (52) The 2000 Act also incorporated the 1999 Trade Agreement on China's accession to the WTO. (53) The 2000 Act currently acts as the umbrella legislation for all trade-related Sino--U.S. diplomacy. (54)

In addition to staying in compliance with WTO obligations, the United States also had much to gain economically from PNTR with China. (55) PNTR was "the key [U.S.] action required to ensure American access to China's market when China join[ed] the [WTO]." (56) The ITC broadly stated that China's "accession to the WTO would likely have a significant positive effect on U.S. trade and investment in services." (57) The U.S. embassy in Beijing estimated that China's WTO membership, and thus PNTR, would increase U.S. service suppliers' revenue by $3 to $5 billion per year. (58)

Yet, controversy enveloped the 2000 Act. (59) Many made the case that PNTR acted as a U.S. imprimatur of China's objectionable political practices and humanitarian standards. (60) Some thought the 1979 Agreement could yield the same benefits as PNTR. (61) Legal scholars concluded the short, simple 1979 Agreement would be in no way a workable substitute for the 2000 Act. (62) While PNTR with China may have endured a politically charged debate, President Clinton ultimately signed the 2000 Act into law on October 10, 2000. (63)

C. Possible Remedies for U.S. Companies

While this Note focuses on section 421, it also gives an overview of the import relief available for various trade injuries. (64) First, there are anti-dumping (AD) remedies. (65) Dumping occurs when a country exports a product at a price lower than the domestic price in the country that imports the product. (66) The WTO Anti-Dumping Agreement allows member countries to impose a tariff on the product from the exporting country in order to "bring its price closer to the 'normal value' or to remove the injury to domestic industry in the importing country." (67)

A country can also impose countervailing duties (CVD) on another country's exports to combat subsidized exports. (68) Export subsidies are special incentives, or direct government assistance, to increase foreign sales of a domestic product. (69) The WTO Agreement on Subsidies and Countervailing Measures governs how members use subsidies and counter-subsidies. (70) In general terms, the importing country can impose an extra duty on the subsidized imports that hurt its domestic producers. (71)

Safeguards are a form of import relief a WTO member can impose on imports that threaten a domestic industry. (72) Unlike CVD and AD laws, (73) safeguards are not a response to unfair trade or treaty violations. (74) Instead, safeguards allow domestic industry to adjust to a new level of competition. (75)

Safeguards also require compensation to the exporting country in principle. (76) Compensation can take many forms, but trade compensation is by far the most common. (77) The country that imposed the safeguard performs trade compensation by lowering its tariffs for other imports it receives from the exporting country. (78) The exporting country can also suspend other obligations if the country that imposed safeguards does not provide trade compensation. (79) This Note explores general and China-specific U.S. safeguard remedies.

1. The General Safeguard Provision: Section 201

a. Legal Standard

Section 201 is an original part of the 1974 Trade Act. (80) It is the general safeguard provision for U.S. trade. (81) Section 201 is the U.S. implementation of the WTO Agreement on Safeguards, which allows WTO members to impose safeguard measures on imports. (82) A WTO member may apply a safeguard measure if, "following an investigation by competent authorities, it determines that imports have increased, that the increase was a result of unforeseen developments and that the increased imports have caused, or threatened to cause, its domestic industry to suffer serious injury." (83) In an investigation, the United States International Trade Commission (ITC) must find that the imports are a "substantial cause of serious injury." (84) A cause of serious injury is "a cause which is important and not less than any other cause." (85)

The WTO's international rules also regulate how the United States applies section 201. (86) The United States must apply section 201 on a most-favored-nation basis (MFN). (87) MFN application means the United States must apply section 201 safeguards to all WTO members equally. (88)

b. Procedure

The first step in an investigation is a petition to the ITC from a company or other entity for section 201 relief. (89) The ITC then formally launches an investigation. (90) If the ITC makes an affirmative determination that the import is a threat or a substantial cause of serious injury, it recommends a remedy to the U.S. President that will prevent or remedy the injury. (91) The President has the discretion to implement the ITC's recommendation, ignore the recommendation, or alter the ITC's proposal as he sees fit. (92)

2. China-Specific Safeguard Provision: Section 421

The United States added section 421 to the Trade Act in the Bilateral Agreement in 2000. (93) The United States exacted section 421 from China as part of China's WTO accession negotiations. (94) Section 421 allows the United States to impose safeguards that are not subject to the WTO Agreement on Safeguards on Chinese exports to the United States. (95) Thus, the United States can subject China to safeguards with a lower standard of injury to U.S. industry than under section 201. (96)

Any WTO member can implement its own version of section 421 into its domestic law. (97) Even though no other country negotiated the provision, the United States made it a part of China's accession protocol (98) to the WTO through the Bilateral Agreement. (99) Therefore, any WTO member can "impose restrictions (such as quotas and/or increased tariffs) on Chinese products when imports of those products have sharply increased and have caused, or threaten to cause, market disruption to [their] domestic producers." (100)

a. Legal Standard for Imposing Safeguards
   Formally, the United States will impose safeguards on Chinese
   imports when under section 421 of the Trade Act of 1974, the [ITC]
   determines [that] imports of a product from China are being
   imported into the United States in such increased quantities or
   under such conditions as to cause or threaten to cause market
   disruption to the domestic producers of like or directly
   competitive products. (101)


Section 421(c)(1) states market disruption exists when imports of a competitive product increase rapidly enough to be a significant cause of material injury or threat of material injury. (102) A significant cause "need not be equal to or greater than any other cause." (103)

i. Differences Between Sections 421 and 201 in Legal Standards

Trade experts describe section 421 as tougher on U.S. imports than section 201 because the 421 safeguard is a "definitely lower-threshold, alternative safeguard relief specifically aim[ed] at Chinese imports." (104) The ITC found that section 421's market disruption (105) standard represents a lesser degree of injury than section 201's serious injury standard. (106) Imports can even be the target of U.S. safeguards under section 421 even where there are greater causes of injury to the domestic industry. (107) In sum, section 421 presents an easier standard for the U.S. industry to meet than section 201. (108)

b. Procedure for Imposing Section 421 Safeguards

There are five ways to begin a section 421 investigation. (109) One way is for a company to file a petition. (110) The ITC has only performed investigations after it has received a petition from a company. (111) Therefore, this Note focuses solely on the ITC procedure for investigations that come from company petitions. Once the ITC receives a petition, the ITC performs an investigation, proposes a remedy, and sends a report to the President and the United States Trade Representative (USTR). (112) The President has the discretion to apply safeguards, which the statute also calls import relief. (113)

The entire process from petition to relief should take 150 days. (114) While the sum of the total days available for every step is more than 150 days, 150 is the cap for the whole process. (115) The ITC has 60 to 90 days to determine whether the petition meets the legal standards under section 421. (116) If the ITC believes section 421 action is appropriate, then the ITC delivers its report to the USTR and the President. (117) The USTR has 55 days to consult with the President and interested parties, including China. (118) If after 55 days the USTR has not agreed to a solution with China, it then recommends a remedy to the President, who has 15 days to take action. (119) The President can decline to take action, or he can impose safeguards. (120) The safeguards last for three years, but the President can adjust the safeguards six to nine months after implementation. (121)

i. Procedural Differences Between Sections 201 and 421

There are two major procedural differences between section 421 and section 201. (122) First, section 421 requires the USTR to try to broker a solution with China before the President imposes safeguards. (123) Section 201 does not require the United States to consult China. (124) Second, the USTR works with the ITC to submit a recommendation to the President under section 421. (125) In section 201, only the ITC makes a recommendation to the President. (126)

D. The Comparative Success Rates of Sections 421 and 201 Investigations

A pragmatic concern for U.S. companies that look to combat Chinese imports is deciding what remedy is more likely to result in import relief. (127) Section 201's 35.62% success rate (128) is higher than section 421's 14.29% success rate. (129) Yet, section 201's success is historically sporadic and rare in recent years. (130) In 2002, the Bush Administration granted the first section 201 relief in 18 years by placing a 30% tariff on various steel imports for U.S. steel manufacturers. (131) No petitioners have obtained section 201 relief since. (132) Further, the ITC has not even performed an investigation since the 2001 investigation that led to the Bush Administration's tariffs on steel imports. (133) Section 201's longstanding inactivity led one analyst to call section 201 the "Forgotten Trade Law." (134)

The ITC has performed seven safeguard investigations under section 421 of the Trade Act. (135) In four investigations, the ITC found material disruption to the domestic market, but the Bush Administration denied relief to the petitioner each time. (136) All of the Bush Administration's determinations concluded import relief would cause net harm to the U.S. economy. (137)

In contrast to section 201, section 421 is not a forgotten trade law. (138) Despite a lower 14.29% success rate, a petitioner last gained section 421 relief only three years ago in 2009. (139) Even more recently, on September 5, 2011, the WTO Appellate Body rendered the Tires decision. (140) Given the recent Tires decision and President Obama's mention of the section 421 safeguard on Chinese tires in his 2012 State of the Union address, section 421 is an active component of U.S. trade law. (141)

E. The Tires Decision

President Obama made history as the first U.S. President to ever grant relief to a petitioner under section 421, on September 11, 2009. (142) President Obama imposed import relief on Chinese imports to protect U.S. producers of certain passenger vehicle and light truck tires. (143) He imposed an additional duty on U.S. imports of Chinese tires over three years: 35% in year one, 30% in year two, and 25% in year three. (144) The measure took effect on September 26, 2009. (145)

China filed a claim with the WTO a mere three days after President Obama imposed import relief. (146) China claimed that the United States violated the WTO Agreement on Safeguards and paragraph 16 of China's accession protocol to the WTO. (147) The Panel found for the United States on all counts. (148) China then appealed. (149) The WTO Appellate Body found for the United States on all counts again. (150) The Tires decision legitimized President Obama's unprecedented action on the international stage. (151)

III. ANALYSIS

The Tires decision validated a more assertive U.S. trade policy. (152) By implementing the safeguard, President Obama protected U.S. workers from Chinese imports (153) and made section 421 relevant in U.S. trade law. (154) This Part examines China's shortcomings in its compliance with WTO obligations and the implications of China's noncompliance for U.S. trade law.

A. Why China's Compliance with WTO Obligations Is Important

The first reason China's compliance is important is that China's compliance with WTO obligations creates large commercial benefits for the United States. (155) The United States' leadership role in WTO negotiations means the United States is the chief actor encouraging trade liberalization, and, in the process, expanding market access for U.S. exports. (156) One factor that makes China's noncompliance surprising is that the United States provides, and has provided, assistance to China to help it comply with WTO obligations. (157)

Second, China's compliance has important benefits for the WTO, stability, and U.S. prosperity through global trade. (158) International relations scholars find that as China becomes more powerful--and thus as the United States' world leadership position erodes--China will use its influence to reshape the international system for its own interests. (159) The current, U.S.-dominated international system is more liberal than imperial and is rooted in "global forces of democracy and capitalism." (160) Yet, "[t]he United States' 'unipolar moment' will inevitably end. If the defining struggle of the 21st century is between China and the United States, China will have the advantage. If the defining struggle is between China and a revived Western system, the West will triumph." (161) Strong international organizations can pursue the U.S. goals of global economic growth and liberalization. (162) The United States' future political power depends on a powerful liberal order capable of integrating China. (163)

Third, China's compliance with WTO obligations reinforces the strength of the world's trading system. (164) The current U.S.-led order is distinctive because it is "unusually accessible, legitimate, and durable." (165) It is multilateral and rule-based, in contrast to the general, historic rule that "any international order dominated by a powerful state is based on a mix of coercion and consent." (166) If China adheres to WTO obligations, it will cement its place in the global economy, accelerate its own internal reform, and strengthen the rule of law, all of which are in the world's best interest. (167) Moreover, China's compliance would strengthen the current international order, which is capable of generating, and has generated, tremendous worldwide economic growth. (168)

B. China Has Failed to Meet Its WTO Obligations

The basic rationale behind section 421 was that U.S. industry should "not lose jobs to competition from Chinese imports at a time when China was adjusting to WTO obligations." (169) Chinese companies will have an artificial competitive advantage when they do not comply with WTO obligations, but U.S. industry and business will suffer. (170) While cheating the WTO system yields short-term benefits for China, protectionism will result in slower economic growth for all countries. (171) The adjustment period should give China time to change its regulatory system to comply with WTO obligations. (172)

Because section 421 expires on December 10, 2013, the adjustment period ought to end at the same time. (173) Thus, by December 10, 2013, (174) China should fully comply with WTO obligations. (175) China is not close, however, to complying with its WTO obligations, despite U.S. assistance. (176) China falls short in many areas. (177) Moreover, in some categories China is even shifting away from WTO principles. (178) China's noncompliance is most salient in three economic sectors: intellectual property rights, services, and industrial policy.

1. Intellectual Property Rights

Despite U.S. efforts to the contrary, intellectual property (IP) rights are an acute problem with China's WTO compliance. (179) Piracy problems are "rampant and enforcement [remains] seriously inadequate." (180) Chinese piracy in 2009 cost the U.S. software and music industries $3.5 billion. (181) While the United States remains committed to working with China to solve many of its IP problems, there are still many issues that will require "considerable [U.S.] staff and resources, both in Washington and Beijing." (182) IP law in China requires extensive reform, and China will not conform to WTO obligations by the end of 2013. (183)

2. Services

China's noncompliance in the services area is not as severe as in IP, but it is still a major area of noncompliance. (184) China has even implemented many of the WTO reforms. (185) Yet, Chinese regulators
   continue to use an opaque regulatory process, overly burdensome
   licensing and operating requirements and other means that frustrate
   efforts of U.S. suppliers of banking, insurance, express delivery,
   telecommunications, construction and legal services to achieve
   their full market potential in China. In addition, China places
   unwarranted restrictions on foreign companies, like the major U.S.
   credit card companies. (186)


Services are thus another area of longstanding Chinese noncompliance. (187) The United States will help China comply with WTO obligations, but China will not be in compliance in the near future. (188)

3. Industrial Policy

Chinese industrial policy also continues to violate WTO obligations. (189) China uses its industrial policy tools to "promote or protect favored sectors and industries in contradiction of its WTO obligations." (190) The United States promises to engage in bilateral negotiations to try and correct China's noncompliance with WTO industrial policy. (191) It is highly unlikely China will comply when section 421 expires. (192)

C. China's Noncompliance and the Future of Section 421

China is not close to abandoning protectionism or embracing WTO-style market reform. (193) Despite China's failure to comply with WTO obligations, section 421 is set to expire on December 10, 2013. (194) The right for WTO member countries to bring their own version of section 421 safeguard actions against China to protect themselves from artificial competition was supposed to exist until "China ha[d] fully implemented its obligations." (195) The expiration of section 421--and thus the expiration of the right to bring safeguard actions against China through section 421--on the arbitrary date of December 10, 2013, is inconsistent with its purpose. (196)

IV. RECOMMENDATION

The Tires decision validated section 421 on a global stage. With a President willing to enforce section 421 actions, U.S. companies have a unique opportunity to petition the ITC for section 421 relief. Yet, its expiration date, December 10, 2013, is not far off, leaving U.S. companies with little time to act. Moreover, section 421 will expire before China fulfills its WTO obligations, and thus terminate prematurely. There are, however, a few actions companies and the U.S. government can take to protect U.S. corporate and trade interests.

First, the United States and the WTO should create a monitoring system to allow existing members to impose compensatory tariffs on new members. Second, U.S. companies should petition the ITC under section 421 for import relief from Chinese imports. Third, the United States should conduct an investigation to determine how U.S. trade negotiators and policymakers could have so inaccurately estimated when China would be in compliance with WTO obligations.

A. Create a Monitoring System

The United States should work with the WTO to create a monitoring system for new member countries. Most importantly, the monitoring system would fulfill section 421's purpose of ensuring new member countries conform to WTO obligations. Section 421-type tariffs are automatically available upon a country's accession to the WTO. Thus, each country would be able to use the lower threshold section 421 standard to impose tariffs on the new member country's exports.

In this system, an 11 person WTO council would vote upon accession, and then every two years thereafter, vote to determine whether to terminate member countries' capability to impose section 421-style tariffs on the new member country. Eight members would need to vote to terminate the tariffs for the tariffs to expire. The council should continue member countries' ability to impose tariffs only if the new member country fails to meet its accession protocol goals in a systemic, widespread manner, barring force majeure or severe extenuating circumstances. This rather easy standard to meet for the new member country satisfies the purpose of section 421, which is to combat serious noncompliance and not isolated violations. Additionally, the indefinite length of the monitoring system avoids section 421's arbitrary termination problem.

Turning to political implications, this monitoring system avoids politics as much as possible. The council will be independent of any country because it would be part of the WTO. Thus, it largely eliminates claims of bias from the new member country. It also avoids much of the political ruckus that arises when one country calls another country a systemic cheater or manipulator. The controversy surrounding whether the United States will call China a currency manipulator every year shows the intense political pressure those situations create. (197) While no system is totally free from politics, this system will minimize political influence and maximize economic merit.

In addition to removing politics, the system also reinforces WTO principles. First, the monitoring system is consistent with the principle of equal treatment for all member countries. The system prevents one country from using the WTO trade agreements to its own advantage. One could argue the tariff treats the punished country unequally. In fact, the punishment would compensate the injured countries and not act as an excessive advantage. Second, the tariffs would encourage fair trade and stimulate reform. New member countries would needlessly face tariffs if they failed to comply with their accession protocol. Third, the system would create economic prosperity. Fair rules for all countries are essential to international commerce, and proof that member countries can enforce those rules will create greater confidence in trade and increase global economic activity. To conclude, this system is not merely a tool of punishment; it is also a means to strengthen the WTO.

Russia recently acceded to the WTO on August 22, 2012. (198) Whether Russia will adhere to the WTO's accession protocol is uncertain. The monitoring system this Note proposes would allow WTO member countries to make sure Russia, China, and any future new member countries respect the WTO's accession protocols and the WTO as a whole.

B. Companies Should Petition the ITC Now

U.S. companies should petition the ITC for import relief under section 421. U.S. companies have a unique opportunity. They have a President willing to provide import relief through a trade statute without parallel in U.S. trade law. U.S. companies may find that now is their last and best opportunity for import relief. After December 10, 2013, U.S. companies will lose a major weapon in the battle for fair trade. U.S. companies have few options to fight surging Chinese imports and will have little recourse for the foreseeable future. As Part II.B discussed, section 421 is superior to section 201 in combating Chinese imports, and only section 201 will be left for U.S. companies on December 11, 2013. (199)

C. Investigate the Section 421 Negotiation

The President should investigate and reform the USTR negotiation process. The USTR is the United States' chief negotiator, and it failed to match section 421's duration with China's WTO compliance schedule by completely misestimating China's pace of reform. The USTR must reevaluate its processes to avoid another serious misjudgment.

Charlene Barshefsky was the USTR's lead negotiator at the time. (200) In testimony before the Senate Banking Committee, Barshefsky said that "China's commitments in all areas are specific and include timetables and final dates for full implementation ... its results will be rapid." (201) Her assessment was wrong. Disturbingly, only two years after her statement, private international trade specialists found that China had implemented reforms that "have not met the spirit of the obligations and may violate WTO obligations.... None of these outcomes is unusual or unexpected." (202)

International trade is an important part of the U.S. economy. Major errors, like section 421's expiration date, have a serious impact on U.S. companies, consumers, and everyday citizens. The United States must reform its negotiation process to make the USTR's miscalculation a solitary, and not a systemic, error.

V. CONCLUSION

U.S. companies currently have a unique opportunity to petition the ITC for import relief from Chinese exports to the United States. They should take advantage of it. The survival of section 421's purpose through a WTO monitoring system would demonstrate U.S. leadership and commitment to international institutions. While the United States faces an increasingly multi-polar world, it may still be a powerful force for the continued development of the rule-based international system and thus for global prosperity.

(1.) G. John Ikenberry, The Rise of China and the Future of the West, Foreign Aff., Jan.-Feb. 2008, at 23, 23.

(2.) The WTO ... in Brief, World Trade Org. (2012), http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr00_e.htm (last visited Oct. 19, 2012).

(3.) Leo Wise, Trading with China, 38 Harv. J. on Legis. 567, 567 (2001).

(4.) Jeanne J. Grimmett, Cong. Research Serv., R40844, Chinese Tire Imports: Section 421 Safeguards and the World Trade Organization (WTO) 1 (2011), available at http://www.fas.org/sgp/crs/misc/R40844.pdf

(5.) United States--Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, World Trade Org. (Sept. 5, 2011), http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds399_e.htm.

(6.) Grimmett, supra note 4.

(7.) President Barack Obama, State of the Union Address (Jan. 24, 2012), available at http://www.whitehouse.gov/the- press-office/2012/01/24/remarks-president-state-union-address.

(8.) Id. Governor Romney has also endorsed a more forceful trade enforcement policy, so the United States will maintain an aggressive stance on enforcement under either a Romney or an Obama Administration. Amy Bingham, Obama, Romney Campaigns Spar over China, ABC News (Sept. 17, 2012), http://abcnews.go.com/Politics/OTUS/obama-romney-clamor- toughestchina/story?id=17254934#.UHMWp67Etv1.

(9.) Ikenberry, supra note 1, at 25.

(10.) The WTO ... in Brief, supra note 2.

(11.) Id.

(12.) Id.

(13.) Principles of the Trading System, World Trade Org., http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm (last visited Oct. 19, 2012).

(14.) Ikenberry, supra note 1.

(15.) Wise, supra note 3.

(16.) Id. at 568.

(17.) Id.

(18.) Id. Normal trade relations means that the United States treats the country enjoying normal trade relations with the United States with the same trade benefits that any other country receives from the United States. Id.

(19.) Wise, supra note 3, at 568.

(20.) Wayne M. Morrison, Cong. Research Serv., RL33536, China-U.S. Trade Issues 1 (Jan. 7, 2011), available at http://fpc.state.gov/documents/organization/155009.pdf.

(21.) Wise, supra note 3, at 568.

(22.) Penelope B. Prime, China Joins the WTO: How, Why and What Now?, Bus. Econ., Apr. 2002, at 26, 32 (discussing the process of China's entry into the World Trade Organization).

(23.) Terence P. Stewart, Accession of the People's Republic of China to the World Trade Organization: Baseline of Commitments, Initial Implementation and Implications for U.S.--PRC Trade Relations and U.S. Security Interests, Law Offs. of Stewart & Stewart (Apr. 30, 2002), http://www.uscc.gov/researchpapers/ 2000_2003/pdfs/access.pdf.

(24.) Wayne M. Morrison, Cong. Research Serv., RS20139, China and the World Trade Org. 2 (Nov. 19, 2001), available at http://fpc.state.gov/documents/organization/6560.pdf.

(25.) Gary Clyde Hufbauer & Daniel H. Rosen, American Access to China's Market: The Congressional Vote on PNTR, Inst. for Int'l Econ., Apr. 2000, at 1, 2 (discussing the congressional vote over Permanent Normal Trading Relations).

(26.) Id.

(27.) Id.

(28.) Robert A. Kapp, Cutting Through the Smoke on China PNTR, The US-China Bus. Council (Jan. 12, 2000), https://www.uschina.org/public/preslets/0003.html (quoting Pieter Bottelier). Analysts estimate WTO membership has increased China's GDP by one percent each year. Gregory Chow, Professor, Princeton Univ., Speech at International Conference on Greater China and the WTO (Mar. 22-24, 2001). While a one percent increase may not sound like much, it would add 33% to the U.S.'s economic growth rate per year. John Ross, The Long Term Slowing of the US Economy--and Its Implications, Key Trends in Globalisation (Jan. 9, 2011), http://ablog.typepad.com/keytrendsinglobalisation/2011/01/slowing_of_the_us_econ omy.html.

(29.) Kapp, supra note 28.

(30.) Stewart, supra note 23, at 30.

(31.) Id. at 4.

(32.) Id.

(33.) Id. at 16.

(34.) Id. at 4.

(35.) Stewart, supra note 23, at 13.

(36.) Id. at 12-13.

(37.) Id. at 7.

(38.) Jeremy Brooks Rosen, China, Emerging Economies, and the World Trade Order, 46 Duke L.J. 1519, 1529 (1997).

(39.) Id. at 1530.

(40.) Id.

(41.) Id.

(42.) Id.

(43.) Rosen, supra note 38, at 1519. The terms of WTO accession ultimately designated China as a developing nation, placing it in the same category as Bangladesh. Id. China's GNP per person is nine times higher than the GNP per person in Bangladesh, and China's GNP is 77 times the GNP of Bangladesh. Id.

(44.) Id.

(45.) Morrison, supra note 24, at 3-4.

(46.) Id.

(47.) Id. The Agreement Establishing the WTO, a product of the 1995 Uruguay round of multilateral trade negotiations, created the rules for joining the WTO. Id. at 1.

(48.) Bilateral Agreement on China's Entry into the WTO Between China and the United States, Ministry of Foreign Aff. of China (Nov. 17, 2011), http://www.fmprc.gov.cn/eng/ziliao/3602/3604/t18051.htm [hereinafter Bilateral Agreement].

(49.) Morrison, supra note 24, at 1. China completed its accession negotiations on September 17, 2001, with the WTO Working Party, the body that handles WTO accessions. Id at 4. The Working Party comprises all interested WTO members. Id. at 2. China completed its last necessary bilateral agreement with Mexico on September 13, 2001. Id. at 4.

(50.) Id. at 5.

(51.) Grimmett, supra note 4, at 10.

(52.) Wise, supra note 3, at 571.

(53.) Morrison, supra note 24, at 5.

(54.) Wise, supra note 3, at 571.

(55.) See generally Kapp, supra note 28 (describing the economic and political benefits the United States would gain from PNTR with China in early 2000, before Congress passed PNTR).

(56.) Hufbauer & Rosen, supra note 25, at 1.

(57.) U.S. Int'l Trade Comm'n, Assessment of the Economic Effects on the United States of China's Accession to the WTO, at vi (1999) [hereinafter USITC Assessment], available at http://www.fas.org/news/china/1999/ES3228.PDF.

(58.) See id (indicating the estimation that China's current barriers to U.S. service suppliers result in $3 to $5 billion in lost sales).

(59.) See generally Hufbauer & Rosen, supra note 25 ("This year's biggest trade battle is the congressional vote over [PNTR] with China."). A factor that made PNTR a contentious issue was that it was the only time when Congress played a role in China's WTO negotiations with the United States. Morrison, supra note 24, at 5. The Bilateral Agreement did not require congressional approval. Id.

(60.) Kapp, supra note 28.

(61.) Id.

(62.) See id. (indicating that the idea that the 1979 Agreement could yield the same benefits as PNTR is false).

(63.) Morrison, supra note 24, at 5. The bill did not grant PNTR to China immediately, but granted PNTR status to China upon China's accession to the WTO--provided the President felt the final terms of China's accession were equivalent to the Bilateral Agreement, which he did. Id.

(64.) Understanding the WTO: The Agreements: Anti-dumping, Subsidies, Safeguards: Contingencies, etc., World Trade Org., http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm (last visited Oct. 19, 2012) [hereinafter Understanding the WTO].

(65.) Id.

(66.) Id.

(67.) Id.

(68.) Subsidies and Countervailing Measures, World Trade Org., http://www.wto.org/english/tratop_e/scm_e/scm_e.htm (last visited Oct. 19, 2012).

(69.) See WTO: Glossary, U.S. Dep't of Agric. (June 4, 2012), http://www.ers.usda.gov/topics/international-markets- trade/trade-policy/world-trade-organization-(wto)/agreement-on-agriculture- andbeyond/major-wto-agreements/subsidies- and-countervailing-measures.aspx (describing export subsidies and other trade concepts).

(70.) Subsidies and Countervailing Measures, supra note 68.

(71.) Id.

(72.) Understanding the WTO, supra note 64.

(73.) Daniel J. Ikenson, Burning Rubber: Proposed Duties on Chinese Tires Whiff of Senseless Protectionism, Cato Inst. (Sept. 11, 2009), http://www.cato.org/publications/free-trade- bulletin/burningrubber-proposed-duties-chinese-tires- whiff-senseless-protectionism.

(74.) Daniel J. Ikenson, Bull in a China Shop, Cato Inst. (Jan. 16, 2003), www.cato.org/pub_display .php?pub_id=2954. There are a few other differences among safeguards and AD and CVD--the injury threshold for safeguard actions is higher than the threshold for AD or CVD actions, and the AD and CVD processes are bureaucratic--that is, they operate automatically--while safeguards allow for presidential discretion. Chad P. Bown, How Different Are Safeguards from Antidumping? Evidence from US Trade Policies Toward Steel 1 (2004) (unpublished manuscript), available at http://people.brandeis.edu/~cbown/papers/steelmfn.pdf. In the United States, ADs and CVDs require industry support, but the domestic industry does not need to support the safeguard measures for the United States to implement them. Grimmett, supra note 4, at 11.

(75.) Ikenson, supra note 74. In most basic terms, section 421 gives "U.S. producers the opportunity to holler 'time out!' as they catch their breath." Id.

(76.) Agreement on Safeguards, World Trade Org., http://www.wto.org/english/tratop_e/safeg_e/safeint.htm (last visited Oct. 19, 2012). Some sources say compensation must be provided, while others say compensation may sometimes be provided to account for situational permutations and exceptions. Compare Chad P. Bown & Rachel McCulloch, U.S. Trade Policy Toward China: Discrimination and Its Implications, in Challenges to the Global Trading System: Adjustment to Globalization in the Asia Pacific Region 58, 65 (Sumner J. La Croix & Peter A. Petri eds., 2007) (saying safeguards "sometimes require compensation"), with Agreement on Safeguards, supra (stating members "must pay compensation").

(77.) Agreement on Safeguards, supra note 76.

(78.) Id.

(79.) Id.

(80.) Jing Ma, Product-Specific Safeguard in China's WTO Accession Agreement: An Analysis of Its Terms and Its Initial Application in Section 421 Investigations, 22 B.U. Int'l L.J. 189, 197 (2004).

(81.) Id. at 204.

(82.) Eliza Patterson, WTO Rules Against US Safeguard Measures on Steel, Am. Soc'y of Int'l L. (Nov. 2003), http://www.asil.org/insigh120.cfm.

(83.) Id.

(84.) Trade Act of 1974, 19 U.S.C. [section] 2251 (1974).

(85.) Id. [section] 2252.

(86.) Bown & McCulloch, supra note 76, at 65.

(87.) Id. at 66.

(88.) Id. There are exceptions to this rule too, as there are situations where safeguards do not need to apply to all WTO members. See Understanding the WTO, supra note 64 (describing how members can allocate quotas among countries supplying the imported good).

(89.) 19 U.S.C. [section] 2252(a) (2006).

(90.) Understanding Safeguard Investigations, U.S. Int'l Trade Comm'N, http://www.usitc.gov/press_room/us_safeguard.htm (last visited Oct. 19, 2012).

(91.) Id.

(92.) Id.

(93.) Grimmett, supra note 4, at 10.

(94.) Id.at 1. The WTO rarely formally labels acceding countries as developed or developing, but it is still an important part of the negotiation process. Stewart, supra note 23, at 8. Grimmett confusingly contends that the United States enacted section 421 as part of PNTR. Grimmett, supra note 4, at 1. This is technically true because PNTR incorporated the Bilateral Agreement, but the Bilateral Agreement is the original source of section 421. See Summary of U.S.--China Bilateral WTO Agreement, The White House (Nov. 17, 1999), https://www.uschina.org/public/991115a.html (listing the product-specific safeguard, section 421, in the agreement highlights). China agreed to the safeguards clause in 2001 with "gritted teeth." The Tyre Wars: Playing with Fire, Economist, Sept. 17, 2009, http://www.economist.com/node/14460069.

(95.) See Grimmett, supra note 4, at 8 (describing the differences between section 421 and the WTO safeguard standards).

(96.) Id. Section 421 is separate from the WTO Agreement on Safeguards, which is a general safeguard provision that creates higher threshold safeguards than those in China's Accession Protocol. Id.

(97.) Morrison, supra note 20, at 33.

(98.) World Trade Organization, Ministerial Decision of 10 November 2001, WT/L/432, 1 16 (2011), available at http://www.worldtradelaw.net/misc/ChinaAccessionProtocol.pdf (granting, through a decision of the Ministerial Conference, China's conditioned accession to the Marrakesh Agreement, which established the WTO).

(99.) Morrison, supra note 20, at 33.

(100.) Id.

(101.) Understanding Safeguard Investigations, supra note 90.

(102.) 19 U.S.C. [section] 2451(c)(1) (2000).

(103.) Id. [section] 2451(c)(2).

(104.) Id.; Ma, supra note 80, at 213. The phrase "substantial cause of serious injury" is actually in section 202 of the 1974 Trade Act. 19 U.S.C. [section] 2252(b)(1)(A) (2012). Yet, many simply call the entire safeguard process a section 201 investigation. See Understanding Safeguard Investigations, supra note 90 (showing that the ITC defines the whole investigation as a section 201 investigation). To be clear, "serious injury" is in this Note as part of section 201.

(105.) See Vivian C. Jones, Cong. Research Serv., RL 32371, Trade Remedies: A Primer 35 (2007), available at http://www.nationalaglawcenter.org/assets/crs/RL32371.pdf (listing four differences between section 421 and section 201 that make section 421 a lower threshold). Both material injury and serious injury refer to injury to the domestic industry.

(106.) Grimmett, supra note 4, at 8.

(107.) Id.

(108.) Ma, supra note 80, at 196.

(109.) See 19 U.S.C. [section] 2451(b) (2000). The four other ways to begin an investigation are upon the request of the President or the United States Trade Representative, upon resolution of either the Committee on Ways and Means of the House of Representatives, upon the Committee on Finance of the Senate's resolution, or upon the United States International Trade Commission's own motion. Id.

(110.) Id.

(111.) 19 U.S.C. [section] 2252(a)(1) (1974). Entities include "a trade association, firm, certified or recognized union, or a group of workers, which is representative of an industry." Id.

(112.) Id.

(113.) 19 U.S.C. [section] 2451(k)(2) (2004).

(114.) Grimmett, supra note 4, at 11.

(115.) Id.

(116.) 19 U.S.C. [section] 2451(e) (2004).

(117.) Id. [section] 2451(g)(1).

(118.) Id. [section] 2451(h).

(119.) Id. [section] 2451(k)(1).

(120.) Id. [section] 2451(k); 19 U.S.C. [section] 2451(o) (2004).

(121.) 19 U.S.C. [section] 2435(b) (1974).

(122.) Id. [section] 2435.

(123.) Id.

(124.) Id. [section] 2435(a).

(125.) Id. [section] 2435.

(126.) 19 U.S.C. [section] 2435 (1974).

(127.) See Greg Mastel, Ctr. for Nat'l Policy, Section 201: Revitalizing the Forgotten Trade Law 16 (1999), available at http://www.centerfornationalpolicy.org/ht/a/GetDocumentAction/i/10078 (stating that domestic industry looks for effective options and thus evaluates alternatives to section 201).

(128.) See Jones, supra note 105, at 29 (showing a chart that decomposes the results of section 201 petitions).

(129.) See Morrison, supra note 20, at 33 (stating that the Bush administration denied relief six times and Obama granted relief once).

(130.) Mastel, supra note 127, at 1.

(131.) Id.

(132.) Suzanne Young, Do Trade Laws Protect Domestic Industry?, Forward Online: Global Perspective from MSCI (July/Aug. 2006), http://forward.msci.org/articles/0706tradelaws.cfm; see U.S. Int'l Trade Comm'n, IA-201-73, Steel: Determinations and Views of Commissioners 7--8 (2001) [hereinafter Steel], available at http://www.usitc.gov/publications/safeguards/PUB3479.pdf (showing that a 2001 petition caused President Bush to levy the steel tariff).

(133.) Steel, supra note 132; Bown, supra note 74.

(134.) Mastel, supra note 127, at 1.

(135.) Grimmett, supra note 4, at 14.

(136.) Ikenson, supra note 73.

(137.) Memorandum on Wire Hanger Imports from the People's Republic of China, 39 Wkly. Comp. Pres. Doc. 492 (Apr. 25, 2003); Grimmett, supra note 4, at 14.

(138.) USW Cites WTO Labor Day Order Against China Tire Imports, PR Newswire (Sept. 5, 2011), http://www.prnewswire.com/news-releases/usw-cites-wto-labor-day-order-against- china-tire-imports129268238.html (stating the USW President's satisfaction with the WTO Appellate Body ruling on September 5, 2001, and thus continued U.S. interest in section 421).

(139.) See Certain Passenger Vehicle and Light Truck Tires from China, Inv. No. TA-421-7, USITC Pub. 4085 (July 2009) (Final), available at http://www.usitc.gov/publications/safeguards/pub4085.pdf (showing the start date of the investigation).

(140.) United States--Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, World Trade Org., http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds399_e.htm (last updated Oct. 5, 2011) [hereinafter WTO Dispute Settlement].

(141.) See id (showing that the WTO rendered its decision on September 5, 2011, only a year ago).

(142.) Morrison, supra note 20, at 35; WTO Dispute Settlement, supra note 140.

(143.) Proclamation, President Barack Obama, To Address Market Disruption from Imports of Certain Passenger Vehicle and Light Truck Tires from the People's Republic of China (Sept. 11, 2009), available at http://www.whitehouse.gov/the_press_office/Proclamation-Address-Market- Disruption-from-Imports-ofCertain-Passenger- Vehicle-and-Light-Truck-Tires/.

(144.) Id. See generally Harmonized Tariff Schedule of the United States, U.S. Int'l Trade Comm'n, http://hts.usitc.gov/Table%2040.xml (last visited Oct. 19, 2012) (showing the base tariff levels for the tires before Obama's additional duty).

(145.) Proclamation, supra note 143.

(146.) WTO Dispute Settlement, supra note 140.

(147.) Appellate Body Report, United States--Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tires from China, 45, WT/DS399/AB/R (Sept. 5, 2011), available at http://www.wto.org/english/tratop_e/dispu_e/399abr_e.pdf.

(148.) WTO Dispute Settlement, supra note 140.

(149.) Id.

(150.) Id.

(151.) See generally id. (declaring President Obama's action to be legal).

(152.) See USW Cites WTO Labor Day Order Against China Tire Imports, supra note 138 (stating the result should "signal that enforcing our trade laws is a vital part to revitalize the economy").

(153.) Id.

(154.) See Young, supra note 132 (showing that because the President had previously never granted relief under section 421, the President had "effectively defanged" section 421).

(155.) Stewart, supra note 23, at 89. Improved WTO compliance would make it easier for companies to operate in China because improved WTO compliance would reduce Chinese favoritism to Chinese companies and reduce intellectual property theft. Id.

(156.) Id.

(157.) See WTO Accessions, Off. of the U.S. Trade Representative (Aug. 28, 2012), http://www.ustr.gov/trade-agreements/wto-multilateral-affairs/wto-accessions (describing how the United States helps all acceding WTO members implement WTO obligations).

(158.) Id.

(159.) Ikenberry, supra note 1, at 30.

(160.) Id. at 26.

(161.) Id. at 36.

(162.) Id. at 28; see G. John Ikenberry, Liberal Leviathan 286 (G. John Ikenberry & Marc Trachtenberg eds., 2011) (explaining that advanced industrialized states historically embraced international institutions because it helped them achieve their liberal goals).

(163.) Ikenberry, supra note 1, at 34 ("The United States' most powerful strategic weapon is the ability to decide what sort of international order will be in place to receive it. ... [I]f the Western system offers rules and institutions that benefit the full range of states ... its dominance as an international order is all but certain.").

(164.) Kong Qingjiang, EU's Monitoring of China's Compliance with WTO Obligations 1 (2008).

(165.) Ikenberry, supra note 1, at 28.

(166.) Id. at 28.

(167.) See id. at 32. It is fundamental economics that trade improves people's lives. See Stephen D. Williamson, Macroeconomics 453 (Clinton ed., 2002) ("An important result is that the representative consumer will always be better off with trade than without it."). For a visual representation of how trade increases consumption possibilities, see id. at 452, fig. 12.4.

(168.) Ikenberry, supra note 1, at 26. In a juxtaposition highlighting how the U.S.-led order is distinctly expansive and inclusive, President Roosevelt--over Winston Churchill's objections-- demanded China's inclusion in the United Nations Security Council. Id.

(169.) China and the WTO: Compliance and Monitoring: Hearing Before the U.S.-- China Economic & Sec. Review Comm'n, 108th Cong. 54 (Feb. 5, 2004) (statement of Terence P. Stewart, Managing Partner, Law Offices of Stewart & Stewart) [hereinafter China and the WTO], available at http://www.uscc.gov/hearings/2004hearings/written_testimonies/04_02_05wrts/terry stewartwrtest.htm.

(170.) The Case for Open Trade, World Trade Org., http://www.wto.org/english/thewto_e/whatis_e /tif_e/fact3_e.htm (last visited Oct. 19, 2012) (saying protectionism produces short-term gain but creates much larger long-term economic and political damage).

(171.) Id.

(172.) Id.

(173.) China and the WTO, supra note 169; Stewart, supra note 23, at 25.

(174.) Stewart, supra note 23, at 25. China should have phased in several key commitments by December 11, 2006, but China is still not in compliance with those commitments. U.S. Trade Representative, Report to Congress on China's WTO Compliance 2 (2010) [hereinafter Report to Congress on China's WTO Compliance], available at http://www.ustr.gov/webfm_send/2596.

(175.) Report to Congress on China's WTO Compliance, supra note 174.

(176.) See generally id. (listing and describing the myriad areas where China is short of WTO compliance). See Terence P. Stewart et al., Trade Lawyers Advisory Grp., China's Compliance with WTO Commitments and Obligations: 2005--2007 Update, at 9-37 (2007), available at http://www.uscc.gov/researchpapers/2008/TLAG%20Report%20%20China's%20WTO%20Compl iance%20and%20Commitments%202005- 2007%20Update.pdf (illustrating the scope of China's noncompliance with a list 28-pages long of changes that China would need to make to comply with WTO obligations).

(177.) Stewart et al., supra note 176.

(178.) See Report to Congress on China's WTO Compliance, supra note 174 (stating that U.S. stakeholders have concerns about the general direction of China's reform, as well as specific area concerns).

(179.) Qingjiang, supra note 164, at 3-4.

(180.) China and the WTO: Assessing and Enforcing Compliance: Hearings Before the U.S.--China Economic & Sec. Review Comm'n, 109th Cong. 85 (2005), available at http://www.uscc.gov/hearings/2005hearings/transcripts/05_02_3_4.pdf.

(181.) Report to Congress on China's WTO Compliance, supra note 174, at 5.

(182.) Id.

(183.) Stewart et al., supra note 176, at 27-30, 46 (showing the depth and variation of China's IP violations).

(184.) See Report to Congress on China's WTO Compliance, supra note 174, at 8 (noting that China's noncompliance continues to stifle potential for U.S. suppliers).

(185.) Id. at 92 (observing that, "[w]hile China has implemented most of its services commitments, it appears that China has not implemented or has only partially implemented its commitments in some service sectors").

(186.) Id. at 8.

(187.) Id. at 92-105 (discussing China's noncompliance progress throughout various service industries).

(188.) Id. at 8-9 (noting that with the cooperation of China's leadership, "the United States is optimistic that concrete progress is again obtainable in 2011").

(189.) See China and the WTO: Assessing and Enforcing Compliance, supra note 180, at 2 (listing the 11 examples that the speaker selected).

(190.) Stewart et al., supra note 176, at 9.

(191.) Report to Congress on China's WTO Compliance, supra note 174, at 17.

(192.) Id.

(193.) Id.

(194.) Id.

(195.) Id.

(196.) Stewart, supra note 23, at 25.

(197.) Is China a Currency Manipulator?, Economist, Oct. 11, 2011, http://www.economist.com/blogs/dailychart/2011/10/america-and-china.

(198.) WTO Membership Rises to 157 with the Entry of Russia and Vanuatu, World Trade Org. (Aug. 22, 2012), http://www.wto.org/english/news_e/pres12_e/pr671_e.htm.

(199.) AD and CVD actions are other remedies that are only available where illegal trade practices exist, and they are unrelated to China's WTO compliance progress. See supra Part II.C (describing AD and CVD actions).

(200.) Ambassador Charlene Barshefsky, WilmerHale, http://www.wilmerhale.com/charlene_barshefsky/(last visited Oct. 11, 2012).

(201.) China's Readmission to the World Trade Organization: Financial Services Agreement: Hearing on Review of 106 H.R. 4444 Before the S. Banking Comm. on Banking, Hous., and Urban Affairs, 106th Cong. 33 (2000) (statement of Honorable Charlene Barshefsky, U.S. Trade Rep.), available at http://banking.senate.gov/ 00_05hrg/050900/barshef.htm.

(202.) Stewart, supra note 23, at 89.

Michael W. Bouts, J.D./M.B.A Candidate, University of Iowa, 2014.
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