Yesterday the United States announced two new WTO cases against China (for the announcement, click here). The timing of these cases is no doubt related to the hearings being held in Congress this week about China’s exchange rate policies and how to respond, either via legislation, a multilateral initiative, or something else (such as Fred Bergsten’s suggestion of intervening in exchange markets).
Bring these cases “demonstrates” the USG is proactively taking steps to counter unfair Chinese behavior. It’s also telling that the first case is in steel, which has been leading the charge for a legislative solution to the RMB.
Beyond the timing and immediate political rationale, both cases are quite interesting. The US steel industry has successfully initiated a handful of trade remedies cases against China over the years. The Chinese case on electrical steel seems in part a direct response to some of those cases. Moreover, this was the first time China simultaneously launched an antidumping and counterveiling duty (anti-subsidy) case against the same product. China had been quite upset the US had brought such “dual anti” (shuangfan) cases against it, and this was China’s way of saying, “if you can do that, so can we.” Tellingly, although Russian firms were also accused of dumping electrical steel, they were not charged with using illegal subsidies. This is the second case brought against China accusing it of misusing its own fair trade laws to unfairly block imports; the first was brought by the EU in May 2010 in regards to China's antidumping tariffs raised against EU "iron and steel fasteners," aka screws.
I know less about the electronic payment services case, which asserts that China Union Pay (CUP) has a monopoly which violates China’s commitments under the General Agreement on Trade in Services. It appears, though, that in this sector foreign credit card companies have made some recent inroads into the Chinese market. This leads me to believe that USTR is pushing on an open door in this case, and we could expect to see a negotiated outcome which removes CUP’s monopoly, at least on paper.