The Trade Deal China Wants Isn’t Just Bad, It May Be Illegal
Buying up $1 trillion in goods from the U.S. may sound like a juicy offer, but it could expose Beijing to billions in penalties.
Purchasing more U.S. soybeans will shrink China’s imports from other countries.
Photographer: Daniel Acker/BloombergIn talks earlier this month, Chinese negotiators reportedly offered to eliminate their country’s bilateral trade surplus with the U.S. by buying $1 trillion in American goods over the next few years. It’s unclear whether they were serious, or whether U.S. producers could even meet the additional demand. The biggest problem with such a transactional deal, though, is one no one’s talking about: It would most likely be illegal.
Because China and the U.S. are members of the World Trade Organization, they each have a legal obligation under the WTO treaty not to favor imported products from one WTO member over like imports from any other WTO member. This is the most-favored-nation rule of nondiscrimination -- one of the foundations of the rule-based world trading system. Any trade advantage granted to a particular country must be extended immediately and unconditionally to all other WTO members.