The China-US Trade Conflict and Its Impact on the World Trade System and the Future of Multilateralism

Abstract

The trade conflict between China and the US has an impact on many levels. The initial discussion was focused on the economic effects both feared and caused by the trade restrictions. This study, however, will go further than an economic-empirical analysis. Rather, it addresses the structural implications of the conflict: as a result of the US blockade of the World Trade Organisation (WTO) Appellate Body, the functioning of the world trade system remains in question. Even though a number of Member States currently participate in a substitute interim dispute settlement system outside the WTO, the future of the world trade system is nonetheless closely tied to a functioning dispute settlement process. For that is the only means by which to guarantee that the contracting parties can trust that their mutually agreed rights and obligations will be respected – and that how dispute settlement will ensure trust in the world trade system as a whole. But what are the prospects for dispute settlement in a situation that is characterized not only by stagnation, but above all by open trade disputes, and for which there is no foreseeable resolution? Are we now witnessing not only a crisis of dispute settlement, but more so, an inability for dispute settlement to function in a multilateral arrangement that lacks a perspective? The author considers the US blockade to be a consequence of the increasing intensification of the global competitive situation, within which the liberalization interests of key actors are going through a transformation. The study will demonstrate how this is leading to more differentiated forms of trade policy, economic and geopolitical integration that operate beyond the previous multilateral liberalization concepts. Nevertheless, the world trade system has an undeniably central role to play in addressing urgent issues of our common future. The author discusses the challenges that lie ahead and asks how further developments can be achieved. World Trade System, Appellate Body, Dispute Settlement, China-US Trade Conflict, Delegation Sovereign Rights, Sovereignty, Decision Making Practice, US Trade Representative, Non-Market Economy, State-Led Economy, Governance, Trade Liberalization, Blockade, Multilateralism, Global Competition