Section 421: China's WTO Noncompliance and the Protection of U.S. Corporate Interests

By Bouts, Michael W. | Journal of Corporation Law, October 1, 2012 | Go to article overview

Section 421: China's WTO Noncompliance and the Protection of U.S. Corporate Interests


Bouts, Michael W., Journal of Corporation Law


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. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Section 421: China's WTO Noncompliance and the Protection of U.S. Corporate Interests
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.