Thread by @ChadBown

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BREAKING
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PROGRESS IN THE US-JAPAN-EU TRILATERAL! 😀

aka, the rules-based way to fix trade problems with China over the LONG-TERM

This is unlikely to make many headlines this week. ☹️

Too bad. Is some of THE MOST IMPORTANT trade news in a while.

trade.ec.europa.eu/doclib/press/i…

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BACKSTORY: One big concern is over Chinese subsidies.

Chinese subsidies are the source of Trump's tariffs on steel, aluminum and solar panels. Not the legal reason, but the underlying problem.

It also relates to Trump's Section 301 tariffs on $360 billion of Chinese goods.

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Coming to agreement on how to deal with China's subsidies are a BIG problem.

The "trilateral" (US, EU, Japan) had been meeting quarterly beginning in December 2017.

They have been trying to agree to new rules the THREE OF THEM could live with, before bringing that to China.

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But with Trump focused on his go-it-alone with China approach, the trilateral stopped meeting. They last issued a joint statement in May 2019.

So today's announcement of resumption is good news.

SHOWING progress is good!

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What the trilateral has done here is to show what is guiding their thinking on new rules for subsidies.

But there is still A LOT of work to be done here.

#tradetwitter can now provide analytical input and feedback to the trilateral on which of these rules makes sense...

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...and #tradetwitter can now also provide analytical input and feedback to the trilateral on which of these rules...

...are likely to result in BAD unintended consequences.

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One proposal shifts the burden of proof from the US to China.

Suppose China doesn't notify a subsidy.

If the US counter-notifies the subsidy, China would have to show that the subsidy is NOT hurting the US.

(Today, the burden is on the US to show the subsidy causes harm.)

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@J_A_Hillman and I have been thinking A LOT about new subsidy rules.

We have written down MANY of those in a new article.

“WTO’ing a Resolution to the China Subsidy Problem,” Journal of International Economic Law.

#tradetwitter - have a look! 👇🏽
piie.com/publications/w…

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Here is the short version of my new JIEL article with @J_A_Hillman

• Improving the WTO Rulebook
• How Big Is The Subsidy Problem?
• The Negotiating Path Forward
• Economics, Not Politics

ENDS /
piie.com/blogs/trade-an…