International Law in US-China Relations: Trade Wars and Maritime Rights in the Era of Xi and Trump

Jacques deLisle

In an increasingly fraught US-China relationship, issues of international law have become important in their own right and illustrative of broader patterns. A pair of particularly salient and illuminating arenas are trade (and related economic matters) and maritime rights (including related security issues, especially in the South China Sea). In each of these fields, the Trump administration and the Xi regime have adopted significantly conflicting positions on the content of legal rules, and the United States has not played its customary role as principal patron of a law-based, multilateral order. Alongside these similarities are noteworthy contrasts between the two issue areas. In trade law and related fields, China under Xi has presented itself as a leading protector of the largely liberal existing system, notwithstanding a lengthy and ongoing history of widespread complaints that China does not comply with applicable legal rules. As the United States under Trump has turned its back on a legal and institutional order it had long championed, China has been accruing an option to sustain or undermine the status quo. Recent law of the sea-related events, including the 2016 decision in the Philippines-China arbitration case concerning the South China Sea, have cast China more starkly in the role of scofflaw toward rules that Beijing has long claimed are consistent with its controversial and highly expansive claims to rights over nearby maritime areas. These developments have reinforced concerns that China is challenging legal principles that have served the security interests of the United States and its friends and allies in the region but that the United States has long failed to support fully. Here, too, US choices and actions have expanded China’s options, more so with the Trump administration in power.

In Trump-era frictions between the United States and China, issues of trade and international economic relations and maritime rights and security—ones with significant legal dimensions—emerged early on and often have taken center stage. A favorite theme for candidate Trump was that China was “raping” the US economy and acting in ways that were “unfair” and “illegal” in trade and international economic relations—a polemical and shorthand version of familiar criticisms that encompassed charges that China was not living up to international legal obligations, principally those associated with China’s membership in the World Trade Organization (WTO).1 In one of the more controversial episodes from the transition period, President-elect Trump responded to Beijing’s criticism of his telephone call with Taiwan’s president Tsai Ing-wen with a tweet that set forth his pique at China’s behavior in both economic and maritime areas: “Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the United States doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!”2 Here, too, Trump’s comments resonated with legal questions: currency manipulation and market access are cognizable claims under WTO law and at times have figured prominently in trading partners’ complaints about Chinese laws and policies. In maritime and security affairs, Trump’s words resonated with the notion that China was transgressing legal prohibitions against exercising sovereign powers in foreign or disputed territories or acting in ways that seriously undercut prospects for resolving disputes peacefully—a position made potent and salient by the international arbitration panel’s decision, a few months earlier, in favor of the Philippines in its case against China concerning rights in the South China Sea.

International Economic Relations and Law

Immediately upon taking office, Trump announced that the United States would be opting out of the Trans-Pacific Partnership (TPP)3—a mega-regional trade-plus agreement that President Obama and his administration had pursued and supported as the next major step forward in liberalizing international trade and investment and harmonizing broadly economics-related domestic regulation among TPP members, the original twelve of which covered 40% of global GDP and one-fifth to one-third of international trade.4 As framed by the Obama administration, the drive for the TPP was nothing less than a contest between the United States and China over who would “write the rules”—which were, in the WTO and TPP frameworks, largely legal rules—for the global economy in the 21st century.5  The United States had turned to the TPP framework in part because the WTO had been fading as the institutional locus for generating legal rules to foster a more open and integrated world economy.6

The Trump administration’s turn against a largely liberal, multilateral, and law-centered approach to international economic relations went well beyond scuttling US accession to the TPP, which had already stalled amid rare bipartisan opposition in Congress during the closing months of the Obama administration. Where the United States had been the principal architect and sponsor of the WTO and its less-ambitious postwar predecessor, the General Agreement on Tariffs and Trade (GATT), the Trump era brought an unprecedented assault on the WTO and much of what it has represented. Trump and his administration have expressed a strong preference for bilateral trade agreements, which they see as holding forth the promise of enhancing US negotiating leverage with weaker counterparties, and have condemned universal, plurilateral, and multilateral pacts and institutions as being “unfair” to the United States and to blame for US job losses, trade deficits, and other woes. Trump and administration officials have specifically criticized the WTO for being unfair to the United States but not unfair to China.7 Under Trump, the United States has taken steps that have been especially threatening to the WTO as a legal institution, refusing to approve replacements for departing members of the Appellate Body (thereby putting the WTO’s key legal body on the verge of lacking the quorum required for issuing decisions), and adopting trade-restricting moves that have pitted key WTO parties against one another in heated and high-stakes cases (including disputes over tariffs the United States imposed on steel and aluminum imports).8

Trade measures adopted by the Trump administration, and reactions by targeted states, have escalated toward trade wars—something that Trump has declared “good” and “easy to win.”9  China has been the biggest target of Trump’s trade measures, including some of the most legally controversial ones. Of particular concern, the Trump administration invoked an old, obscure, and rarely used provision in US trade law as the basis for imposing steep tariffs on imported steel (25%) and aluminum (10%), claiming that the levies on imports from Canada and other close allies, as well as from rivals and potential foes such as China, were needed to protect national security by preventing further loss of domestic production capacity for strategically important materials.10 The steel and aluminum measures were the first big salvo in what became a tit-for-tat series of tariffs and threatened tariffs between the United States and China that raised the prospects of a trade war reaching nearly the entirety of bilateral trade in manufactured and agricultural products.11

The Trump-era invocation of national security threats to legitimate legal moves that restricted relatively open economic relations reached more broadly and grew from pre-Trump roots.  Prominent examples include: potentially company-killing restrictions—reversed partly at Xi Jinping’s urging—on exports of key US-made components to Chinese electronics firm ZTE for violating US restrictions on sales to Iran and North Korea; and rules and proposed rules to prohibit purchases of equipment from ZTE and rival Chinese firm Huawei by US government buyers and others spending US government funds, and to press US telecommunications companies not to offer the Chinese companies’ cellphones—based on concerns about hacking.12

In asserting that trade-restricting measures targeting China were warranted and lawful, the Trump administration relied on several grounds in addition to national security. These entailed primarily arguments that China was violating international legal rules and obligations. The claims ranged widely, from long-familiar and legally conventional to novel and legally questionable: China has a large surplus in bilateral trade, which is indicative of unfair trade practices, or, at least, justifies measures to address the imbalance; China maintains an overvalued currency, boosting exports and depressing imports; China provides inadequate protection for US intellectual property (including through coerced transfers of technology), violating WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights) requirements, improperly harming US firms, and unlawfully benefitting Chinese firms; the Chinese government impermissibly subsidizes Chinese firms (especially state-owned ones) through a variety of means (including access to cheap capital); Chinese firms engage in dumping (selling exports below “normal” value) in foreign markets; and China’s industrial policy—including, most prominently, the “Made in China 2025” program—gives unfair and impermissible advantages to Chinese firms in emerging, primarily technology-focused sectors that are vital to future US economic success.13

There is, of course, nothing inherently corrosive, or even unsupportive, of the WTO-centered international legal order in US claims that China has been violating international legal rules and obligations, or in China’s assertions that its policies and actions are lawful and that the US tariffs are not. Many of the Trump-era US complaints reprise ones raised over many years by previous administrations that were much more strongly supportive of the WTO and related international law.14 And the Trump administration itself properly initiated the WTO dispute process against China concerning intellectual property rights protection.15 Nonetheless, its stance departed from past US patterns in several potentially seriously regime-weakening respects. 

First, any meritorious WTO-based or WTO-linked legal claims about China’s behavior risk being overwhelmed by, or lost amid, Trump administration rhetoric that has been hostile to the WTO and skeptical about multilateral institutions—so much so that it has spawned concerns that the United States will withdraw from the WTO, especially if it loses any of the WTO cases arising from Trump’s trade moves and other states’ responses.16 Second, the Trump administration’s simultaneous attack on NAFTA, the EU, and the trade practices of members of those accords has meant that the United States entered the Trump-era disputes with China without the backing it might have had from traditionally allied and like-minded states that share many longstanding US concerns about China and that might have cooperated with the United States to develop and press a more coherent case challenging China under applicable international law (and thereby potentially strengthening the international legal regime for trade). Third, some of the unilateral US moves and steps taken in response by China and other targets flouted WTO rules that call for submitting to formal dispute resolution procedures rather than moving immediately to self-help.

Fourth, and perhaps most fundamentally, the shifting rationales and apparent motivations, and the mix of credible and implausible legal claims, in the Trump administration’s approach have encouraged assessments that international law does unusually little (even by the low standards of normal state practice of international law) to drive, frame, or constrain, the US agenda.17  Although the details can be contentious and the specific cases more or less promising, to assert—as the Trump administration has—that China has failed to meet the requisite standards for protecting foreign, specifically US, intellectual property, or that China engages in impermissible dumping or subsidies, treads a wide and well-worn path in WTO law and dispute resolution.  Relying on national security as a basis for steel and aluminum tariffs (or, perhaps, barriers to market access for telecommunications equipment) is much more problematic, triggering concerns that the United States is engaging in disguised protectionism for domestic industries buffeted by foreign competition in a liberal trading regime and, worse, raising the specter that the United States is pushing a seriously regime-undermining national security exception that would be open to self-serving self-judgment by exception-invoking states.18 Challenges to China’s industrial policies lie somewhere in between. Trump’s occasional claim that China maintains an overvalued currency, although a familiar trope from earlier periods of US-China trade frictions, is empirically questionable today and, at best, provides a shaky basis for a difficult-to-establish claim of currency manipulation as a WTO-violating trade practice. Even more difficult to square with WTO law and kindred international norms is the less fully articulated but seemingly central, mercantilist-style notion in the Trump approach to trade that a large bilateral deficit is per se problematic, and that it is therefore appropriate to demand that China make concessions (or for the US to take its own measures) to close the gap.19

The Trump administration’s approach to trade-related disputes with China threatens to weaken the WTO-centered legal system and international economic law in another, more oblique, but still significant, way. Existing laws and legal institutions are in some respects ill-equipped to deal with policies and behavior—especially from China—that challenge the principles and norms of a liberal international economic order. Many of the foci of US complaints about China, including ones that predate and are likely to outlast the Trump administration, are not effectively reached by existing legal rules or readily achievable alternatives. Existing international economic law is ill-equipped to police phenomena such as: industrial policy to promote the development of emerging sectors (including some forms of state financial support that are not straightforward subsidies); the influence of the party-state (or even party-state-spurred nationalist sentiments) on companies’ (including formally private companies’) business decisions, including where and on what terms to invest abroad and from whom (or when and at what price) to purchase imported goods and material; selective enforcement, or relatively lax or strict enforcement, of regulations such as customs and safety inspections or licensing review that can have a disparate impact harmful to particular foreign firms or sectors; the adoption of more or less strict and probing national security or antitrust review of foreign bids to acquire domestic companies; the pursuit of more of less zealous enforcement of TRIPS-compliant intellectual property laws; and the persistence in practice of something akin to the socialist planning era’s “soft budget constraint” such that large, especially state-linked, companies face less pressure than their foreign competitors to focus only on maximizing profit or share value.20 

The difficulties extend beyond substantive laws to matters of process and remedy. A few examples suggest the broader pattern. The law of the WTO and other trade and economic treaties is not entirely clear or entirely liberal. This creates room for effective lawyering to escape accountability for what may plausibly, and even persuasively, look like legal obligation-violating (and, even more obviously, illiberal and self-serving) national laws, policies, and actions. Much to US chagrin, China has quickly moved along the legal learning curve in bringing and defending cases against the US and others.21 In a deeply globalized and fast-changing international economy, justice delayed may indeed be justice denied. The WTO dispute settlement process is painfully slow, and the more streamlined procedures under other treaties often are not expeditious enough to alleviate concerns that remedies will come long after the damage is done and will provide inadequate recompense. This problem is particularly acute in the context of claims of improper acquisition and use of intellectual property, which has been a major US complaint about China.

Tariffs and other measures targeting imports—which are a principal mechanism of self-help, sometimes legally authorized, and a favored tool of Trump administration policy—are crude and flawed instruments in an international economy characterized by complex global supply and value chains, many of which run through China. Tariffs that target exports from China inflict much of their pain on interests that are not China or Chinese producers. For many manufactured goods exported by China, less than half of the value added is attributable to China. Producers in the United States, Japan, and elsewhere bear a significant share of the cost.22 Foreign-invested (including US-owned) enterprises are disproportionately concentrated in the export sector, which suffers losses from US trade barriers.23 Many Chinese exports to the United States are inputs for US producers or goods for U.S. consumers, with price-increasing tariffs making the former less competitive and the latter less well-off. Retaliatory tariffs by China, of course, harm US exporters.24

The complexity of the task and the conflicting interests of numerous states and diverse non-state stakeholders are inherent and formidable impediments to reforms to keep, or make, the legal regime for an open and integrated international economy effective. The lack of a clear agenda for reform from the Trump administration—beyond a desire to “shake up” a troubled system—compounds these difficulties.25 Given the limitations of existing rules and institutions as means to address US concerns—including clearly legitimate ones—about Chinese behavior, a downward spiral is easily imaginable, with an innately skeptical or hostile Trump administration growing increasingly frustrated with a system that does not produce satisfying outcomes or does not do so expeditiously.

The Trump administration’s sharp and possibly deepening turn against the WTO and other multilateral international economic legal institutions and rules, combined with other significant and possibly worsening troubles besetting the established regime, are helping to give China valuable and relatively low-cost options in this crucial issue area. With the United States departing from its traditional support for the status quo and a liberal legal order, China has been relatively free to declare itself the principal exponent of economic globalization.26 With the TPP shaken by the Trump administration’s rejection, the Chinese-led Regional Comprehensive Economic Partnership (RCEP) looms larger—and its more limited liberalization is less of a liability for China—on the international economic legal scene than would have been the case if the TPP had not been reduced to the more modest, Japanese-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). With US aversion—predating Trump and strongly grounded in Congress, but extended under Trump—toward reforming the International Monetary Fund and the World Bank to grant China and other developing countries voting shares commensurate with their economic importance and to give the institutions resources adequate for current and likely future needs, China has taken a leading role in establishing new institutions. Examples include the Asian Infrastructure Investment Bank (AIIB), the New Development Bank (formerly the BRICS Bank), and aspects of the Belt and Road Initiative (BRI). China has been able to present these initiatives as consistent with, and, indeed, vitally supportive of, existing institutions and rules.

It may be the case that China’s claims to support economic globalization, a largely liberal international order for trade and investment, the WTO, and so on are true. And it may be that the early practices of the AIIB—co-financing with established institutions and largely adopting the standards of other multilateral development banks—indicate that new Chinese-led institutions will help sustain the status quo. But the US posture and practice, especially and increasingly under Trump, are granting Beijing a low cost option.27 Because Beijing can pursue its agenda in these economic fields without the scrutiny, criticism, and rivalry that previously would have been expected, and likely forthcoming, from Washington, China has more latitude to develop the means to pursue a revisionist agenda, should it intend or choose to do so, without having its agenda revealed or its choices forced in the near term.

The South China Sea, Regional Security, and International Law

Much as the WTO is at the center of a troubled US-China economic relationship and its legal aspects, the United Nations Convention on the Law of the Sea (UNCLOS) regime is a focus of discord in regional security relations and their legal dimensions. Here, too, the United States and China have long pressed conflicting views on the content of relevant law. Beijing asserts highly expansive rights over the South China Sea region.28 China claims sovereignty over all islands and marine formations (and perhaps the ocean space as well) within the notorious nine-dash line that encloses almost all of the South China Sea and runs close to the main coastlines of several other states that assert their own, conflicting claims. China controversially characterizes, if often only implicitly, the islands and lesser features—and scattered clusters of features—inside the line as having strikingly high status in the law of the sea’s hierarchy of land forms capable of generating authority over maritime zones, including twelve-nautical-mile territorial seas and 200-nautical-mile Exclusive Economic Zones (EEZ). To the extent that China’s claims do not rest on the radical and never more-than-ambiguously embraced claim of sovereignty over the sea itself, such claims about the status of land features are the legally indispensable underpinnings for China’s assertion of rights over much of the contested maritime area, including the right to undertake the massive land reclamation that has given China control over, and made possible its construction of military facilities in, the southern reaches of the disputed zone. China also invokes, often only tacitly, the contestable principles of equidistance (between small features claimed by China and larger ones belonging to neighboring states), prescriptive rights (rooted in other states’ purported acquiescence in Chinese claims and exercises of control), or historic rights (of unspecified dimensions) as bases for China’s jurisdiction over areas far from China and its major islands but close to the principal landmasses of adjacent states.

Within these geographic zones, China claims extraordinarily capacious rights. Although Beijing accepts the law of the sea principle that foreign warships enjoy rights of innocent passage through China’s claimed territorial seas, China makes the controversial assertion that it can require such ships to give notice, receive permission, and follow Chinese laws. China asserts not only the well-accepted rights to regulate and restrict the exploitation of economic resources and scientific research in its claimed EEZs (and the underlying continental shelf) but also makes the much more contested claim that it can impose restrictions in its claimed EEZs (and, for some purposes, beyond) to protect China’s national security interests, including prohibiting foreign militaries’ surveillance activities or other conduct that transgresses China’s interpretation of other states’ obligations to exercise their law of the sea rights consistent with requirements of peaceful use of the seas, and to show “due regard” for China’s rights and interests as a coastal state. Beijing also maintains that it has vague but extensive “historic rights” within the nine-dash line that sweep well beyond the narrow categories (such as traditional fishing rights) that are part of the generally accepted law of the sea.

On nearly every point, the United States has countered this “Chinese lake” portrayal of the South China Sea (and China’s more general “closed seas” position) with an “open seas” conception of relevant law: the nine-dash line can signify nothing more than a claim that China has territorial sovereignty over any landforms within it; the marine formations within the line are much less than China assumes or asserts, being too insubstantial to be sovereign territory at all or to generate more than a territorial sea, or being the object of conflicting and unsettled claims of sovereignty by two or more states and thus not available to China (or others) as baselines from which to draw maritime zones; much of the South China Sea therefore remains part of the high seas, open to free navigation and peaceful use by all; and China’s rights to regulate or restrict foreign navies’ and other vessels’ activities in its territorial sea, EEZ, or other areas in the South China Sea cannot extend beyond the limited rights of coastal states that are generally, even universally, accepted as part of the international law of the sea.29

This legal face-off, which had remained stable for a decade or more and through several incidents at sea between US and Chinese navy vessels and rising tensions over China’s island-building, shifted after mid-2016. A few months before Trump’s election, the claim that China’s positions and actions were consistent with international law suffered a major blow when an ad hoc international arbitration panel in the Hague issued a sweeping decision in a long-pending case brought by the Philippines against China concerning a large swath of the South China Sea.30 The panel rejected key Chinese claims, finding that: the nine-dash line conferred upon China no rights greater than it would enjoy by application of ordinary UNCLOS rules, which base rights to maritime zones on sovereignty over land; none of the landforms in the relevant area were islands capable of generating a 200-mile EEZ; contested marine features, including some areas where China had engaged in its controversial island-building, were mere low tide elevations not independently susceptible to claims of territorial sovereignty or capable of anchoring maritime zones; China enjoyed no additional historic rights; and China’s land-reclamation activities severely violated environmental obligations under UNCLOS.

In addition to putting core, longstanding Chinese positions on the wrong side of an authoritative and final determination of substantive law and its application to the facts of the case, the arbitration and its aftermath cast China in the role of a scofflaw on matters of process as well. China’s foreign ministry declared the arbitral award “just a piece of waste paper” and a “so-called” award which China would not, and need not, recognize or implement.31 In part, this response was rooted in China’s earlier refusal to participate formally in the arbitral proceedings on the grounds that the tribunal lacked jurisdiction because, in China’s view, the issues inevitably addressed questions of territorial sovereignty (which are beyond the competence of a panel constituted under UNCLOS) and other matters (including maritime boundary and zone delimitation, historic title, and military and law enforcement activities) that China permissibly declared outside the scope of its submission to UNCLOS dispute resolution jurisdiction. The tribunal rejected all of these arguments.32

After the arbitration decision, the United States seemingly would have had a promising opportunity to press its long-held positions rejecting China’s claims in the South China Sea and favoring its own, pro-open seas views on the law of the sea, but its ability to do so was undercut by several factors, some long present and some made worse by Trump-era policy. First, the United States, unlike China, has not joined UNCLOS despite efforts (albeit anemic ones) by several presidents. It, therefore, has had to frame its arguments in terms of the customary international law of the sea, arguing that it closely tracks the substantive provisions of UNCLOS. While this is an eminently plausible argument, it cedes the moral-legal high ground to China and gives Beijing a potent debating point to counter US complaints about China’s failure to conform to international law of the sea rules. The challenges associated with the less-than-full US engagement with the UNCLOS regime became all the more acute in the context of the Philippines-China arbitration because the dispute resolution provisions of UNCLOS (unlike the substantive provisions) stand apart from customary international law, and because Chinese responses to the US criticism of China’s refusal to participate in the arbitration invoked US behavior in a case brought by Nicaragua over US support for the insurgent Contras. (The United States had participated and lost on issues of jurisdiction, refused to participate on the merits, and then withdrew its general submission to the jurisdiction of the International Court of Justice.)33 

Under Trump, this weak point for the United States has become weaker still. The administration shows no signs of equaling its predecessors’ tepid support for Senate ratification of UNCLOS. And the general Trump era decline in rhetorical and practical support for international law and multilateral and UN-linked legal regimes has not explicitly spared UNCLOS and thus has cast a pall over US engagement with the law of the sea regime.34

Second, US pushback against China has been dependent on alignment with regional states. Much of the US argument against excessive maritime claims by China has rested on general law of the sea principles that any state can assert, but claims to rights in the South China Sea have been closely bound up with disputes concerning sovereignty over territory, and those disputes are entirely between China and its weaker neighbors, not between China (or anyone else) and the United States. When the Philippines initiated the arbitration proceeding against China, the Obama administration supported the move and when the award was issued called upon China to accept the outcome. The United States thus adopted a position that resonated with its earlier calls on all South China Sea disputants to respect international law and limit themselves to peaceful means, and signaled de facto US support for the Philippines—so much so that Beijing alleged that Washington was the black hand behind Manila’s litigious moves.35 By the time the decision was issued, Rodrigo Duterte had succeeded Benigno Aquino as president of the Philippines, and promptly put the arbitration decision “in the back seat.”36 With the Philippines largely abandoning its victory (perhaps sensibly, given China’s reaction) and Beijing making clear that it would not obey the decision, Vietnam, Malaysia, and other regional states that had contended with China over legal rights in the South China understandably showed little appetite for initiating follow-on arbitration cases.

This left the United States with, at best, reluctant allies in a contest with China over legal and related security issues where it was untenable for the United States to take a more forward and forceful position than the more immediately affected and at-risk frontline states. This difficulty, too, increased with Trump’s ascension. Although the United States would not have had much leverage to dissuade Duterte from accommodating China, Trump’s affinity for authoritarian rulers further reduced the likelihood that Washington would exert pressure on Manila. More fundamentally, from his early days as a candidate, Trump had sown doubt about the stability and reliability of US security commitments to allies and partners in the region. Although such concerns predated Trump and had not been fully assuaged by the Obama administration’s “pivot” or “rebalance” to Asia, Trump’s victory added to the worries with an avowedly “America First” foreign policy, and oscillations between calls for a military build-up and pugnacious threats (including toward China and North Korea), on the one hand, and talk of reducing regional military commitments to cut costs and making deals with adversaries or potential adversaries (such as North Korea and China), possibly at the expense of traditional allies and friends (such as Japan and Taiwan), on the other hand. To the extent that traditional US commitments are newly in question, regional states that share US views about China’s legal claims and concrete actions in the South China Sea have new reasons to be less assertive in resisting and challenging China on intertwined issues of international law and regional security. To the extent that US-China relations seem headed toward sustained hostility, many regional states can be expected to follow the well-worn path of seeking to avoid taking sides.37

Third, the US ability to use the arbitration decision to push for similar views of relevant law, and against the alternative version embraced by China and rejected by the tribunal, suffered from several problematic features of the legal regime. The tribunal’s decision was final in the sense that it was binding and could not be appealed, and it was sure to be influential on many long-contested law of the sea issues. But it was not necessarily the last word. In the non-hierarchical system of international tribunals, another court or arbitration panel would not be bound by the Philippines-China decision and could reach different legal conclusions. Although staffed by eminent members, the Philippines-China panel was not an especially high-status body. It was an ad hoc panel whose decision was issued under the auspices of the Hague’s Permanent Court of Arbitration (PCA). It was not UNCLOS’s International Tribunal for the Law of the Sea, or the International Court of Justice.  Moreover, its holdings on major legal issues were far from uncontroversial, especially its setting a very high bar for an EEZ-generating island.38 

More broadly, some points of disagreement over relevant legal issues between the United States and China are unclear or contested. For example, criteria for determining sovereignty over small landforms and demarcating maritime zones among neighboring states with overlapping claims are complex and somewhat indeterminate. So, too, China’s claims of expansive powers to regulate activities in territorial seas and to protect security-related rights in EEZs are shared by a significant number of other states, including in some respects by rival claimant states in the South China Sea region.39 While these features would have muddied any US argument calling on China to accept and follow international law as set forth in the arbitration award, any such argument became still more difficult under Trump. Here, again, the overall indifference or disdain toward international law and legal institutions, including institutions for dispute resolution, is a significant obstacle. But there are more fine-grained concerns as well. For example, one of the more striking features of the arbitration panel’s decision was its emphasis on China’s violation of marine environmental obligations under UNCLOS. The United States might have made more of this if it were not led by a president whose earliest moves in office included making the United States the only country in the world to reject the Paris climate accords.

The long-ambivalent US engagement with UNCLOS, along with ambiguities in the law of the sea and the stature of dispute resolution processes and institutions, have combined with additional developments under Trump to give China greater options than it otherwise might have had, especially in the aftermath of the Philippines-China arbitration decision. China is likely to face weaker, sparser, and less formal challenges from the United States and regional states to the legality of its behavior in the South China Sea, better enabling it to continue to assert that its extension of control and resistance to others’ activities in the contested maritime region are lawful.

Shifting interests or perceived interests may continue to reshape the legal-economic and legal-political landscape for the United States and China in trade/economic and maritime/security affairs. Radical change seems unlikely in the near term. The terrain looks somewhat different in the two issue areas. In both states., albeit for different reasons, there are growing doubts that the status quo, largely liberal, and law-governed order for the international economy serves national economic interests. The waning of expectations that China would continue to converge with global economic norms and rules, and that the United States would continue to support and underwrite the postwar international economic regime, did not begin with Xi or Trump, but it has surged under both. The long-established US reluctance to support fully a largely pro-open seas international legal regime, particularly on security issues,40 that has aligned with US interests as a major force-projecting state seems unlikely to abate—all the more so while Trump is in power and, in the longer run, as US military dominance declines. China’s accretion of geographically far-flung interests and its acquisition of greater capacity to project force across great distance have done remarkably little to move China from its defensive crouch of resisting pro-open seas norms, asserting expansive coastal state rights, and seeking to retain or develop legal cover for assertive postures in territorial and related maritime disputes with weaker neighbors. In both areas of law, US moves, especially under Trump, have given China options to postpone hard choices between supporting and challenging the status quo, or to delay revealing a provocatively revisionist agenda.

1. Jeremy Diamond, “Trump: ‘We Can’t Continue to Allow China to Rape Our Country,’” CNN, May 2, 2016, https://www.cnn.com/2016/05/01/politics/donald-trump-china-rape/index.html; “Full Transcript: Donald Trump’s Jobs Plan Speech,” Politico, June 28, 2016, https://www.politico.com/story/2016/06/full-transcript-trump-job-plan-speech-224891

2. Donald Trump, Facebook posting, December 4, 2016, https://www.facebook.com/DonaldTrump/posts/10158229642705725; Ros Krasny, “Trump Takes on China in Tweets on Currency, South China Sea,” Bloomberg, December 5, 2016, https://www.bloomberg.com/news/articles/2016-12-04/trump-takes-on-china-in-tweets-about-currency-southchina-sea.

3. “Presidential Memorandum Regarding Withdrawal of the United States from the Trans-Pacific Partnership Negotiations and Agreement,” January 23, 2017, https://www.whitehouse.gov/presidential-actions/presidential-memorandum-regarding-withdrawal-united-states-trans-pacific-partnership-negotiations-agreement/

4. World Bank. “Potential Implications of the Trans-Pacific Partnership,” Global Economic Prospects, January 2016, http://pubdocs.worldbank.org/en/287761451945044333/Global-Economic-Prospects-January-2016-Highlights-Trans-Pacific-Partnership.pdf; Lydia DePillis, “Everything You Need to Know about the Trans-Pacific Partnership,” The Washington Post, December 11, 2013; Kevin Granville, “What is TPP? Behind the Trade Deal that Died,” The New York Times, January 23, 2017.

5. “President Obama: ‘Writing the Rules for 21st Century Trade,’” The White House, February 18, 2015, https://obamawhitehouse.archives.gov/blog/2015/02/18/president-obama-writing-rules-21st-century-trade

6. See, for example, Gary Clyde Hufbauer and Cathleen Cimino-Isaacs, “How Will TPP and TTIP Change the WTO System? Journal of International Economic Law, Vol. 18, No. 3 (2015): 679-696.

7. See, for example, Donald J. Trump on Twitter, April 6, 2018, https://twitter.com/realDonaldTrump/status/982264844136017921; Jessica Dye, “Trump Calls WTO ‘Unfair’ to US in Latest Trade Barb,” Financial Times, April 6, 2018; Eli Watkins, “Draft Admin Proposal Would Allow Trump Ignore Key WTO Principles.” CNN, July 2, 2018, https://www.cnn.com/2018/07/01/politics/trump-world-trade-organization-tariffs/index.html.

8. Rosalind Mathieson, “U.S. Block of WTO Appeals Body Compromises System, Director Says,” Bloomberg, November 8, 2017, https://www.bloomberg.com/news/articles/2017-11-08/u-s-block-of-wto-appeals-body-compromises-system-azevedo-says; Tetyana Payosova, Gary Clyde Hufbauer and Jeffrey J. Schott, “The Dispute Settlement Crisis at the World Trade Organization,” Peterson Institute for International Economics Policy Brief, No. 18-5 (March 2018); Office of the United States Trade Representative, United States Challenges Five WTO Members Imposing Illegal Tariffs Against U.S. Products, July 2018, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/united-states-challenges-five-wto; Alexandra Ma, “China and the EU are Teaming Up to Fight Back Against Trump’s Trade War,” Business Insider, June 26, 2018, https://amp.businessinsider.com/china-eu-teaming-up-against-trump-in-trade-war-2018-6
Such moves are not unique to the Trump administration. The US had begun delaying appointments and reappointments in an effort to force US-favored reforms before Trump came to office. And US policies that had little hope of surviving WTO scrutiny have been adopted under earlier administrations, for example when George W. Bush imposed, and then rescinded, steel tariffs.

9. Donald J. Trump on Twitter, March 2, 2018, https://twitter.com/realDonaldTrump/status/969525362580484098.

10. “Presidential Proclamation on Adjusting Imports of Steel into the United States,” March 8, 2018, https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states/; “Presidential Proclamation on Adjusting Imports of Aluminum into the United States,” March 8, 2018, https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states/
The relevant statutory provision is Section 232 of the Trade Expansion Act of 1962.

11. Chad P. Brown and Melina Kolb, “Trump’s Trade War Timeline: An Up-to-Date Guide,” Peterson Institute for International Economics, August 15, 2018, https://piie.com/system/files/documents/trump-trade-war-timeline.pdf.

12. Kate O’Keeffe and Siobhan Hughes, “Congress Ends Bid to Undo Trump Deal to Save China’s ZTE,” The Wall Street Journal, July 20, 2018; Thomas Heller, “Trump Bans Huawei and ZTE,” Channelnews, August 14, 2018, https://www.channelnews.com.au/trump-hits-huawei-and-zte-with-ban/; Todd Shields, “Broadband Leaders Push Back on Proposed Ban on ZTE, Huawei Gear,” Bloomberg, June 4, 2018, https://www.bloomberg.com/news/articles/2018-06-04/broadband-leaders-push-back-on-proposed-ban-on-zte-huawei-gear. Disclosure: the author submitted an expert report on behalf of Huawei in response to a report submitted by an industry group in support of the proposed FCC rule discussed in sources cited in this note.

13. See, for example, “President Donald J. Trump is Confronting China’s Unfair Trade Policies,” White House, May 29, 2018, https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-confronting-chinas-unfair-trade-policies/.

14. See, generally, Wayne M. Morrison, “China-U.S. Trade Issues,” Congressional Research Service, RL 33536, July 6, 2018, https://fas.org/sgp/crs/row/RL33536.pdf; Office of the United States Trade Representative, Pending WTO Disputes, https://ustr.gov/issueareas/enforcement/dispute-settlement-proceedings/wto-dispute-settlement/pending-wto-disputes; Disputes Sorted by Respondent—China, https://ustr.gov/issue-areas/enforcement/dispute-settlement-proceedings/wto-disputesettlement/disputes-sorted-respo.

15. Office of the United States Trade Representative, Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974, March 22, 2018, https://ustr.gov/sites/default/files/enforcement/301Investigations/301%20Draft%20Exec%20Summary%203.22.ustrfinal.pdf; United States Files WTO Complaint on China’s Protection of Intellectual Property Rights, World Trade Organization, March 26, 2018, https://www.wto.org/english/news_e/news18_e/ds542rfc_26mar18_e.htm.

16. Carol Schaeffer, “Donald Trump Tells Aides He Wants to Withdraw US from WTO, Reports Say,” Independent, June 29, 2018; Ana Swanson, “Once the W.T.O.’s Biggest Supporter, U.S. is its Biggest Skeptic,” The New York Times, December 10, 2017(quoting Trump trade advisor statement, “On China….[w]e can go to the W.T.O. and file more trade cases. And if they don’t work with us, we can leave the W.T.O.”); Gabby Morrongiello, “Trump Threatens to Leave the WTO If ‘They Don’t Treat Us Properly,’” Washington Examiner, July 2, 2018 (quoting Trump).

17. See, for example, Sourabh Gupta, “Trump’s Tariff Overreach Jeopardises International Law,” East Asia Forum, July 16, 2018, http://www.eastasiaforum.org/2018/07/16/trumps-tariff-overreach-jeopardises-international-law/; Edward Alden, “Trump, China, and Steel Tariffs: The Day the WTO Died,” Council on Foreign Relations, March 9, 2018, https://www.cfr.org/blog/trump-china-and-steel-tariffs-day-wto-died; Martin Hesse, “Back to the Jungle: WTO Faces Existential Threat in Times of Trump,” Spiegel, June 30, 2018, http://www.spiegel.de/international/world/world-trade-organization-in-trouble-amid-trump-trade-war-a-1215802.html.

18. Douglas A. Irwin, “The False Promise of Protectionism: How Trump’s Trade Policy Could Backfire,” Foreign Affairs, Vol. 96, No. 3 (2017): 45-56; Phil Levy, “What Does Trump Really Want on Trade? It’s Time to Take Him Literally,” Forbes, July 23, 2018, https://www.forbes.com/sites/phillevy/2018/07/23/three-takes-on-trump-trade-policy/#27f390e27ff1; Ana Swanson and Jack Ewing, “Trump’s National Security Claim for Tariffs Sets Off Crisis at WTO,” The New York Times, August 12, 2018. Ana Swanson and Jack Ewing, “Trump’s National Security Claim for Tariffs Sets Off Crisis at WTO,” The New York Times, August 12, 2018.

19. To be sure the mere existence of a large bilateral deficit has not been a factor in US legal arguments or detailed policy analyses under Trump, but it has loomed large in informal presidential statements and is one of the elements in the White House statement cited above, “President Donald J. Trump is Confronting China’s Unfair Trade Policies.” Divergences between Trump’s statements and more structured and conventional administration policies are a recurring characteristic of Trump era foreign policy, perhaps most notably toward Russia. As the case of Russia dramatically illustrates, however, presidential rhetoric that diverges from concrete policy still matters. At a minimum, it contributes to the confusion abroad concerning US policy agenda, which is discussed below.

20. For discussions of some of these phenomena and the difficulty of addressing them through WTO law, see Mark Wu, “The ‘China, Inc.’ Challenge to Global Trade Governance,” Harvard International Law Journal, Vol. 57, No. 2 (2016): 261-324; and Wentong Zheng, “Trade Law’s Responses to the Rise of China,” Berkeley Journal of International Law, Vol. 34, No. 2 (2016): 109-158.

21. See Gregory Shaffer and Henry S. Gao, “China’s Rise: How It Took on the U.S. at the WTO,” University of Illinois Law Review (2018): 115-184.

22. Dongwei Wen, “Domestic Value Added in China’s Exports to the World and Its Partners,” Chinese Economy, Vol. 51, No.1 (2018): 45-68; David Dollar, “Global Value Chains Shed New Light on Trade,” Brookings Institution, July 10, 2017, https://www.brookings.edu/blog/order-from-chaos/2017/07/10/global-value-chains-shed-new-light-on-trade/.

23. Ministry of Commerce, People’s Republic of China, “Official from the Department of Foreign Trade Comments on China’s Foreign Trade in January 2018,” February 12, 2018, http://english.mofcom.gov.cn/article/newsrelease/policyreleasing/201802/20180202712202.shtml (stating more than 40% of exports are produced by foreign-invested enterprises); “China Export Surge Highlights Trump’s Cause as Tariffs Readied,” Bloomberg, March 7, 2018, https://www.bloomberg.com/news/articles/2018-03-08/china-export-growth-surged-in-february-as-imports-moderated

24. See generally, Annie Lowrey, “How Much Damage Will Trump’s Trade War Do?” Atlantic, July 16, 2018, https://www.theatlantic.com/business/archive/2018/07/the-costs-of-trumps-trade-war/565208/; Samuel Rines, “How the Trade War Could Backfire and Cost America its Economic Security,” National Interest, July 24, 2018, https://nationalinterest.org/feature/how-trade-war-could-backfire-and-cost-america-its-economic-security-26716.

25. Although defenders of Trump’s approach to trade reject this characterization, the lack of a clear, coherent, and consistent strategy is evident and widely perceived. As noted earlier, some of the major components of Trump’s rhetoric are not reflected in concrete policy priorities, and official White House policy statements are a grab bag or dog’s breakfast of complaints about China’s economic policies and behavior. Chinese policy analysts complain that they do not know what the US administration wants. (Author’s interviews.) A publicly reported shouting fight over China trade policy issues between two of the administration’s senior foreign economic policy  officials during a negotiating trip to Beijing confirmed this impression, Lachlan Markay and Asawin Suebsaeng, “Trump Advisors Steve Mnuchin and Peter Navarro Got into a Profanity-Laced ‘Screaming Match’ on the China Trip,” Daily Beast, May 16, 2018, https://www.thedailybeast.com/trump-advisers-steve-mnuchin-and-peter-navarro-got-into-a-profanity-laced-screaming-match-on-the-china-trip.; WTO leaders similarly have recently expressed frustration that US goals under the Trump administration for WTO reform are opaque. See Swanson and Ewing, “Trump’s National Security Claim for Tariffs Sets Off Crisis at W.T.O.” (quoting former WTO Director General Pascal Lamy, “When we ask what’s their [that is, the Americans officials’] plan, their answer is they don’t know.”)

26. See, for example, “China’s Xi Jinping Defends Globalization from the Davos Stage,” World Economic Forum, January 17, 2017, https://www.weforum.org/agenda/2017/01/chinas-xi-jinping-defends-globalization-from-the-davos-stage/; Peter Martin and Keith Zhai, “Xi Mounts Fresh Defense of Globalization in Contrast to Trump,” Bloomberg, November 10, 2017, https://www.bloomberg.com/news/articles/2017-11-10/xi-mounts-fresh-defense-of-globalization-in-contrast-to-trump (2017 APEC Forum).

27. Jacques deLisle, “China’s Rise, the U.S., and the WTO: Perspectives from International Relations Theory,” University of Illinois Law Review (2018): 57-71; Natalie Lichtenstein, A comparative Guide to the Asian Infrastructure Investment Bank (New York: Oxford University Press, 2018).

28. Jacques deLisle, “From Accepting to Challenging the International Law of the Sea: China and the South China Sea Disputes,” in Chang-fa Lo, Nigel N.T. Li and Tsai-yu Lin, eds. Legal Thoughts between the East and the West in the Multilevel Legal Order (Singapore: Springer, 2016), pp. 255-276;  Zhiguo Gao and Bing Bing Jia, “The Nine-Dash Line in the South China Sea: History, Status, and Implications,” American Journal of International Law, Vol. 107, No. 1 (2013): 98-123.

29. See United States Department of State, Bureau of Oceans and International Environmental and Scientific Affairs, Limits in the Seas No. 143, China: Maritime Claims in the South China Sea, December 5, 2014, http://www.state.gov/documents/organization/234936.pdf

30. PCA Case No. 2013-19, South China Sea Arbitration between the Republic of the Philippines and the People’s Republic of China, Award, 12 July 2016.

31. Vice Foreign Minister Liu Zhenmin at the Press Conference on the White Paper Titled China Adheres to the Position of Settling Through Negotiation the Relevant Disputes Between China and the Philippines in the South China Sea, July 13, 2016, http://www.fmprc.gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t1381980.shtml; Yang Jiechi Gives Interview to State Media on the So-Called Award by the Arbitral Tribunal for the South China Sea Arbitration, July 16, 2016,  http://www.chinaembassy.org/eng/zt/abc123/t1382060.htm

32. PCA Case No. 2013-19, South China Sea Arbitration between the Republic of the Philippines and the People’s Republic of China, Award on Jurisdiction and Admissibility, 29 October 2015; and PCA Case No. 2013-19, South China Sea Arbitration between the Republic of the Philippines and the People’s Republic of China, Award, 12 July 2016.

33. Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Jurisdiction and Admissibility, Judgment, I.C.J. Reports 1984, p. 392; Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment. I.C.J. Reports 1986.

34. See generally, Harold Hongju Koh, “The Trump Administration and International Law,” Washburn Law Journal, Vol. 56 (2017): 413-469; Jack Goldsmith, “The Trump Onslaught on International Law and Institutions,” Lawfare, March 17, 2017, https://www.lawfareblog.com/trump-onslaught-international-law-and-institutions; Roncevert Ganan Almond, “U.S. Ratification of the Law of the Sea Convention: Measuring the Raison d’État in the Trump Era,” The Diplomat, May 24, 2017, https://thediplomat.com/2017/05/u-s-ratification-of-the-law-of-the-sea-convention/.

35. For statements supportive of the arbitration process and its outcome, see “Remarks by President Obama and President Benigno Aquino III of the Philippines in Joint Press Conference,” White House, April 28, 2014, https://obamawhitehouse.archives.gov/the-press-office/2014/04/28/remarks-president-obama-and-president-benigno-aquino-iii-philippines-joi; John Kirby, Press Statement, Assistant Secretary and Department Spokesperson, Bureau of Public Affairs, 12 July 2016, https://ph.usembassy.gov/statementusdepartmentstatespokespersonjohnkirbydecisionphilippineschinaarbitration/ (“the Tribunal’s decision is final and legally binding on both China and the Philippines. The United States expresses its hope and expectation that both parties will comply with their obligations”). For earlier, more general statements of US policy, see Hillary Clinton Statement on the South China Sea, July 2011, https://2009-2017.state.gov/secretary/20092013clinton/rm/2011/07/168989.htm; Remarks at Press Availability (Hillary Clinton), July 23, 2010 http://china.usc.edu/remarks-press-availability-secretary-clinton-july-23-2010; On Chinese allegations concerning the US role, see “Yang Jiechi Gives Interview to State Media” (“Certain countries outside the region have attempted to deny China’s sovereign rights and interests in the South China Sea through the arbitration.”); “Abuse of International Law Impacts International Order,” Renmin Ribao, July 12, 2016 (blaming Western forces led by the United States for manipulation of arbitration and international law more generally).

36. Benjamin Kang Lim, “Philippines’ Duterte Says S. China Sea Arbitration Case to Take ‘Back Seat,’” Reuters, Oct. 19, 2016, https://www.reuters.com/article/us-china-philippines-idUSKCN12J10S;  Statement of Foreign Secretary Perfecto Yasay on the West Philippine Sea arbitration case The Republic of Philippines v. The People’s Republic of China, Department of Foreign Affairs, Pasay City, July 12, 2016, http://globalnation.inquirer.net/140968/full-text-dfaforeign-affairs-perfecto-yasay-west-philippine-sea.

37. See National Security Strategy of the United States of America, December 2017, p. 46 (“China’s infrastructure investments and trade strategies reinforce its geopolitical aspirations. Its efforts to build and militarize outposts in the South China Sea endanger the free flow of trade, threaten the sovereignty of other nations, and undermine regional stability.”)

38. Jacques deLisle,” Political-Legal Implications of the July 2016 Arbitration Decision in the Philippines-PRC Case Concerning the South China Sea,” Asian Yearbook of International Law, Vol. 21 (2015/2018): 49-82; Feng Zhang, “The Paradox at the Heart of the South China Sea Ruling,” Foreign Policy, July 28, 2016, https://foreignpolicy.com/2016/07/28/can-china-actually-be-benefiting-from-south-china-sea-ruling-paradox-hague-philippines/; Ankit Panda, “5 Takeaways: A Closer Look at the Historic South China Sea Arbitration Award,” The Diplomat, July 13, 2016, https://thediplomat.com/2016/07/5-takeaways-a-closer-look-at-the-historic-south-china-sea-arbitration-award/.

39. See Jacques deLisle, “Troubled Waters: China’s Claims and the South China Sea,” Orbis, Vol. 46, No. 4 (2012): 608-642; and Jacques deLisle, “China’s Territorial and Maritime Disputes in the South and East China Seas: What Role for International Law?” in Jacques deLisle and Avery Goldstein, eds., China’s Global Engagement (Washington, DC: Brookings, 2017), pp. 235-290.

40. The substantive law of the sea principles embodied in UNCLOS (as well as customary international law) has been even more closely aligned with US interests than the shorthand term “open seas” regime would suggest. US interests as a global power with a dominant navy have indeed been well served by a regime that greatly limits the rights of coastal states to exclude foreign military craft. As a major trading nation, the United States has similarly benefited from “open seas” norms for maritime trade. At the same time, it also has been a major beneficiary of more “closed seas” provisions (principally for the EEZ and continental shelf)—which it initially resisted—that give the United States extensive jurisdiction over vast and valuable ocean and seabed resources adjacent to its extraordinarily long coastline.

#BRI #CPTPP #Made in China 2025 #RCEP #South China Sea #TPP #UNCLOS #WTO