Stewart on Wu, “China, Inc.”

Mark Wu, Assistant Professor of Law at Harvard Law School, joined us for the latest meeting of the Sawyer Seminar on Corporations and International Law this past Friday, March 2.  He discussed his paper, “China, Inc.,” as well as a thought experiment piece that he wrote in anticipation of the seminar meeting.

 

“China, Inc.” is how Wu describes the current economic model of China, which diverges significantly from the various economic models that the WTO framers anticipated or had in mind when the WTO framework was born.  In his paper, Professor Wu details the challenges that the current WTO framework faces in addressing the China, Inc., model, in terms of both adapting legal concepts and applying them to China, Inc., as well as addressing issues stemming from the China, Inc. model that seem to fall outside of the current jurisdiction of the framework.  Professor Wu’s though experiment piece challenged the readers to think about various abstract scenarios involving issues of informal coordination between parties (or simply one party benefitting from the actions of a third party at the expense of others) and potentially “unfair” outcomes, and how the law should respond to these scenarios.

 

Our discussion at the seminar meeting covered a variety of topics regarding the past, present, and future of China and its economic model, approaches to trade barriers generally, and related topics.  Professor Wu discussed the ideas from which the development of the China, Inc. model stemmed, which developed out of pragmatism as Chinese leaders recognized that the current system was not working.  These ideas include the belief that the state needed to maintain some means of control of the economy, but it also needed to facilitate growth by adopting economic competition models.  In short, China developed the China, Inc. model out of a pragmatic understanding that state control alone did not work, and there needed to be competition, but that some control, both in the top-down and horizontal varieties, was still important.

 

Addressing the topic of how international law regimes, such as the WTO, can effectively address unanticipated scenarios (or parties), Professor Wu offered two potential solutions.  One option is to create supranational courts that would have the power to determine how the law applies to that specific scenario.  This option faces political feasibility problems, though, as it would require states to cede a significant amount of sovereignty to the court.  The second option, which seems to be one that the Trump Administration would favor, is to specify in the framework agreement that the parties will renegotiate the terms of the framework after x occurs (with x being one of a specified list of events, or even just a number of years).  This, although potentially more feasible, would clearly come at the expense of stability in terms of what the framework stands for, at least in the longer term.

 

Professor Wu also challenged us to think abstractly to how we object to specific instances of informal coordination and third party beneficiaries, and develop a consistent, cogent response.  Otherwise, objections to individual instances, such as certain involving China, will come off as personal, political objections.

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