The Splendor of International Economic Law on the Three Tools of Trade War: A Reflection on the Confrontation between China and the United States

Zamaneh Ghadim, Navid

doi:10.48308/eclr.2025.239258.1152

The Splendor of International Economic Law on the Three Tools of Trade War: A Reflection on the Confrontation between China and the United States

Document Type : Original Article

Author

Navid Zamaneh Ghadim ^¶

Ph.D., Faculty of Law and Political Science, Kharazmi University, Tehran, Iran. Std_abbasi378@alumni.khu.ac.ir

https://doi.org/10.48308/eclr.2025.239258.1152

Abstract

Trade wars, especially at the international level, are recognized as one of the most important economic and political challenges in relations between countries. This article analyzes the three main tools of trade war, including tariff increases, technology export bans, and protectionist policies, focusing on the economic confrontation between China and the United States. The aim of this research is to examine how the principles and rules of international economic law affect these tools and to analyze the legal challenges associated with them. Using a descriptive-analytical method, while examining documents related to the World Trade Organization and bilateral agreements such as international investment agreements, as well as the role of the International Monetary Fund and the World Bank, the article focuses in particular on legal approaches to dealing with these tools and attempts to explain the limitations and opportunities available for resolving trade disputes from the perspective of international economic law. Finally, the article, looking at the China-US trade war, presents solutions for improving legal coordination in the field of global trade. The findings indicate that institutional reforms within the World Trade Organization, the enhancement of coherence among international economic institutions, and the design of clearer mechanisms to define the boundaries of legitimacy for protective and security measures are necessary.

Keywords

Trade war

tariff increases

technology export bans

protectionist policies

international economic law

China

USA

Refrences

Books
1. Bown, C. P. The US–China Trade War and Phase One Agreement. Peterson Institute for International Economics, 2020.
2. Dolzer, R., & Schreuer, C. Principles of International Investment Law (2nd ed.). Oxford University Press, 2012.
3. Solingen, E. Geopolitics, Supply Chains, and International Relations in East Asia. Cambridge University Press, 2021.
4. Eichengreen, B. Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. Oxford University Press, 1992.
5. Hufbauer, Gary Clyde & Miner, Sean. “China’s BITs and Financial Services Liberalization.” In: Sauvant, Karl P. & Sachs, Lisa E. (eds.), The Evolving International Investment Regime: Expectations, Realities, Options. Oxford University Press, 2015.
6. Irwin, D. A. Clashing Over Commerce: A History of US Trade Policy. University of Chicago Press, 2017.
7. Jackson, J. H. The World Trading System: Law and Policy of International Economic Relations. MIT Press, 2000.
8. Krugman, P., & Obstfeld, M. International Economics: Theory and Policy. Pearson,
9. Matsushita, M., Schoenbaum, T., Mavroidis, P. C., & Hahn, M. The World Trade Organization: Law, Practice, and Policy. Oxford University Press, 2017.
10. Medcalf, R. Indo-Pacific Empire: China, America and the Contest for the World's Pivotal Region. La Trobe University Press, 2022.
11. Muchlinski, P. Multinational Enterprises and the Law (2nd ed.). Oxford University Press, 2007.
12. Pauwelyn, J., Guzman, A., & Hillman, J. International Trade Law. Wolters Kluwer, 2016.
13. Van den Bossche, P., & Zdouc, W. The Law and Policy of the World Trade Organization. Cambridge University Press, 2021.
14. Zhang, L. Renminbi Internationalization: Achievements, Prospects, and Challenges. Springer, 2016.
Articles
1. Choer Moraes, H. & Kim, J. “Digital Currencies and the Future of the International Monetary System”. Harvard International Law Journal. Vol.63. No.2, 2022, p. 528-542.
2. Chukwuma, N. & Ngoc, L. & Mativenga, P. “The US-China trade war: interrogating globalisation of technology”. Cogent Social Sciences. Vol. 10. No. 2, 2024, p. 1-39.
3. Howse, R. “The World Trade Organization 20 Years On: Global Governance by Judiciary”. European Journal of International Law, Vol.24. No.1, 2013, p. 9-77.
4. Howse, R., & Eliason, A. “The Legality of US Tariffs under the National Security Exception of GATT Article XXI”. Journal of International Economic Law, Vol.22. No.2, 2019, p. 199-222.
5. Hua, Sh., & Zeng, K. “The US–China Trade War: Economic Statecraft, Multinational Corporations, and Public Opinion”. Business and Politics, Vol.24, 2022, p. 319-331.
6. Mercurio, Bryan, Shaffer, Gregory, & Gao, Henry. “WTO Reform and China: Defining or Defiling the Multilateral Trading System?” Journal of International Economic Law, Vol.24. No.2, 2021, 621-639.
7. Puślecki, Z. “The new protectionism between the USA and China and international trade policy amid worldwide geopolitical turbulence”. Ekonomista. Issue. 2, 2023, p. 125-151.
8. Qin, Julia Ya. “The Challenge of Interpreting 'WTO-Plus ' Provisions.” Journal of World Trade, Vol.127. No.44, 2010, pp. 127-172.
9. Sauvant, K. P. “The Negotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned”. The Journal of World Investment & Trade, Vol.16. No.1, 2015, pp.11-87.
10. Stern, R. “The evolution of trade sanctions in international economic law”. Journal of International Economic Law, Vol.18. No.3, 2015, pp. 561-589.
11. Zhang, W. “Sovereign digital currencies and the fragmentation of the international monetary system”. Harvard International Law Journal, Vol.63. No.2, 2022, pp. 498-525.
Legislative and Policy Documents
1. European Commission & Government of the People's Republic of China. (2020). Comprehensive Agreement on Investment (CAI) – Draft Text.
2. IMF, Review of the Method of Valuation of the SDR—Final Report, 2016.
3. International Monetary Fund (IMF). (2007–2010). People’s Republic of China: Article IV Consultation Reports (2007, 2008, 2009, 2010). IMF Country Reports No. 07/385, 08/235, 09/262, and 10/238. Washington, D.C.: International Monetary Fund.
4. International Monetary Fund (IMF). Annual Report of the Executive Board for the Financial Year Ended April 30, 1997. Washington, D.C.: International Monetary Fund. 1997.
5. International Monetary Fund (IMF). The Liberalization and Management of Capital Flows: An Institutional View. IMF Policy Paper, November 14, 2012. Washington, D.C.: International Monetary Fund. 2012.
6. Lagarde, C. IMF Adds Chinese Renminbi to SDR Basket: A Historic Milestone. International Monetary Fund. 2015. Available at: https://www.imf.org/en/News/Articles/2015/09/28/04/53/sdrr121515a
7. World Investment Report 2021: Investing in sustainable recovery. United Nations Conference on Trade and Development. Retrieved from https://unctad.org/webflyer/world-investment-report-2021
8. World Bank & Development Research Center of the State Council, the People’s Republic of China. China 2030: Building a Modern, Harmonious, and Creative Society. Washington, D.C.: World Bank. 2013.
Online Sources
1. https://blogs.law.ox.ac.uk/business-law-blog/blog/2021/09/legality-capital-controls-covid-induced-retreat-financial#:~:text=distinct%20phases [last visited: 1/4/2025]
2. https://www.centralbanking.com/central-banks/currency/7860946/chinas-capital-controls-here-to-stay#:~:text=Since%20the%20mid,beginning%20of%20stricter%20capital%20controls [last visited: 20/3/2025]
3. https://www.piie.com/commentary/op-eds/why-west-should-welcome-chinese-yuans-inclusion-sdr#:~:text=The%20RMB%20is%20now%20the,for%20International%20Settlements%20in%202013 [last visited: 17/3/2025]
4. Liu, Li-Gang (2015). “Why the West Should Welcome Chinese Yuan’s Inclusion into the SDR.” Op-ed, Peterson Institute for International Economics (originally in South China Morning Post), June 8, 2015. Available at: https://www.piie.com/commentary/op-eds/why-west-should-welcome-chinese-yuans-inclusion-sdr [last visited: 17/3/2025]
5. Ma, Guonan, “Do China’s capital controls still bind? Implications for monetary autonomy and capital liberalization”, BIS Working Papers, No 233, 2007. Avilable at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1014311
6. https://www.csis.org/analysis/where-chips-fall-us-export-controls-under-biden-administration-2022-2024