Today’s largest trade frictions stem from differences between China and the OECD regarding the appropriate role of government. Daniel Trefler discusses the two types of differences. The first are legitimate attitudinal differences towards industrial policy (the use of subsidies), competition policy (the use of forced industry consolidation), and innovation policy (weak protections of intellectual property). China and the OECD will have to reach an accommodation on these differences if the end game is a rules-based trading system. Daniel Trefler is a Canadian economist who is currently the J. Douglas and Ruth Grant Chair in Competitiveness and Prosperity at the Rotman School of Management, University of Toronto. He is among the most influential and frequently cited economists worldwide. Publication