World Trade Organization Finds In Favour Of China Over Tariffs Imposed By US

The WTO has become the latest battleground of the US-China trade war

Tariffs imposed by the Trump administration on Chinese goods in 2018 violated an international trade treaty, the World Trade Organization has ruled, finding in China’s favour. But its decision will be difficult if not impossible to enforce.

The US violated the General Agreement on Tariffs and Trade (GATT) treaty when it imposed 25% tariffs on $234 billion worth of Chinese goods in 2018, the WTO declared in a ruling issued on Tuesday, finding in favour of Beijing with respect to the unilateral measures taken by the US that signalled the commencement of a prolonged trade war between the two countries.

A three-person panel determined that the tariffs, which the US has since broadened to cover $550 billion worth of Chinese exports, violated two GATT provisions and stated that the US has not demonstrated their necessity under a third provision which would permit tariffs in certain circumstances.

During the proceedings China argued that the US tariffs violated GATT’s most-favoured treatment provision because they did not apply equally to other WTO member countries. China also argued that the Trump administration had violated a dispute-resolution provision that requires countries to submit trade disagreements to a WTO dispute settlement mechanism before applying retaliatory tariffs on another country’s products.

The US tried to justify the tariffs by citing a 1974 law allowing the president to impose tariffs and other restrictions on imports in retaliation for unfair trade practices, and insisted that the levies were necessary to counter China’s alleged violations of intellectual property rights, particularly in the technology sector.

China’s Ministry of Commerce welcomed the decision, expressing hope that the US would “respect the rulings of the WTO” and “take practical actions” to bring its policies into line with the ruling.

The US can appeal the decision within a period of 60 days, an act which would effectively nullify the decision as the US has prevented the WTO’s appeals division from functioning by refusing to appoint a representative to it.

The US criticised the decision in official statement on Tuesday, describing the WTO as “completely inadequate” in terms of holding China “accountable” for its alleged trade transgressions. Trade Representative Robert Lighthizer insisted the US must be allowed to “defend itself” against unfair trade practices and maintained the ruling would not affect Phase I of the proposed trade agreement between the US and China.

Last month Democratic presidential candidate Joe Biden said that he would remove the tariffs from Chinese exports, however an aide later revised the statement, declaring that Biden would “reevaluate the tariffs upon taking office.” LINK

Beijing has strongly denied Washington’s allegations throughout the trade war and has consistently introduced reciprocal tariffs on the imports of US goods in response. The two countries signed the so-called Phase One agreement in 2019, which was supposed to become a first step towards normalising their trade relations, but ties between the two deteriorated once again after President Trump accused China of being responsible for starting the global coronavirus pandemic – another allegation denied by Beijing. LINK

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