The World Trade Organization found on Tuesday that the U.S. broked international trading rules through imposition of multibillion-dollar tariffs in President Donald Trump’s trade war with China, a ruling that drew anger from Washington.
The U.S. administration says that it had already imposed tariff two years ago on $200 billion in Chinese goods which was justified as China was stealing intellectual property and forcing US organizatoins to transfer technology for access to China’s markets.
But the WTO’s three-member panel said that the US duties broke trading rules due to thier application only on China and were more than rates agreed to by the United States. The U.S failed to adequately explain why its measures were a justified exception, the panel concluded.
“The panel report has confirmed what the Trump administration has been saying for four years that the WTO is totally inadequate to stop China‘s harmful technology practices,” US Trade Representative Robert Lighthizer said in response.
The Commerce Ministry of China said that Beijing supported the multilateral trading system and respected WTO rules and rulings, and hoped Washington would do the same. The decision will have little immediate effect on the US tariffs and it is just the beginning of a legal process that could take years to play out, ultimately resulting in WTO approving retaliatory measures if it is upheld – move that China has already taken on its own.
The U.S. is probably going to appeal Tuesday’s ruling. That might put the case into a legal void, however, because Washington has already blocked the appointment of judges to the WTO’s appellate body, preventing it from convening the minimum number required to hear cases.
The panle of World Trade Organization was aware of the fact that it was stepping into hot water. It also noted that it had only looked into the US measures whereas not at China’s retaliation, which has not been challenged by U.S. at the WTO.
“The panel is aware of the wider context in which the WTO system currently operates, which is one reflecting a range of unprecedented global trade tensions,” the 66-page report concluded. The panel recommended the U.S. to brought its measures “into conformity with its obligations”, but also encouraged the both sides to work to resolve the overall dispute.
“Time is available for the parties to take stock as proceedings evolve and further consider opportunities for mutually agreed and satisfactory solutions,” it said.
Througout the trade tussle with China over the two years, Trump threatened tariffs on nearly all Chinese imports of more than $500 billion before the two countries signed a “Phase 1” trade deal in January. Additionl tariffs are still in place on some $370 billion Chinese goods, and duties of $62.16 billion have been collected since July 2018, the U.S. Customs data show.
Meanwhile in an ABC News town hall on Tuesday, Donald Trump continued backing of the trade deal signed with China in January, and also suggested that China was now purchasing record amounts of US beef, corn and soybeans, because they knew that he was “very, very unhappy” about their handling of the coronavirus pandemic.
He said that closer look at the ruling is required, but added: “I’m not a big fan of the WTO – that I can tell you right now. Maybe they did us a big favor.”
The former USTR official Margaret Cekuta, said that this decision can fuel Donald Trump decision to leave the WTO or underpin US arguments for reforming the 25-year-old trade body.
“It gives the administration ammo to say the WTO is out of date,” said Cekuta, now a principal with the Capitol Counsel lobbying firm, adding U.S. officials could argue WTO’s inability to rule on intellectual property rights left it not well prepared to deal with the global economy.