Experts from the World Trade Organization (WTO) ruled, Wednesday, August 16, that the tariffs imposed by China on billions of American imports in retaliation for Washington’s tariffs on steel and aluminum violated the rules of international trade.
A WTO panel set up to help resolve one of many disputes in the trade war between the world’s two largest economies has found that China’s ‘additional duty measure is inconsistent’ with various articles of the General Agreement on Tariffs and Trade (GATT).
Sam Michel, spokesman for the United States Trade Representative, welcomed the move, saying it recognizes China “illegally retaliated with bogus safeguard tariffs.”
The case revolves around China’s decision in April 2018 to impose tariffs on 128 US imports, worth around $3 billion, including fruit and pork. The move was made shortly after Donald Trump’s administration imposed steep tariffs on steel and aluminum imports from China and a number of other countries. Distancing himself from the free trade policy pursued by the United States for decades, Donald Trump had justified these high customs duties by allegations that the massive flow of imports from the United States threatened national security.
commercial battle
The administration of his successor, Joe Biden, has since adopted a less combative tone, but stuck to tariffs. Separate panels set up by the WTO’s Dispute Settlement Body to settle complaints over US steel and aluminum tariffs ruled in late 2022 that they too violated the rules of international trade.
Washington then appealed these decisions, considering that the inconsistencies found were not justified by the security exceptions provided for by the GATT, because they were not applied in time of war or in a case of serious international tension. . Adam Hodge, then spokesman for the United States Trade Representative, pointed out in particular that “the United States has for more than 70 years defended the clear and unequivocal position that questions of national security cannot be examined within the framework of the settlement WTO disputes”.
China can appeal
The panel’s decision announced Wednesday did not delve into the question of whether Washington was justified in claiming national security exemptions. But she acknowledged that the U.S. tariffs were imposed in evocation of such goals, not as purported safeguards imposed to protect domestic industry. The panel therefore concluded that an agreement authorizing retaliation against unfair safeguard measures did not apply in this case, as China had argued. He recommended that “China bring its WTO-inconsistent measure into conformity with its GATT obligations.”
China can now appeal Wednesday’s decision, but it remains unclear where the cases will be handled. The WTO appeals tribunal, also known as the Supreme Court of World Trade, has been frozen since late 2019, after the United States under Trump blocked the appointment of new judges and demanded a sweeping overhaul.
By filing lawsuits despite this situation, countries can in effect block the ability of other countries to move forward and seek financial compensation for activities deemed illegal by the Dispute Settlement Body.