Trade Fallout

US digs in after WTO China ruling fails to defuse trade timebomb

The WTO found earlier this week that the US had breached global trading regulations

China was left crowing. The United States remained defiant.

Even though the World Trade Organization ruled in favor of Beijing, Washington refused to back down in a row that has engulfed the two largest economies on the planet.

The WTO found earlier this week that the US had breached global trading regulations by imposing tariffs on Chinese exports worth US$370 billion. 

Intellectual property theft was the main plank behind the strategy rolled out by President Donald Trump’s administration more than two years ago.

The panel is very much aware of the wider context in which the WTO system operates, which is one reflecting a range of unprecedented global trade tensions

World Trade Organization

But the WTO’s three-member panel reaffirmed that American duties broke trading regulations because they applied only to China and were above maximum rates agreed to by the US. 

“The panel is very much aware of the wider context in which the WTO system operates, which is one reflecting a range of unprecedented global trade tensions,” the 66-page report concluded.

Still, the decision is just the start of a legal wrangle that could last for years.

Washington looks certain to lodge an appeal but that process is in limbo because of a lack of judges to the appellate body after American blocking tactics.

“This panel report confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices,” Robert Lighthizer, the US Trade Representative, said in a statement.

Dismantle tariffs

“Although the panel did not dispute the extensive evidence submitted by the US of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct,” he added.

In a statement, China’s Ministry of Commerce called on Washington to respect the ruling and dismantle tariffs.

“China appreciates the objective and fair ruling made by the WTO expert panel. China also hopes that the US can fully respect the rulings of the expert panel and the rule-based multilateral trading system, and take practical actions to maintain the multilateral trading system,” it said.

Wang Yiwei, the director of the Institute of International Affairs at Renmin University, felt the WTO decision proved that the US trade war was unjustified.

“This also proves that the trend of globalization and multilateralism is ongoing and cannot be changed,” he told the pandaily website.

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