WTO rules in favor of China. The Trump Administration rejects the ruling and considers that it demonstrates the “inefficiency” of the WTO.
The World Trade Organization (WTO) on Tuesday issued a first ruling contrary to the interests of the United States in its tense trade war with China. The international entity considers “excessive” and that the rates imposed by the Trump Administration on transactions with Beijing violate international laws. Washington has come up against the WTO ruling, calling it “totally inappropriate” and demonstrating the organization’s inefficiency in putting an end to China’s “nefarious technological practices”.
The tariffs imposed by Washington “are not consistent with the most-favored-nation principles of the WTO, and exceed the maximum tariffs agreed by the United States” before the body, he stressed. The decision was made by a panel of experts at the request of China, which took the case to Geneva in April 2018. The office of the US Trade Representative (USTR), Robert Lighthizer has responded stating that this report “confirms what the government Trump has been saying for four years now: The WTO is totally inadequate to stop China’s nefarious technological practices. “
In June of that year, the US Government imposed tariffs of 25% on Chinese exports worth 50,000 million dollars, and in September it imposed another 10% (increased to 25% in May 2019) to more exports from China , worth 200,000 million dollars.
The tariffs, which China responded with similar tariffs against US products, were imposed from Washington alleging bad practices by the Asian country in terms of technology transfer and intellectual property. According to the WTO, the United States has failed to justify the reasons why these tariffs could exceed the limits set by the Geneva-based organization.
Washington argued that the tariffs could be considered an exception to the rules established in 1994 by the General Agreement on Tariffs and Trade (GATT, predecessor of the WTO) necessary to protect “public morals” against Chinese practices that involve “consensual theft by his State “.
No “mutually satisfactory” solution
The organization’s panel also ruled today that the bilateral negotiations between Beijing and Washington had not achieved a “mutually satisfactory solution” to resolve the dispute, as the United States defended so that the conflict would not be brought to the heart of the WTO.
The WTO dispute resolution mechanism, despite today’s decision, has been paralyzed since the end of last year due to Washington’s refusal to authorize the appointment of new judges to the Appellate Body, its last instance. The United States alleges that this body has not acted objectively in previous trade disputes, and that it has sometimes exceeded its functions by adopting politically biased decisions.
In this context, which the panel recognizes today and considers “a reflection of the current unprecedented trade tensions,” the US and China are recommended to continue working to negotiate a bilateral solution. Otherwise, the dispute would have to run its course in higher instances of the currently paralyzed dispute resolution mechanism, so the dispute in Geneva could drag on for years.