The World of International Organizations

WTO sides with China in Trump’s trade war

U.S. President Donald Trump waves while boarding Air Force One en route back to Washington (AN/Shealah Craighead)

GENEVA (Arête News) — U.S. President Donald Trump’s administration violated international trade rules by unfairly slapping USD$234 billion in tariffs on Chinese goods without justification two years ago, a World Trade Organization panel ruled on Tuesday.

China had complained in 2018 to the WTO, which is not part of the United Nations system, about the tariffs that the Trump administration imposed that year on two sets of Chinese products.

The first involved 25 percent duties on USD$34 billion in Chinese goods ranging from aircraft tires to water boilers to X-ray machines. The second involved 10 percent duties, later raised to 25 percent, on USD$200 billion in Chinese goods — some 1,000 products such as air conditioners, televisions and toys.

The WTO panel said the U.S. tariffs were illegal because they targeted only Chinese products and the Trump administration “had not provided an explanation” to support their claims that the products benefited from unfair Chinese trade practices, the three-member panel said in a statement.

“The panel found, accordingly, that the United States had not met its burden of demonstrating that the measures are provisionally justified,” it said. The panel was chaired by Alberto Juan Dumont, Argentina’s U.N. ambassador in Geneva, and included Álvaro Espinoza, a Chilean veteran diplomat and WTO expert, and Athaliah Molokomme, Botswana’s U.N. ambassador in Geneva and former attorney general.

The panel’s ruling, backed up by its 66-page report, is the first involving the tariffs imposed by the Trump administration on China, the European Union and other important trading partners — a centerpiece of Trump’s antagonistic “America First” trade policy.

It hands a moral victory to Beijing, even if the ruling cannot be made formally binding upon appeal. Since last December, WTO’s appellate body has been shut down by U.S. opposition to refilling the ranks of international judges on the WTO’s bench. That opposition now has a convenient outcome in this case.

If the ruling were made final, China might have been justified in putting retaliatory tariffs on U.S. goods.

Sharp reactions

The ruling quickly, and predictably, elicited strong criticism from U.S. trade representative Robert Lighthizer and praise from China’s commerce ministry.

Lighthizer said the panel’s ruling confirms the Trump administration’s belief that the WTO is “completely inadequate” to stop China’s policies from harming the U.S. economy and upending global trade.

“Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct,” he said in a statement.

“The United States must be allowed to defend itself against unfair trade practices,” said Lighthizer, “and the Trump administration will not let China use the WTO to take advantage of American workers, businesses, farmers, and ranchers.”

Trump had justified the tariffs under Section 301 of the U.S. Trade Act of 1974, which was typically used by previous presidents not to unilaterally impose tariffs but “to build cases and pursue dispute settlement at the WTO,” according to the U.S. Congressional Research Service, which is part of the Library of Congress.

China’s commerce ministry called the ruling “objective and fair,” and demanded that the Trump administration abide by the WTO panel’s conclusions.

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