WTO says US trade war tariffs on China violate international rules

The World Trade Organization found on Tuesday that the United States breached global trading rules by imposing multibillion-dollar tariffs in President Donald Trump's trade war with China, a ruling that drew anger from Washington.

NEW YORK • The World Trade Organisation (WTO) yesterday undercut the main justification for US President Donald Trump's trade war against China, saying that American tariffs on Chinese goods violate international rules.

A panel of three WTO trade experts said the US broke international rules when it imposed tariffs on Chinese goods in 2018. Washington has imposed levies on more than US$550 billion (S$749 billion) in Chinese exports. The panel said in its report "that the United States had not met its burden of demonstrating that the measures are provisionally justified".

While the ruling bolsters Beijing's claims, Washington can effectively veto the decision by lodging an appeal at any point in the next 60 days.

That is because the Trump administration has already paralysed the WTO's appellate body, a tactic that has rendered toothless the world's foremost arbiter of trade.

The dispute centres on the Trump administration's use of a 1970s-era US trade law to unilaterally launch its commercial conflict against China in 2018.

China claimed the tariffs violated the WTO's most-favoured treatment provision because the measures failed to provide the same treatment to all WTO members.

China also alleged the duties broke a key dispute settlement rule that requires countries to first seek recourse from the WTO before imposing retaliatory measures against another country.

The US tariffs against China were authorised under Section 301 of the Trade Act of 1974, which empowers the president to levy tariffs and other import restrictions whenever a foreign country imposes unfair trade practices that affect US commerce. The Trump administration has claimed the tariffs were necessary to confront China's widespread violations of intellectual property rights and forced technology transfer policies.

China's Ministry of Commerce said in a statement that it "appreciates the objective and fair ruling made by the expert group".

"China also hopes that the United States will fully respect the rulings of the expert group and the rules-based multilateral trading system, and take practical actions to meet China and other WTO members to jointly maintain the multilateral trading system and promote the stable and healthy development of the world economy," it added.

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A version of this article appeared in the print edition of The Straits Times on September 16, 2020, with the headline 'WTO says US trade war tariffs on China violate international rules'. Print Edition | Subscribe