China wins WTO case to sanction US$3.6 billion in US trade

LONDON (BLOOMBERG) - China won the World Trade Organisation's (WTO) permission to impose US$3.6 billion (S$4.9 billion) in sanctions against the US in a case that predates the tariff war between the world's two largest economies but may add a layer of tension to ongoing talks.

The damages awarded, in a document released Friday (Nov 1) on the Geneva-based organisation's website, are the third highest in WTO history.

The amount is about half of what was requested by China, which argued that some US anti-dumping rules were illegal.

The case began before the 18-month-old trade war between the two nations, which has led to tit-for-tat tariffs covering some US$500 billion in goods going in both directions.

While the ruling deals with matters outside current negotiations to conclude phase one of a comprehensive trade deal, it gives Beijing a new - and legal - weapon to slap the Trump administration if it opts to do so.

China now can ask the WTO's dispute settlement body to authorise retaliatory tariffs on US goods. Such requests are typically granted.

Next steps for the US include amending its illegal anti-dumping restrictions on the Chinese products in question, or resolving the dispute directly with China - a move that theoretically could happen as part of the broader trade-war talks between Washington and Beijing.

At issue in the case were US anti-dumping duties imposed on 13 imported Chinese products including machinery, electronics, metals and minerals.

In May 2017, the WTO said in an appellate ruling that the US must modify its anti-dumping regime. Beijing asked for permission to retaliate against US$7 billion in US goods.

In January this year, the WTO gave the US Commerce Department until Aug 22 to modify its anti-dumping methodologies or face the prospect of Chinese retaliation.