US, China trade barbs as WTO litigation begins

World body sets up separate panels to hear disputes over US' aluminium and steel levies

GENEVA • The World Trade Organisation (WTO) has agreed to hear complaints from a range of countries over new United States steel and aluminium tariffs, as well as complaints from Washington over retaliatory duties.

The WTO's Dispute Settlement Body (DSB) on Wednesday agreed to establish panels to review US President Donald Trump's decision to hit a long line of countries with tariffs of 25 per cent on steel and 10 per cent on aluminium.

Mr Trump has outraged US trading partners by erecting the tariff wall - justified by US national security concerns - and he has also hit Chinese goods with huge tariffs over accusations of stealing US intellectual property.

The DSB said it will create separate panels for the complaints by the European Union, China, Canada, Mexico, Norway, Russia and Turkey, after the US said it would not agree to a single panel to hear all of them.

The DSB agreed on Wednesday to Washington's request for three panels to rule on the legality of retaliatory tariffs imposed by Canada, China, Mexico and the EU.

It also agreed to a US call for a panel to be created to review "certain Chinese measures pertaining to the protection of intellectual property rights".

The US and China clashed on Wednesday at the WTO meeting, with a US envoy accusing Beijing of using the WTO to pursue "non-market" policies and a Chinese official saying it was Washington that was flouting the rule book.

The decision to establish the panels follows rounds of failed consultations between the parties.

The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.

At the meeting where the slew of legal disputes over Mr Trump's trade policies entered a formal adjudication phase, US Ambassador Dennis Shea said China was using the WTO to promote "non-market" policies, which had distorted world markets and led to massive excess capacity, especially in steel and aluminium.

The Chinese official retorted that Beijing did not want to get into a blame game and said Washington had failed to back up its "unfounded" claims about China's economy, which it was using to disguise its own violations of the WTO rule book.

Both sides accused each other of hypocrisy.

 
 
 
 

Mr Shea said the WTO should throw out the lawsuit brought by China, along with those brought by the EU, Canada, Mexico, Norway, Russia and Turkey, as WTO rules allowed exceptions for actions taken for national security concerns.

"Some (WTO) members have expressed concerns that invoking the national security exception in these circumstances would undermine the international trading system. This is erroneous, and completely backwards," he said, according to a copy of his remarks provided to Reuters.

"Rather, what threatens the international trading system is that China is attempting to use the WTO dispute settlement system to prevent any action by any member to address its unfair, trade-distorting policies."

In response to the US intellectual property complaint, China's representative highlighted the fact that the WTO still had several unresolved disputes on its books, including a 2004 ruling against a US violation of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (Trips).

At the same time, the US was suggesting its intellectual property protection was supreme.

"China has fully complied with the Trips agreement while the US has not. And we believe that until the US faithfully and entirely honours its Trips obligations, the comparison suggested by the US is clearly without the legal benchmark."

The decision to establish the panels follows rounds of failed consultations between the parties.

The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on November 23, 2018, with the headline 'US, China trade barbs as WTO litigation begins'. Print Edition | Subscribe