China launches WTO challenge against proposed tariffs by US

Mr Donald Trump's top economic adviser Larry Kudlow (above) called the tariff announcements by the US and China mere opening proposals.
Mr Donald Trump's top economic adviser Larry Kudlow (above) called the tariff announcements by the US and China mere opening proposals.

Move triggers 60-day deadline for both parties to settle complaint or face litigation by neutral panel of arbitrators

WASHINGTON/BEIJING • China has initiated a World Trade Organisation (WTO) challenge against Washington's proposal to slap US$50 billion (S$65.7 billion) in tariffs on Chinese imports over Beijing's alleged theft of intellectual property and technology.

The notification to the Geneva-based watchdog triggered a 60-day deadline for the two sides to settle the complaint or face litigation at the WTO by a neutral panel of arbitrators, the WTO said yesterday.

The US had earlier voiced its willingness to negotiate a resolution to the escalating trade fight with China after Beijing's retaliation against the proposed US tariffs.

Just 11 hours after US President Donald Trump's administration proposed 25 per cent tariffs on some 1,300 Chinese industrial, technology, transport and medical products, China shot back with a list of similar duties on major American imports including soya beans, planes, cars, beef and chemicals.

China said on Wednesday its list of 25 per cent additional tariffs on US goods covered 106 items with a trade value matching the US$50 billion targeted on Washington's list.

Beijing's swift and forceful response raised the prospect of a quickly spiralling dispute bet-ween the world's two economic superpowers that could harm the global economy.

While Mr Trump posted defiant messages on Twitter, his administration signalled possible wiggle room. Asked whether the US tariffs announced on Tuesday may never go into effect and may be a negotiating tactic, Mr Trump's top economic adviser Larry Kudlow told reporters: "Yes, it is possible. It is part of the process."

He called the tariff announcements by the two countries mere opening proposals.

Mr Kudlow later told Fox News Channel: "I think we are going to come to agreements," he said, adding that "I believe that the Chinese will back down and will play ball".

Mr Cui Tiankai, China's Ambassador to the US, held an hour-long meeting at the US State Department in Washington with Acting Secretary of State John Sullivan.

"Negotiation would still be our preference, but it takes two to tango. We will see what the US will do," Mr Cui said afterwards.

The trade actions will not be carried out immediately, so there may be room for manoeuvre.

Publication of Washington's list on Tuesday started a period of public comment and consultation expected to last around two months. The effective date of China's moves depends on when the US action takes effect.

White House spokesman Sarah Sanders said the US implementation of the tariffs would depend on China's behaviour. "It is going to be a couple of months before tariffs on either side would go into effect and be implemented, and we are hopeful that China will do the right thing," she told reporters.

If the two countries are unable to settle the dispute, a full-scale trade war could destabilise US-Chinese commercial ties, an important component of the global economy.

Mr Trump contends that his predecessors served the US badly in trade matters.

While Washington targeted products that benefit from Chinese industrial policy - including Beijing's initiative to replace advanced technology imports with domestic products in strategic industries such as advanced IT and robotics - Beijing appeared to offer a response intended to inflict political damage.

Washington's list was filled with many obscure industrial items, but China's struck at signature US exports, including soya beans, frozen beef, cotton and other agricultural commodities produced in states from Iowa to Texas that voted for Mr Trump in the 2016 presidential election.

REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on April 06, 2018, with the headline 'China launches WTO challenge against proposed tariffs by US'. Print Edition | Subscribe