WTO: US Violated Trade Rules With Tariffs on China

A panel of experts set up by WTO’s Dispute Settlement Body ruled the tariffs “inconsistent” with global trade rules

A panel of experts set up by WTO’s Dispute Settlement Body ruled the tariffs “inconsistent” with global trade rules

The World Trade Organization ruled Tuesday that additional tariffs imposed in 2018 by the United States on Chinese goods violated worldwide trading rules, a blow to the Trump administration's trade war against the world's second-largest economy.

The decision could help fuel a Trump decision to leave the WTO or underpin United States arguments for reforming the 25-year-old trade body, said Margaret Cekuta, a former USTR official who helped write a crucial report on China's intellectual property abuses that preceded Trump's tariffs.

The WTO panel said tariffs on $200bn worth of goods were illegal because they only applied to products from China and the USA had not shown the products benefited from unfair practices including intellectual property theft and technology transfer, according to the Associated Press.

The Trump administration has previously claimed that the tariffs on China were necessary to curb Beijing's unfair trading practices and intellectual property theft.

While the ruling handed China a victory on paper, it means little since the USA already hobbled the WTO by dismantling its panel that oversees the appeals process.

US Trade Representative Robert Lighthizer said the WTO report released on Tuesday confirmed US President Donald Trump's aggressive foreign policy that has sought to dismantle multilateral organisations like the Geneva-based trade body.

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"Panel recommends that the United States bring its measures into conformity with its obligations.", the report said.

Since China did not have WTO permission to retaliate against the United States, those tariffs, too, were arguably a violation of global trade rules.

But the U.S. said it showed that the WTO was "completely inadequate" to the task of confronting China.

However, Hufbauer said neither the US nor China is likely to remove its tariffs as a outcome of the ruling.

The US-Chinese relations deteriorated sharply after Trump took office in 2017.

The WTO panel said the tariffs violate the most-favored-nation principle, which prevents WTO members from discriminating against any other member by enforcing higher tariffs than those imposed on other countries. "That I can tell you right now, maybe they did us a big favor".

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The United States is likely to appeal Tuesday's ruling.

He said the WTO ruling showed that it "provides no remedy for such misconduct".

The U.S. tariffs target two batches of Chinese products.

Though the use of Section 301 of the US's 1974 Trade Act isn't unprecedented, the provision largely fell out of favour in the 1990s after the USA agreed to first follow the WTO's dispute-settlement process before it triggered any retaliatory trade actions.

The U.S. president has described the WTO as "horrible" and biased towards China, threatening to quit.

The ruling, in theory, would allow China to impose retaliatory tariffs on billions worth of US goods - if the process is completed. China, which was admitted to the WTO late in 2001, regularly draws accusations of being a trade cheat.

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Mr Trump, critical of multilateral institutions, has already quit Unesco and plans to leave the World Health Organisation.

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