WTO Says US Breaches International Trading Rules Over Tariffs on China

A leading intergovernmental organization for global trade, the World Trade Organization (WTO) has ruled that the United States (US) broke international laws on trading when it targeted only China by imposing a series of trade tariffs. A three-member panel of the WTO concluded on Tuesday, September 15, 2020, that the US action of imposing tariffs on China was too frequent and reached maximum rates agreed upon by the US.

The WTO’s ruling provoked Washington and the Trump administration accused the organization of being biased and irresponsible taking side with China. Over recent years, the administration has slapped Beijing with a range of trade duties and tariffs as the world’s two largest economies locked their horns over trade issues.

Washington has recently stopped its funding to the World Health Organization (WHO) alleging that the organization refused to share timely information to other countries related to the COVID-19 pandemic situation in China. With this new development, some experts are saying that the US may decide to leave the WTO or exert pressure to reform it.

WTO’s Ruling Against the US

The panel ruled that Washington’s imposing of multibillion-dollar tariffs on China was not justified and Washington had not then adequately explained why it took such measures. Over the last two years due to trade war with Beijing, Trump threatened tariffs on nearly all Chinese imports that were worth over $500 billion before the two countries signed a “Phase 1” trade deal in January. As per the US Customs data shows, tariffs are still in effect for some $370 billion worth of Chinese goods and $62.16 billion in duties have been collected since July 2018.

Reflecting on the need for cooperation and initiatives from both sides to resolve the existing trade conflicts, the panel recommended, “the parties to take stock as proceedings evolve and further consider opportunities for mutually agreed and satisfactory solutions.’ At the same time, it insisted the US to bring measures “into conformity with its obligations.”

Experts suggested that the decision might have a little immediate effect on the existing tariffs on china but paved a way for initializing a legal process against Washington. If the situations get worse, the WTO ultimately can approve retaliatory measures.

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US Criticisms

Following the WTO statement, US Trade Representative Robert Lighthizer said in response, “This panel report confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices.” The Trump administration explained persistently that the tariffs impositions were responses to the Chinese violation of intellectual property rights and technology transfer issues.

On leaving an event at the White House on Tuesday, Trump said he would “have to do something about the WTO because they’ve let China get away with murder.” Terming the ruling as “horrible,” and biased towards China; he stressed, “I’m not a big fan of the WTO that I can tell you right now. Maybe they did us a big favor.”

A former USTR official, Margaret Cekuta stated that the decision could help ignite Trump to leave the WTO or intensify the US attempts to reform the 25-year-old trade body. Meanwhile, during an ABC News town hall on Tuesday, Trump continued to support the January trade deal as China had agreed to buy some billion worth of US corn, soybeans, and other products.