In the trade dispute between the United States and China, Washington imposed punitive tariffs on Chinese goods in 2018. The WTO decided: These violate international trade rules. The US government does not want to accept this and is now appealing. Beijing criticizes the tactical approach.
The US government is appealing against a World Trade Organization (WTO) decision that the punitive tariffs imposed on China are inconsistent with international trade rules. According to the WTO, US officials announced at a meeting of the organization’s dispute settlement body that they would appeal the decision. The dispute settlement body, the Dispute Settlement Body (DSB), decided in mid-September that the US punitive tariffs on Chinese imports violated international trade rules and called on the Washington government to “align its measures with its obligations”. The US has not provided sufficient evidence or justification for its actions.
Beijing had previously lodged a complaint with the WTO against the punitive tariffs imposed by the US government of President Donald Trump in 2018 on Chinese goods worth the equivalent of 212 billion euros. The tariffs were the prelude to an increasingly bitter trade conflict in which the two largest economies in the world imposed massive punitive tariffs on each other. In mid-January, both sides finally signed a partial agreement. In it, Beijing pledged to import more US goods and respect intellectual property. In return, the USA waived new punitive tariffs and reduced some of the existing tariffs.
US veto makes the WTO appellate body incapacitated
The WTO’s decision on US tariffs in 2018 met with sharp criticism from the US government in September. US Trade Representative Robert Lighthizer said this shows that the World Trade Organization is utterly inadequate in stopping China’s “harmful” technology practices. Trump repeatedly accuses China of unfair trade practices at the expense of US companies and the theft of intellectual property.
The WTO would now normally have three months to deal with the US objection. The appellate body of the dispute settlement body has been practically incapable of action since last December, as the US had vetoed the appointment of new appellate judges for the WTO dispute settlement. The USA need not fear conviction as long as there are no appellate judges.
Representatives of China accused the USA of abusing the rules in order to prevent the dispute from being resolved. At the same time, with the objection, the USA is now levering China’s ability to advance the dispute settlement before the World Trade Organization and to provide financial compensation for those found to be inadmissible by the DSB To charge customs duties. China’s WTO representatives were disappointed with the US objection on Monday and accused Washington of taking advantage of the current paralysis of the appellate body. There are currently 16 appeals still to be processed.
WTO is about to elect a new boss
The WTO, based in Geneva, is one of the most important international organizations in economic policy, alongside the International Monetary Fund (IMF) and the World Bank. Its main purpose is to provide a forum for negotiations on the dismantling of tariffs and other trade barriers and to monitor whether international trade agreements are being observed.
A complicated electoral process is currently underway to replace former WTO chief Roberto Azevedo, who gave up prematurely at the end of August. The 66-year-old Ngozi Okonjo-Iweala from Nigeria and the 53-year-old Yoo Myung Hee from South Korea are in the running for the top position. According to diplomats in the European Union, most of the 27 member states supported the Nigerian Okonjo-Iweala or announced that they would follow the majority opinion; unanimous support is still pending. The decision on the future head of the WTO should be made in early November.