WTO Finds that U.S. Tariffs on China Breach Global Trade Rules

09:31AM Sep 15, 2020
China Tariffs
The WTO has ruled against U.S. tariffs on Chinese goods.
( MGN )

GENEVA/BRUSSELS, Sept 15 (Reuters) - The World Trade Organization ruled on Tuesday that tariffs imposed by the United States on more than $200 billion of Chinese products in 2018 were inconsistent with global trading rules.

A three-person panel ruled that Washington had not shown why the tariffs, imposed after an investigation into forced transfer of technology and intellectual property, were a justifiable exception to Washington's obligations.

The panel found that the duties were inconsistent with trading rules because they applied only to China and were above the maximum rates to which the United States had committed.

It also found that the United States had not adequately explained the choice of products hit by the tariffs, or why the measures were necessary based on what Washington saw as Chinese companies' misappropriation and unfair competition.

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

The panel added that it had only looked into the U.S. measures and not China's retaliation, which Washington has not challenged at the WTO. Noting "unprecedented global trade tensions", the three-person panel encouraged the two sides to work to resolve the overall dispute.

“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,” U.S. Trade Representative Robert Lighthizer responded in a release.  “Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct.  The United States must be allowed to defend itself against unfair trade practices, and the Trump Administration will not let China use the WTO to take advantage of American workers, businesses, farmers, and ranchers.  It is important to note that this report has no effect on the historic Phase One Agreement between the United States and China, which includes new, enforceable commitments by China to prevent the theft of American technology.”

The United States could appeal against Tuesday's ruling. The case could then enter a legal void because Washington has blocked the appointment of judges to the appellate body, preventing it from convening the minimum number required to hear cases.