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WTO Rules Some U.S. Tariffs on China Violate Trade Rules

The headquarters of the World Trade Organization in Geneva, Switzerland, June 2, 2020 (Denis Balibouse/Reuters)

The World Trade Organization ruled on Tuesday that the U.S. broke international trading rules by imposing levies on more than $200 billion of Chinese goods two years ago when President Trump’s trade war with China began.

The ruling came in response to a complaint filed by China in 2018, which claimed the U.S. violated WTO rules in singling China out for additional tariffs. WTO rules outline limited reasons a country can impose tariffs on only one country, but the U.S. tariffs did not fall under those allowances, according to the ruling.

“China has demonstrated that the additional duties apply only to products from China and thus fail to accord to products originating in China an advantage granted to the like product originating in all other WTO Members,” the panel said.

The Chinese Ministry of Commerce said in a statement that it thought the ruling was “fair and objective” and hoped the U.S. would comply.

U.S. trade representative Robert Lighthizer said in a statement that the ruling “confirms what the Trump administration has been saying for four years: the WTO is completely inadequate to stop China’s harmful technology practices.”

“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,” he said.

The ruling covers only some tariffs — those imposed on $34 billion of goods in 2018 and $200 billion of goods in September 2018. In all, U.S. tariffs cover about $370 billion of Chinese imports, according to the Wall Street Journal.

The panel looked only at the U.S. tariffs and did not review China’s retaliation as the United States has not filed a complaint.

“The panel is very much aware of the wider context in which the WTO system currently operates, which is one reflecting a range of unprecedented global trade tensions,” the report said.

Trump fired back after the decision saying that he had to “do something about the WTO because they’ve let China get away with murder.”

Senator Josh Hawley (R., Mo.) called the ruling “more evidence that the WTO is outdated, sclerotic, and generally bad for America,” in a tweet. 

“USA should withdraw and lead the effort to abolish it,” he added.

The decision is only the start of a legal process that could play out over a number of years and will not have much effect on the U.S. tariffs in the meantime, though the WTO could approve retaliatory measures if the ruling is upheld.

The U.S. is likely to appeal the decision, though that would place the case into a legal void as Washington had blocked the appointment of judges to the WTO’s appellate body, which has prevented it from meeting the quorum required to hear cases.

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