Donald Trump’s ‘inconsistent’ US$250 billion China tariffs likely to be investigated by WTO
- World Trade Organisation investigation expected to move ahead on Monday because the United States is unable to block the dispute inquiry for a second time
- Next round of trade war talks between the world’s two largest economies expected to begin on January 30 ahead of March 1 deadline
US President Donald Trump’s tariffs on US$250 billion of Chinese goods are expected to be investigated by the World Trade Organisation, with a one-time head of the Geneva-based arbitrators appellate body saying they are “inconsistent with WTO obligations”.
On Monday, the arbiter of trade disputes is likely to launch an inquiry into whether the US duties run afoul of a requirement that all World Trade Organisation (WTO) members give each other the same tariff treatment, as China asserts.
If a deal is not reached by March 1, the Trump administration has threatened to raise the tariff rate on US$200 billion of Chinese goods from 10 per cent to 25 per cent.
“This WTO case is especially significant because it deals with the central international legal issue in the US conduct of its trade war with China – whether the US can impose trade restrictions on China in response to alleged Chinese WTO violations without first seeking dispute settlement in the WTO,” said James Bacchus, a former Democratic congressman and one-time head of the WTO’s appellate body.
“I believe these US tariffs are inconsistent with WTO obligations, but it will be left to my successors on the WTO appellate body to decide.”
The WTO is already facing an existential threat over a hold the US has placed on new appellate judge nominations.
This is China’s second request for an inquiry on the matter, the first one last month was vetoed by the US. The investigation is likely to move ahead on Monday because WTO rules prevent members from blocking a dispute inquiry a second time.
But China will not be expecting a resolution to the investigation any time soon due to a backlog in the WTO dispute settlement system.
“These trade tensions are not only a threat to the system, they are a threat to the entire international community,” Roberto Azevedo, the director general of the WTO, said last week. “The risks are very real and there will be economic impacts.”
The case cuts to the heart of the US-China trade conflict because Trump says the tariffs are necessary to counter an alleged Chinese campaign to steal American intellectual property.
China’s dispute alleges the US tariffs violate the WTO’s most favoured nation provision because the measures fail to provide the same tariff treatment that the US offers to imports of all other WTO members.
The US counters that the tariffs fall outside the WTO’s remit because they address trade issues that are not specifically covered under WTO rules.
