China to use ‘legitimate’ WTO retaliatory tariffs as ‘bargaining chips’ in US trade war negotiations
- Scale will be minuscule compared to those levied during 15-month trade war, but are backed by the WTO stemming from an Obama-era trade dispute
- Experts say that while any tariffs may take a year to finalise, they could upset Donald Trump, a known WTO critic, and in turn ‘upend’ the trade talks
China’s pursuit of US$2.4 billion in “legitimate” retaliatory tariffs against the United States, stemming from an Obama-era trade dispute, could be used as a bargaining chip in upcoming negotiations with Washington, experts have said.
On Monday, China announced its next move in the long-running World Trade Organisation (WTO) dispute after the Geneva-based governing body for trade found in July that Washington did not fully comply with a ruling pertaining to the removal of anti-subsidy tariffs on Chinese goods ranging from solar panels to steel cylinders, which have been in place since 2012.
The value of tariffs China is now seeking to impose will be ruled on by the WTO’s arbitration body, which will ultimately rule on whether the US$2.4 billion sum matches the perceived damage to China’s economy.
“Any request for trade retaliation gets litigated, and an arbitrator decides the amount of allowable tariffs. The final amount is sure to be less than the US$2.4 billion,” said Simon Lester, associate director at the Cato Institute and former legal affairs officer at the Appellate Body Secretariat of the WTO.
This will give China bargaining chips in the talks. It might not want to impose more tariffs, but if it does choose that route, they will be sanctioned by the WTO, so they have the right to do so