China’s WTO win over US offers no concrete reward but Beijing gets moral high ground, experts say

Chinese officials ‘certainly happy’ with World Trade Organisation ruling that some of Donald Trump’s trade war tariffs are illegal

However, a frosty political climate and dysfunction at the Geneva body suggest the spoils of victory will be moral rather than concrete

3-MIN READ3-MIN

The World Trade Organisation has ruled that some US trade war tariffs are illegal, but the case is likely to become tied up in procedural limbo as the US has blocked the appointment of new judges to the WTO’s Appellate Body. Photo: AFP

Published: 6:00pm, 16 Sep 2020Updated: 1:24pm, 26 Nov 2020

The Chinese government may feel vindicated by a World Trade Organisation (WTO) ruling that some of US President Donald Trump’s trade war tariffs flouted international rules, but in reality gains little from the verdict other than the moral high ground, according to pundits in China.

A panel of three trade experts made the ruling after Trump unilaterally imposed tariffs on more than US$350 billion worth of Chinese imports – a move he said was in response to Beijing’s unfair trade practices. This marks the first ruling from a number of dispute cases filed by China at the Geneva body in response to US trade war tariffs, which were first launched in July 2018.

Beijing is expected to use the dispute-settlement body’s ruling – that US tariffs on US$234 billion of Chinese goods were illegal – for propaganda purposes at home, while trying not to kick the hornets’ nest abroad, with Trump already lambasting the WTO’s findings.

“China feels vindicated, but it will get very little from this. The tariffs won’t go away or be reduced as a result of this, so the impact is very limited,” said John Gong, a professor of economics at the University of International Business and Economics (UIBE) in Beijing. “For the US, the outcome would have been anticipated, so this result will not have any effect on the US’ future actions.”

The US has blocked the appointment of new judges to the WTO’s Appellate Body, meaning that if Washington decides to appeal, as expected, the case will get tied up in procedural limbo.

Kong Qingjiang, a WTO expert at the China University of Political Science and Law, said that Chinese officials he had been in touch with were “certainly happy”, but “aware that the victory will not give rise to any concrete legal results – this is the dilemma China must face”.

Trade watchers had expected the verdict, as the protracted trade war is generally accepted to have been conducted outside the rules of the global trading system, both in the case of the US and with regard to China’s retaliation.