The Geneva-based arbiter of trade disputes on Monday began 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, said the official, who asked not to be identified because the decision has not been made public.
The WTO will now assign a panel to begin the investigation.
A US envoy to the WTO called the inquiry “pointless” and “entirely hypocritical,” according to a copy of the remarks made at the meeting and seen by Bloomberg.
“China is currently damaging the United States not only through its forced technology transfer practices but additionally by imposing discriminatory duties on over US$100 billion in US exports,” the envoy said.
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’s “unilateral actions” infringe on China’s WTO rights and “flagrantly violate” the WTO’s fundamental principles, the Chinese delegation said on Monday, according to a prepared statement seen by Bloomberg.
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.
The investigation comes at a delicate moment between the world’s two largest economies as a new round of trade talks is expected to begin on Wednesday.
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.
The WTO is already facing an existential threat over a hold the US has placed on new appellate judge nominations.
Absent any reforms, the decision-making wing of the organisation will not have enough judges to rule on cases by the end of the year, and this new investigation could further antagonise the US, which sees the WTO as overstepping its authority.
China will not be expecting a resolution to the investigation any time soon due to a backlog in the WTO dispute settlement system.
So far, 23 disputes have been brought against the current US administration, including a European Union inquiry into tariffs levied against aluminium and steel imports.
Source: South China Morning Post