Published: Wed, September 16, 2020
Economy | By

WTO: US Violated Trade Rules With Tariffs on China

WTO: US Violated Trade Rules With Tariffs on China

The World Trade Organisation has ruled that the U.S. violated the trade rules of the organisation by introducing high tariffs against Chinese goods as a part of its trade war against the Asian country.

The WTO panel ruled that the US measures violated longstanding global trade rules because they only applied to products from China, and that Washington had not adequately substantiated its claim that the Chinese products hit with the extra duties had benefited from the allegedly unfair Chinese practices.

That means the United States can appeal the decision "into the void", said Timothy Keeler, a lawyer at Mayer Brown and former chief of staff for the U.S. Trade Representative.

"Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct", U.S. Trade Representative Robert Lighthizer said in a statement.

In its decision, the WTO ruled against the Trump administration's argument that China has engaged in practices harmful to USA interests, on issues including intellectual property theft, technology transfer and innovation.

Washington initiated a trade war with China back in 2018 by introducing hefty tariffs on several groups of Chinese goods over Beijing's alleged abuse of the existing trade agreements between the two countries at the expense of the United States.

The tariffs imposed in 2018 marked the beginning of the trade war between the world's two largest economies.


The panel found that the duties were inconsistent with trading rules because they applied only to China and were above the maximum rates to which the United States had committed. Washington has imposed levies on more than US$550 billion (S$749 billion) in Chinese exports.

"Although the panel did not dispute the extensive evidence submitted by the USA of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct".

The panel said in its report "that the United States had not met its burden of demonstrating that the measures are provisionally justified". It added that the USA had not proved its case that the tariffs were justified on moral grounds because it did not show how the products affected by the duties had benefited from the unfair practices.

The Trump administration, which has repeatedly criticised the WTO, may appeal the decision.

In its report, the panel stressed that it was "very much aware of the wider context in which the WTO system now operates, which is one reflecting a range of unprecedented global trade tensions".

But the case could then enter a legal paralysis because Washington has blocked the appointment of judges to the appellate body, preventing it from convening the minimum number required to hear cases.

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