A World Trade Organization panel ruled Tuesday that the U.S. broke its international commitments by circumventing the WTO dispute system and hitting China in 2018 with tariffs on $234 billion worth of its goods.
The decision evoked a strong rebuke from the Trump administration, but the Chinese case is not expected to have any real impact on the dispute with the U.S. That’s because the WTO’s appellate court is effectively shut down – a result of the continued refusal by the U.S. to approve new appointments.
All the U.S. has to do now is appeal the ruling to send the case into limbo, said Veronica Nigh, an economist with the American Farm Bureau Federation.
The U.S. tariffs, which followed a Section 301 investigation by the Commerce Department into allegations of China steeling intellectual property and technology, spurred China to retaliate with its own tariffs, mostly on U.S. farm commodities. That in turn lead to the Trump administration agreeing to pay billions to farmers who were unable to export their soybeans, sorghum and other crops to Chinese buyers.
U.S. Trade Representative Robert Lighthizer was quick to respond to the ruling, saying the WTO was being used by China to try to prevent the U.S. from defending itself against unfair Chinese trade practices. The U.S., he said, had no other option but to exclude the WTO in its dispute with China.
“This panel report confirms what the Trump Administration has been saying for four years: The WTO is completely inadequate to stop China’s harmful technology practices,” Lighthizer said in a statement. “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.”
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While the U.S. and China did reach a partial trade agreement in February – the “phase one” pact that included promises to remove many restrictions on U.S. farm commodities – the tariffs technically remain in place. Separately from the pact, China agreed in March to begin exempting some importers from paying tariffs on U.S. soybeans, corn, wheat, pork, sorghum and other commodities.
“It is important to note that this report has no effect on the historic Phase One Agreement between the United States and China, which includes new, enforceable commitments by China to prevent the theft of American technology,” Lighthizer said.
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