Tariffs on China are illegal

US tariffs on China are illegal says world trade body

On Tuesday a panel of three trade experts said the U.S. violated global rules when it imposed tariffs on Chinese goods in 2018.

China claimed the tariffs violated the WTO's most-favored treatment provision because the measures failed to provide the same tariff treatment that the U.S. provides to imports of all other WTO members.

The Chinese ministry of commerce said the ruling was "objective and fair" and called on the U.S.to respect it.

But in practice, the United States has no chance of seeing the appeal process be completed because of its own past actions that have left the WTO's appeals court defunct due to a lack of Washington-approved judges.

In particular, it rejected the USA argument that the tariffs were applied to products it said had benefitted from practices that the U.S. considers are contrary to "public morals", like theft, misappropriation and unfair competition.

"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", he said.

China brought the case to the WTO in 2018, as the Trump administration started preparing the first rounds of tariffs on what would eventually become more than $300bn worth of products. An additional 25% duties were imposed in June 2018 against Chinese goods worth about $34 billion in annual trade.

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But China said the taxes violated trade regulations because they were higher than USA commitments and targeted only one country.

In the past, US President Donald Trump has repeatedly accused the WTO of treating the United States "unfairly" in its dispute resolving mechanisms. It added that the United States 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.

In 72-page report Tuesday, the panel however said that Washington had "not met its burden of demonstrating that its measures were provisionally justified" under global trade rules. China also alleged the tariffs violated a key dispute settlement rule that requires countries to first seek recourse from the WTO dispute settlement body before imposing retaliatory tariffs against another country.

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".

China's Ministry of Commerce hailed the decision, expressing hope that the United States would "respect the rulings of the WTO" and "take practical actions" to bring its policies into line with the ruling. The US can appeal the decision at any time within 60 days, an act which would essentially veto it, since Washington has hamstrung the WTO's appellate department by refusing to appoint a representative to it.

Since the Trump administration has refused to appoint new members to the WTO's appellate body, the next step could involve the US simply appealing this panel report "into the void", effectively ending the legal nature of this dispute, said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

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