Dec 19, 2018 02:37 PM

China Moves Closer To WTO Inquiry on Trump Tariffs

The Port of Qingdao in eastern China's Shandong province. Photo: Bloomberg
The Port of Qingdao in eastern China's Shandong province. Photo: Bloomberg

(Bloomberg) — China moved a step closer to launching a formal World Trade Organization inquiry into whether President Donald Trump’s $250 billion in tariffs against Chinese goods violate international trade rules, a process that could move forward next month.

The U.S. rejected China’s first request for a WTO inquiry in the matter, according to a participant at Tuesday’s dispute settlement meeting. The trade body’s rules prevent the U.S. from blocking a dispute inquiry if China returns with a second request at the next WTO dispute settlement meeting. The next such meeting is set for Jan. 28, but the WTO could also hold a special session before then to hear China’s second request.

The dispute centers on the Trump administration’s decision to impose duties of 10% to 25% on thousands of Chinese goods after finding that China’s policies were harming U.S. intellectual-property rights, innovation and technology development.

The case cuts to the heart of the U.S.-China trade conflict because the U.S. claims the tariffs are necessary to counter an alleged Chinese campaign to steal American intellectual property and force technology transfers from U.S. companies.

Trump this month agreed to delay a further increase in duties against Chinese goods until March 1 as U.S. Trade Representative Robert Lighthizer and Chinese trade czar Liu He work to reach a mutually agreeable solution.

China alleges the U.S. tariffs violate the WTO’s most favored nation provision because the measures fail to provide the same tariff treatment that the U.S. provides to imports of all other WTO members. China said the tariffs also violate a key trade-dispute rule that requires countries to first seek recourse to the WTO dispute settlement body before imposing retaliatory tariffs against another country.

The U.S. tariffs against China were authorized under Section 301 of the Trade Act of 1974, which empowers the president to levy tariffs and other import restrictions whenever a foreign country imposes alleged unfair trade practices that affect U.S. commerce.

The Chinese delegation to the WTO said the U.S. tariffs were impacting hundreds of billions of dollars in trade, worsening the global economic and trade environment, and damaging global industrial supply chains around the world.

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