China failed to overturn a US law targeting unfair trade subsidies on Monday, when the WTO’s Appellate Body said it did not have enough information to uphold China’s appeal against an earlier WTO ruling.
China had claimed that the US “Public Law 112-99,” also known as the GTX legislation, which was signed by US President Barack Obama in March 2012, broke world trade rules, but a WTO dispute panel ruled against it in March.
The Appellate Body disagreed with several of the panel’s interpretations of the law, but said that it did not have enough information to rule one way or the other, effectively leaving the March ruling intact.
However, the seven-member body also left intact another part of the panel’s ruling, which said that the US had wrongly “double-counted” when punishing Chinese goods for being both subsidized and unfairly priced — allowing both parties to claim victory.
In a statement, China’s Ministry of Commerce said the dispute was “another significant victory of China’s challenge against the United States’ abuse of trade remedy measures.”
However, the US said the ruling showed it acted within its rights when introducing the legislation.
“Today’s decision allows US industries to continue to rely on US trade laws to address unfair competition from their subsidized Chinese competitors,” US Secretary of Commerce Penny Pritzker said.
The US tariffs affected photovoltaic cells and modules used in solar power, various steel products, off-road tires, aluminum goods and towers for wind farms.
China said the annual value of trade affected was US$7.2 billion.
Meanwhile, the US wants China to break what it sees as a logjam over a proposed WTO information technology pact in annual bilateral talks this week, the top US trade envoy said on Monday.
China should show “real leadership” by helping to advance negotiations on the expansion of the WTO’s Information Technology Agreement, US Trade Representative Michael Froman said.
Froman, who is to join the US delegation at the Strategic and Economic Dialogue (SED) in Beijing today and tomorrow, said that the expansion of the ITA was high on the list of US trade priorities.
Froman said there had been some progress with China on the sidelines of the APEC finance ministers meeting in May and afterward, but “we’re not there yet.”
All members negotiating the update of the 1996 ITA, not just the US, believe China’s offer is “insufficiently ambitious,” and that is why the talks have been suspended twice last year, Froman said in a conference call with reporters.
“This is an area where we think there is a real opportunity for China to show leadership — leadership in its role as chair of APEC this year — and to work at the SED to make concrete progress toward resolving our differences between the US and China in order to restart the negotiations,” he said.
Froman said if China showed more willingness to negotiate the ITA deal, it could help smooth the way to reach common ground on other troublesome issues between the world’s two largest economies.
“Concrete progress would have positive spillover effects” on other negotiations, both bilateral and international, he said.