The WTO granted Beijing a new tariff weapon against the US during a politically sensitive moment for US President Joe Biden, nearly one year into a tenuous truce in the trade dispute between the two largest economies.
A WTO arbitrator in Geneva, Switzerland, on Wednesday said that China can retaliate against US$645 million of annual US exports as part of a decade-old trade dispute over US anti-subsidy duties on Chinese goods.
The amount was much less than the US$2.4 billion that China had initially requested legal authority to target.
While US$645 million pales in comparison to the tariffs China imposed on US$110 billion of US goods during former US president Donald Trump’s tenure, it still provides Beijing with a new irritant with which to pressure Biden as he seeks to tamp down inflationary headwinds ahead of midterm elections.
The Biden administration could attempt to head off China’s WTO-authorized tariffs, but to do so it must revise US countervailing duties, which would increase competition for key US manufacturing sectors such as steel and aluminum.
Beijing can now request formal WTO authorization to retaliate against US goods and services, which could be granted as soon as next month.
China “will keep a close watch on the next moves of the US and reserves the right to take further action,” Chinese Ministry of Commerce Spokesman Gao Feng (高峰) said at a media briefing yesterday.
US Trade Representative spokesman Adam Hodge said the decision was “deeply disappointing” and “reflects erroneous Appellate Body interpretations that damage the ability of WTO members to defend our workers and businesses from China’s trade-distorting subsidies.”
“Today’s decision reinforces the need to reform WTO rules and dispute settlement, which have been used to shield China’s non-market economic practices and undermine fair, market-oriented competition,” Hodge said.
The dispute dates back to 2012, when China said that the US imposed illegal countervailing duties on several imports including thermal paper, pipes, lawnmowers, kitchen shelving, print graphics, solar panels, steel sinks and wind towers.
The WTO repeatedly ruled against the US and found that Washington failed to withdraw the illegal duties in a timely manner.
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