Is the WTO ruling really a “victory” for China?

A panel of 3 trade experts from the WTO Dispute Settlement Agency ruled on September 15 that US tax policies on Chinese goods in 2018 were “inconsistent” with the Global Trade Rules.

Specifically, the WTO ruling states that US taxes on Chinese goods worth $ 234 billion in June 2018 and September 2018 are illegal.

The ruling came after President Donald Trump unilaterally imposed tariffs on more than $ 350 billion worth of goods imported from China, a move the White House chief said was in response to Beijing’s unfair trade practices.

This is also the first decision to be issued after China filed numerous complaints with the WTO to oppose US tariff measures, in the context of the trade war between the world’s two largest economies. signs of cooling.

According to analysts, China hopes to use the WTO ruling for domestic propaganda purposes, but Beijing still tries not to cause more external “turmoil”, although President Trump “has been angry.” “With the decision of the WTO.

“China feels vindicated, but gets very little from the ruling. Tariffs are not lost or loosened even when a decision is made, so the impact of the ruling is very limited,” said John Gong, professor of economics at the University. of Beijing International Business and Economy., identify.

According to Professor Gong, “for the United States, the (WTO) decision was anticipated, so this outcome will have no impact on US movements in the future.”

In the past two years, the United States has refused to nominate new judges to replace judges with terms on the WTO’s seven-member appeals panel, which is responsible for hearing appeals in trade disputes. This Washington move meant that the appeal panel did not have enough active members.

After the WTO ruling, the United States has the right to appeal within 60 days and President Trump announced that he would consider appropriate action. If Washington decides to appeal, the WTO ruling will be stalled and cannot be enforced.

Triumph of China?

Kong Qingjiang, a WTO expert at the China University of Law and Political Science, said the Chinese officials he had met with were “certainly satisfied” with the WTO decision, but were also aware that the State victory will not lead to any substantial legal outcome “and this is a” dilemma “facing China.

Trade observers have predicted that the WTO will make a decision, as the protracted trade war between the world’s two largest economies is essentially beyond the rules of the world trading system. in terms of US tariffs and Chinese retaliation.

“The trade community has always understood that the US measures are inconsistent with WTO rules, and the dispute resolution council report also confirms that, in reality, there is no legal background,” Tatiana said. Prazeres, a former Brazilian foreign trade minister and former senior adviser to the WTO, said.

The United States has “objected” that the tariffs they impose on Chinese products are “necessary measures to protect American values”, instead of admitting that the country is deviating from WTO rules. . However, this argument does not convince the WTO Council.

The Chinese Ministry of Commerce welcomed the decision, stating that Beijing hopes the United States “fully respects the judgment of the expert panel, as well as the rule-based multilateral trading system, and takes real action. Cooperate with China and others. members of the WTO to keep the multilateral trading system together ”.

For his part, on September 15, President Trump reaffirmed his position that he was not a supporter of the WTO.

According to analysts, the fact that China only makes diplomatic statements and avoids provocative words is a sign that Beijing no longer wants to “provoke” President Trump. Instead, Beijing will continue to focus on phase 1 of the trade deal, the only “glue” in current US-China relations.

“China cannot take retaliatory measures that could continue to damage bilateral relations. The dispute between the United States and China can ultimately only be resolved bilaterally, “said Qingyi Su, senior fellow at the Institute for World Politics and Economics.

Siqi Li, a professor at China’s WTO Research Institute, said Beijing would view the WTO decision as a “parallel solution to bilateral negotiations” with the United States to end the trade war.

“The rulings of the WTO can provide a legal basis, while a bilateral negotiation between the United States and China can address certain political and economic concerns. Because the WTO appeals panel is paralyzed, the final outcome of the trade war between the United States and China will depend more on how the first phase of the trade agreement will evolve, ”said the professor. Li said.

Meanwhile, all the attention in Beijing will be on how the Trump administration will decide how to act in the WTO, as the head of the White House has already warned.

“Not only China, but all WTO members are concerned that Mr. Trump will withdraw from the WTO. If this happens, it could be a disaster for the WTO, ”said Sun Lei, a member of the Beijing-based Dacheng law firm, which represents the Chinese government in previous WTO trials.

Success

According to the Bloomberg, SCMP