In the past few years, in response from pressure from domestic unions, the United States has levied a series of additional duties on various Chinese products. The World Trade Organization initially ruled in favor of the US ability to do so, but the Chinese have appealed this decision (see more background here). A new WTO ruling out today supports Chinese claims that these duties are against WTO regulations. From Market Watch:
The World Trade Organization Friday handed an important victory to China, ruling that the U.S. illegally imposed both anti-dumping and anti-subsidy duties on some Chinese exports in 2007.
The trade body’s decision sets a precedent in limiting the ability of China’s trading partners to impose punitive duties on its exports.
Beijing appealed, arguing the U.S. couldn’t legally impose two different classes of punitive duties—anti-dumping and anti-subsidy—on the same goods.Most countries, the U.S. included, do not consider China a market economy, and therefore usually don’t apply anti-subsidy duties. The EU has never imposed anti-subsidy duties on China.Beijing has been campaigning hard for market-economy status from both the U.S. and EU because it would make it harder for those countries to levy anti-dumping duties.
In its 232-page report, the WTO’s judges said that the U.S. couldn’t apply both kinds of duties.
The American United Steel Workers Union, whose products face competition from Chinese manufacturers, has expressed indignation at the ruling. From Investor’s Business Daily:
The United Steelworkers (USW) said that today’s decision by the Appeals body of World Trade Organization (WTO) is a slap in the face to U.S. workers and industries that are harmed by China’s predatory trade practices. The USW believes this decision will undercut the ability of the U.S. to fully and effectively apply countervailing duty and anti-dumping laws against China.
“Today’s decision from the WTO is very troubling,” said Leo W. Gerard, International President of the USW. “This is yet another example of the WTO overreaching and undermining the legitimacy of the WTO and the sovereignty of the United States.
“China is the world’s number two economy and number one exporter, and it maintains a massive trade surplus with the U.S. and the world. The WTO needs to make sure China plays by the same rules as everyone else, and ensure all countries can effectively enforce their trade laws when their workers and industries are being injured by predatory dumping and massive, trade-distorting subsidies.
“It will be extremely difficult for workers to have any confidence in the benefits of trade when an international tribunal can override our trade rules and harm our workers and industries. We look forward to working with the Administration and Congress to change this outcome.”
We will have to see what, if anything, Congress will do about this. Furthermore, it will be interesting to consider if this ruling will transform China’s trade relations with the world.
