China seeks $2.4 billion in sanctions against U.S. in Obama-era case: WTO

Chinese and U.S. flags flutter near The Bund in Shanghai
FILE PHOTO: Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song

October 21, 2019

By Stephanie Nebehay

GENEVA (Reuters) – China is seeking $2.4 billion in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating to the Obama era, a document published on Monday showed.

WTO appeals judges said in July that the United States did not fully comply with a WTO ruling and could face Chinese sanctions if it does not remove certain tariffs that break the watchdog’s rules.

The WTO’s Dispute Settlement Body effectively gave Beijing a green light to seek compensatory sanctions in mid-August. The United States said at the time that it did not view the WTO findings as valid and that the judges had applied “the wrong legal interpretation in this dispute”.

China continued to be the “serial offender” of the WTO’s subsidies agreement, the U.S. delegation said. U.S. officials in Washington and Geneva had no further comment.

In addition to the cases pending before the WTO, the United States and China have imposed a series of tit-for-tat tariffs over the past 15 months that have roiled financial markets and resulted in a sharp drag on global economic growth.

Alan Wolff, deputy director-general of the WTO, the highest-ranking American in the organization, declined to comment on the specific case at an event hosted by a Washington think tank.

But he said the fact that members continued to file cases with the WTO demonstrated their belief that the organization would ultimately resolve a current impasse over its dispute settlement process.

“The WTO … can’t prevent a trade war, but it can be part of the solution,” he said.

China, in its request posted by WTO, said: “In response to the United States’ continued non-compliance with the (WTO Dispute Settlement Body’s) recommendations and rulings, China requests authorization from the DSB to suspend concessions and related obligations at an annual amount of $2.4 billion.”

The United States had failed to comply with the DSB recommendations and rulings within the specified period and no agreement on compensation had been reached, it said.

China went to the WTO in 2012 to challenge U.S. anti-subsidy tariffs, known as countervailing duties, on Chinese exports including solar panels, wind towers, steel cylinders and aluminum extrusions, exports that China valued at $7.3 billion at the time.

The duties were imposed as the result of 17 investigations begun by the U.S. Department of Commerce between 2007 and 2012.

China’s request appears on the agenda of the DSB set for Oct. 28. The United States could challenge the amount of retaliatory sanctions sought, which could send the long-running dispute to arbitration.

The office of U.S. Trade Representative (USTR) Robert Lighthizer has said the WTO ruling recognized that the United States had proved that China used state-owned enterprises to subsidize and distort its economy.

But the ruling also said the United States must accept Chinese prices to measure subsidies, even though USTR viewed those prices as “distorted”.

U.S. President Donald Trump said on Monday that work on a U.S.-China trade agreement was coming along “great.” On Friday he said a trade deal between the world’s two largest economies will be signed by the time the Asia-Pacific Economic Cooperation meetings take place in Chile on Nov. 16 and 17.

But U.S. Commerce Secretary Wilbur Ross on Monday said it was more important to get details of the deal right than meet a specific deadline.

(Reporting by Stephanie Nebehay; Additional reporting by Andrea Shalal in Washington; Editing by Toby Chopra and Tom Brown)

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