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World trade group is likely to investigate Trump's China tariffs

World trade group is likely to investigate Trump's China tariffs

January 28th, 2019 by Bryce Baschuk / Bloomberg News in International News

GENEVA—Tension between the U.S. and China is about to get more complicated, with the World Trade Organization ready to investigate President Donald Trump's tariffs on $250 billion worth of Chinese goods.

On Monday, the Geneva-based arbiter of trade disputes is likely to begin an inquiry into whether the U.S. duties violate a requirement that all WTO members give each other the same tariff treatment, as China asserts.

The investigation comes at a delicate moment between the world's two largest economies. A new round of trade talks is scheduled to begin on Jan. 30, and if a deal isn't reached by March 1, the Trump administration has threatened to raise the tariff rate on more Chinese goods to from 10 percent to 25 percent.

"This WTO case is especially significant because it deals with the central international legal issue in the U.S. conduct of its trade war with China—whether the U.S. can impose trade restrictions on China in response to alleged Chinese WTO violations without first seeking dispute settlement in the WTO," James Bacchus, a former Democratic congressman and former head of the WTO's appellate body, said in an email. "I believe these U.S. tariffs are inconsistent with WTO obligations, but it will be left to my successors on the WTO appellate body to decide."

The WTO is already facing an existential threat over a hold the U.S. has placed on new appellate judge nominations. The decision-making wing of the organization will have too few judges to rule on cases by year-end. A new investigation could further antagonize the U.S., which sees the WTO as overstepping its authority.

This is China's second request for an inquiry on the matter; the first one last month was vetoed by the U.S. The investigation is likely to move ahead Monday because WTO rules prevent members from blocking a dispute inquiry a second time.

But China won't expect a resolution to the investigation quickly because of a backlog in the WTO dispute settlement system. So far, 23 disputes have been brought against the current U.S. administration, including a European Union inquiry into tariffs on aluminum and steel imports.

"These trade tensions are not only a threat to the system, they are a threat to the entire international community," Roberto Azevedo, director-general of the WTO, said last week. "The risks are very real and there will be economic impacts."

The case cuts to the heart of the U.S.-China trade conflict because Trump says the tariffs are necessary to counter an alleged Chinese campaign to steal American intellectual property.

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