WTO Litigation Begins as US and China Trade Barbs

November 22, 2018 Updated: November 22, 2018

GENEVA—The United States and China clashed on Oct. 21 at a World Trade Organization (WTO) meeting with a U.S. envoy accusing Beijing of using the WTO to pursue “non-market” policies.

U.S. President Donald Trump has erected a tariff wall against foreign imports of steel and aluminum, though the European Union, Canada, Australia, and several other countries have either permanent exemptions or postponed tariffs due to ongoing trade negotiations.

The United States has also hit billions of dollars worth of Chinese goods with huge tariffs over accusations of stealing U.S. intellectual property.

Trump has previously expressed his doubts about the WTO’s ability to ensure fair trade practices and has threatened to pull the United States out of the organization if it doesn’t “shape up.”

At the meeting on Wednesday, the WTO agreed to launch a dispute investigation into U.S. allegations of China’s theft of intellectual property, according to Bloomberg. The organization will task a panel of three experts to determine whether China’s policies violate WTO terms. A decision could be made as soon as next year.

Meanwhile, China, the European Union, Canada, Mexico, Norway, and Russia agreed to escalate their complaints against the United States’ steel and aluminum tariffs, entering into a formal adjudication phase.

U.S. Ambassador Dennis Shea said China was using the WTO to promote “non-market” policies, which had distorted world markets and led to massive excess capacity, especially in steel and aluminum.

Both China and the United States accused each other of hypocrisy.

Shea said the WTO should throw out the complaint brought by China and others because WTO rules allowed exceptions for actions taken for national security concerns.

“Some (WTO) members have expressed concerns that invoking the national security exception in these circumstances would undermine the international trading system. This is erroneous, and completely backwards,” Shea said, according to a copy of his remarks provided to Reuters.

“Rather, what threatens the international trading system is that China is attempting to use the WTO dispute settlement system to prevent any action by any Member to address its unfair, trade-distorting policies.”

The United States also triggered its own litigation to contest retaliatory measures by Canada, Mexico, China, and the EU.

Ahead of the WTO meeting, European Trade Commissioner Cecilia Malmstrom told a conference in Paris that China must make concessions in negotiating reform of the WTO or risk seeing the United States turning its back on the current system.

“China has won a lot from the WTO system, and we call on China to show leadership and to engage with us to reform and to update the system, to create a level playing field. Because otherwise the U.S. will create a level playing field outside the system,” Malmstrom said on Nov. 16.

By Tom Miles. The Epoch Times contributed to this report.