Info Service on WTO and Trade Issues (May18/02)
3 May 2018
Third World Network
China calls for common front on US S.301 measures
Published in SUNS #8673 dated 2 May 2018
Geneva, 30 Apr (D. Ravi Kanth) - China has called for a common front
against the United States at the World Trade Organization for fighting
the "unilateralism and protectionism" unleashed by Washington
through its "crowbar trade measures" under Section 301 of
the US Trade Act of 1974, according to people familiar with the development.
In a hard-hitting statement delivered at the WTO's Dispute Settlement
Body meeting on Friday (27 April), China said "we believe the
time has come for all members to join with each other to take actions
against the unilateralism a nd protectionism manifested in the US
conduct, so that what has happened time after time in the past will
not repeat itself in the future."
The unilateral measures in the US Section 301 posed a systemic threat
to the global trading system, China said.
"What certainly has happened today is that the unilateral nature
of the US Section 301 is revived and is now challenging the foundations
of the rules-based multilateral trading system," China pointedly
Against the backdrop of the US Section 301 investigations into China's
IP (intellectual property) policy regime on purported grounds of "unfair
economic practices" adopted by Beijing and the subsequent threat
last month of US trade retaliatory measures to the tune of US$50 billion,
China said there is a material change in the dynamics of unilateral
positions adopted by the US.
Chronicling the background to the enactment of Section 301 in 1974,
China said that "the US has initiated 125 investigations under
Section 301 of the Trade Act of 1974 and retaliated in 17 instances."
"Between 1974 and 2018," China pointed out, "the US
has initiated 27 investigations against EC (later the EU), 16 investigations
against Japan, 14 investigations against Canada, 11 investigations
against Korea, 8 investigations against Brazil, 6 investigations against
Argentina, 6 investigations against Chinese Taipei, 5 investigations
against India, 3 investigations against Thailand, 2 investigations
against Belgium, France, Indonesia, Italy, Portugal, Spain, Sweden,
Switzerland, the UK (United Kingdom), Ukraine respectively, and one
investigation against Australia, Austria, Colombia, Costa Rica, Denmark,
Germany, Guatemala, Honduras, Ireland, Mexico, Norway, Pakistan, Paraguay,
Netherland, Turkey and the Soviet Union respectively."
China said that the Section 301 investigations remained a nightmare
for countries before the establishment of the WTO, particularly for
those countries that did not possess the negotiating leverage. Shockingly,
with a low- threshold for the Section 301 investigations, "roughly
one third of all Section 301 investigations were self-initiated by
the US government, namely without any petition by an y domestic industry,"
"Twenty-three years after the establishment of the WTO [in 1995],
Section 3 01 of the Trade Act of 1974 continues to serve as the tool
of the US to take unilateral actions against other members,"
According to China, a WTO dispute settlement panel in 2000 had clearly
rule d that even though Section 301 is not inconsistent with Article
23 of the Dispute Settlement Understanding that deals with strengthening
multilateralism, any actions taken under Section 301 must be based
on the "rulings and recommendations" issued by the DSB (Dispute
"Contrary to these commitments, none of the decisions or actions
taken by the US in this recent Section 301 investigation was based
on any adopted rulings or recommendations of the DSB," China
Strangely, "the US defended its Section 301 investigations and
subsequent actions by asserting that the US made no findings in the
Section 301 investigation that China had breached its WTO obligations,"
China said. Yet, "the US argues therefore it was entitled to
take retaliatory trade measures against China regardless of whether
those retaliatory measures conform to the WTO rules," China said.
Clearly, "this is a fundamental misinterpretation of Members'
WTO obligations," China maintained.
Citing Article 1 and Article 2 of the GATT 1994 which requires members
to provide MFN (most-favoured-nation) treatment to all other contracting
parties and each contracting party to accord same treatment as per
the schedules of concessions, China said "the precondition suggested
by the US is not justified."
Last month, China launched at the WTO a trade dispute against the
US Section 301. At last week's DSB meeting (where the Chinese dispute
came up), several other countries - Pakistan, Russia, Hong Kong-China,
Chinese Taipei, the European Union, Brazil, India, and Norway - cautioned
the US about the dangers that the US unilateral actions posed to the
global trading system.
Chinese Taipei and the EU said while they share the US concern about
China' s alleged violations of intellectual property rights, the best
way to address the matter was through the multilateral trading system.
Without naming the US, India said "adoption of unilateral measures
by Members will erode our long-cherished principles of predictability
and non-discrimination and can lead to a real risk of a full-blown
"As a firm supporter of the rules-based multilateral trading
system," India said "gaps, imperfections and unfair elements
in trade rules need to be discussed and reformed in the WTO."
"Unilateral measures, on the other hand, could stop the fragile
global economic recovery in its tracks, with consequences for jobs,
GDP growth and development that would harm us all," India argued.
In a sharp response to China's trenchant criticism on the Section
301, the US said it had already catalogued the Chinese abuse of IPRs
in its trade dispute complaint filed last month. "Instead of
addressing its damaging and discriminatory policies, China accuses
the US of "unilateralism," the US argued.
The controversial Chinese practices, according to the US, include
"foreign ownership restrictions" involving joint venture
requirements and foreign equity limitations, "China's regime
of technology regulations" that force the American companies
to transfer technology, China's facilitation of investment systematically
to take over foreign companies and assets, and China's theft of sensitive
commercial information and trade secrets from the computer networks.
China, however, dismissed the US statement, saying that it is a "wilful
distortion of facts" and that the alleged policies on technology
transfer and licensing on non-marketing terms was "entirely without
China slammed the United States for rejecting Beijing's complaint
for invoking dispute settlement proceedings against Washington at
the World Trade Organization over the proposed tariff measures following
the Section 301 investigations that have not been applied as yet against
On April 13, the US said China's request for dispute settlement consultations
on April 4 "does not meet the requirements of Article 4 [consultations]
of the DSU [dispute settlement understanding]" since the US has
not adopted any tariff measures with respect to China.
The US has said that since China's complaint revolves around the "proposed
tariff measures" which have not been adopted against China, the
issues raised in China's complaint "are not measures affecting
the operation of any covered agreement taken within the territory
of" a Member, within the meaning of DSU Article 4.2. Consequently,
"China's letter therefore does not "identif[y] the measures
a t issue" pursuant to DSU Article 4.4 as there are no tariff
measures in existence," the US said.
In sharp response to the US rejection, China has said, in a communication
o n April 25, that the measures raised by China are explicitly based
on legal provisions.
China ridiculed the US that, after having rejected China's request
for consultations, it is ready to enter into consultations with "China
with respect to the United States's concern on China's relevant policies
addressed in the Section 301 investigation as well as China's Public
Notice on imposing additional tariffs on certain products originating
from the United States."
"I regret to inform you that such request obviously exceeds the
scope of China's consultations request dated 4 April 2018," China
"In addition, it is confused by the logic taken by the United
States," China argued, saying "on the one hand, the United
States emphasizes that the policies addressed in the Section 301 investigation
do not appear to implicate WTO obligations except for the measures
under China - Certain Measures Concerning the Protection of Intellectual
Property Rights (DS542); on the other hand, your 13 April letter requests
to discuss China's policies addressed in the Section 301 investigation,
which appears that the United States also recognizes the policies
addressed in Section 301 investigation do implicate the WTO rules."
China said that it will go ahead with the "consultations between
our two sides [which] will be conducted in accordance with Article
4 of the DSU and will only cover the measures at issue identified
explicitly in the DS543 consultation s request, including the list
of imported products originating from China for additional tariffs
dated 3 April, the Section 301 investigation report date d 22 March,
In short, China seems to have decided to take the fight against the
US unilateral actions to finish at the WTO. It remains to be seen
whether developing and the least-developed countries will coalesce
around the issues raised by China.