TWN Info Service on WTO and Trade Issues (May18/05)
14 May 2018
Third World Network

China to denounce US threats to MTS at General Council
Published in SUNS #8677 dated 8 May 2018

Geneva, 7 May (D. Ravi Kanth) - China, along with like-minded countries, is expected to denounce the United States at the World Trade Organization's General Council meeting Tuesday (8 May), over the grave threats to the "multilateral trading system" (MTS) from Washington's "unilateral" trade measures, and the continued US attempts to trigger trade wars, according to trade diplomats.

For the first time at a General Council (GC) meeting, China is expected on Tuesday to pointedly tell the US that its unilateral measures under Section 232 and Section 301 of its trade laws and the repeated attempts to block the selection process for filling three vacancies at the Appellate Body (AB) will irreparably damage the multilateral trading system, said a trade envoy who asked not to be quoted.

China has listed three specific items on the GC agenda targeting the US. The three items are (1) "selection of new Appellate Body members"; (2) "[US] section 232 investigations and measures on steel and aluminum products"; and (3) "[US] investigations and measures under Section 301 of the Trade Act of 1974."

Until now, China has never criticized the US by name, nor included items against the US on the General Council agenda. But China has now decided to go full blast against the US by almost naming and shaming the US over the threats it is inflicting on the "multilateral trading system and the WTO", the envoy suggested.

Ahead of the GC meeting, China severely criticized the US at the Dispute Settlement Body meeting on 27 April.

China challenged the US interpretation of Article 17 of the Dispute Settlement Understanding, which lays out the basic rules for the Appellate Body, as well as Rule 15 of the Working Procedures of the AB, Appellate Review.

[Rule 15 says: "A person who ceases to be a Member of the Appellate Body ma y, with the authorization of the Appellate Body and upon notification to the D SB, complete the disposition of any appeal to which that person was assigned while a Member, and that person shall, for that purpose only, be deemed to continue to be a Member of the Appellate Body].

"Whether or not Rule 15 is part of the constitutive text should not prevent members from implementing such a rule, or including such a rule in the DSU as an amendment after negotiation," China said at the DSB meeting on 27 April.

"DSU itself was the result of Uruguay Round Negotiation," China pointed out, arguing that "the WTO did not exist before 1995."

"The entire multilateral trading system was the fruit of hard negotiations," China said.

China referred to the repeated assertion by the US that "the United States remains resolute in its view that Members need to resolve that issue first before moving on to the issue of replacing such a person."

The US, China noted, also said it will continue "our efforts and our discussions with Members and with the chair of the DSB to seek solution on this important issue."

"Contrary to what the US has said, we do not see any efforts by the US to s eek resolution or even any constructive engagement of the US in a meaningful discussion," China maintained at the DSB meeting.

Failure to fill the three vacancies in the Appellate Body due to the "unreasonable blockage placed by the US will profoundly undermine the functioning of the system and credibility of the multilateral trading system", which may eventually result in the complete paralysis of the WTO, according to China.

"Without such system and its enforceable dispute settlement mechanism, trade rules will be manipulated," China said.

In short, "unilateral and protectionist actions such as Section 301 investigations or Section 232 investigations and the subsequent measures will become prevalent," China warned.

China also attacked the US for not implementing the Dispute Settlement Body ruling against Section 110(5) of the US Copyright Act that violated global intellectual property rules.

China said it remains concerned that "IP [intellectual property] right holders are still denied their legitimate rights and that the US fails to provide minim um standards of protection required by the TRIPS agreement."

On Section 301 investigations and measures, China said: "23 years after the establishment of the WTO, Section 301 of the Trade Act of 1974 continues to serve as the tool of the US to take unilateral actions against WTO members."

Disagreeing with the US interpretation of the DSB ruling on Section 301, China said "what certainly has happened today is that the unilateral nature of Section 301 is revived and is now challenging the foundation of the rule-based multilateral trading system."

It asked members "to join with each other to take actions against the unilateralism and protectionism manifested in the US conduct, so that what happened time after time in the past will not repeat itself in the future."

China has already brought the US actions on Section 232 additional duties on steel and aluminum products to the dispute settlement system.

Last week, the US and China held high-profile bilateral meetings in Beijing but failed to resolve their differences on a range of demands made by Washington.

Despite failure to settle differences at the bilateral meetings, the US, according to a news report in Financial Times on 4 May, "has presented China with a list of hardline trade demands, including requiring Beijing to cut their bilateral trade deficit by $200 billion."

In response to the US "brinkmanship" and maximalist positions, "Beijing has responded with a matching stance of its own, calling on Washington to drop its longstanding objections to China being treated as a market economy in the World Trade Organization and has threatened to retaliate by treating the US as a non-market economy if it did not comply," according to the FT.

Against this backdrop of escalating tensions, China will intensify its criticism against the US at the WTO so as to sensitize the members about joining hand s to counter the grave threat posed by the US to the continuation of the rule-based multilateral trading system, trade envoys said.