TWN Info Service on WTO and Trade Issues (Jul18/14)
17 July 2018
Third World Network

US criticised for starting "trade war", undermining WTO's credibility
Published in SUNS #8722 dated 16 July 2018

Geneva, 13 Jul (D. Ravi Kanth) - China severely criticized the United States on Thursday for undermining the "authority" and "credibility" of the World Trade Organization (WTO) by openly "defying" previous rulings against the Special 301 and by pointing a "gun" at the "other party" during discussions for resolving differences.

The US actions amounted to torpedoing the multilateral trading rules at a time when they are much needed for the recovery of the global economy.

"The WTO rules are not perfect but members can improve them through serious negotiations," said China's vice minister of commerce Wang Shouwen, during a briefing with reporters on Thursday.

"The US started the trade war and against the interests of the US, its consumers, workers, and ranchers, and it is against the interests of China," he said.

China, said Minister Wang, will vigorously uphold "the authority and efficacy of the WTO dispute settlement" and continue to support "the multilateral trading system" that worked for the WTO with a greater role.

He said "China has lived up to its responsibilities as a Major Country" while taking "firm steps" for opening-up the economy.

Asked to comment whether China remains committed to safeguarding the special and differential flexibilities for developing countries and for the elimination of aggregate measurement of support provided by developed countries, Minister Wang said "the special and differential treatment (S&DT) is a very important principle" and "it should be observed as it enables the developing countries to adapt to the WTO rules."

"And it is our view too that the S&DT is important for developing countries, and China's views are very clear on this issue," he said.

Commenting on the AMS (aggregate measurement of support) or most trade-distorting domestic subsidies provided by the developed countries to their farmers, the Chinese minister said "the AMS has been very unfair to developing countries while the developed countries are entitled to huge sums of agricultural subsidies - which are having very adverse consequences on the farmers in the developing countries."

He said "those developed economies which use AMS to subsidize their farmers to artificially depress the world market prices and resulting in over-production [are] having an impact on the other developing countries."

To another question whether China's negotiating strategy at the WTO - involving the pursuit of the unresolved Doha issues with other developing countries while simultaneously joining with the developed countries to pursue "new" issues - amounted to "running with hares and hunting with hounds," the Chinese minister said "China will continue to pursue the traditional issues in the Doha work program and is also supportive of discussions in non-traditional areas like e-commerce and investment facilitation."

"In our view, e-commerce is very helpful for young people and women to set up their own businesses. The e-commerce platforms are creating new jobs and investment facilitation would help all developing countries," he said.

When asked to comment about the escalating frictions between the US and China, Minister Wang said pointedly: "The US started the trade war and against the interests of the US, its consumers, workers, and ranchers. It is against the interests of China."

He said "there had been progress for resolving the outstanding issues between China and the US after four rounds of high-level discussions during this year."

"So much so that the US said it will put its [proposed] measures [on account of Section 301 investigations] on hold and all of a sudden an announcement was made to impose tariffs on imports of Chinese products," Minister Wang maintained.

"For any talks to be [a] success," he said, "no party should point a gun at other party."

And more important, "for any talks to be useful, every party needs to keep its word," the Chinese minister said, suggesting that fresh talks to resolve the differences with the US remain uncertain.

The Chinese minister justified China's retaliatory measures against the unilateral duties imposed under Section 301 that has already been found to be a violation of the WTO rules by a dispute panel.

"The 301 investigation is in itself a violation of the US' own commitment and the statement of administrative action that the US made when the WTO was created in 1994," the Chinese minister argued.

Moreover, "the 301 investigation runs counter to the US' commitment made to the panel in a case brought by the European Union in 1999 against the US," Minister Wang said.

Therefore, "the 301 investigation and the measures taken thereafter are a total violation of the WTO principles of most-favoured-nation (MFN) treatment and the scheduled binding commitments," he said.

Consequently, "the investigations and measures taken are against the interest of the US, the American consumers, workers, and ranchers, and against China," the Chinese minister repeatedly emphasized.

The US actions amounted to "just bullying and they are hurting the global value chains," Minister Wang said.

"And as a WTO member," he said, "China needs to do something to safeguard WTO rules and as a sovereign state China has a right to adopt measures necessary to defend itself."

Finally, "what China has done so far is also in spirit with the international law," the Chinese minister maintained.

He suggested that China could not have waited for three years for a panel to decide the issue when "somebody [the US] knows this is exactly wrong to do and still does its wrong."

Minister Wang said China merely tried to protect its interests by imposing retaliatory measures, otherwise "if a big WTO member continues to defy the WTO rules it would [undermine] the authority and the credibility of the WTO."

Further, if other members "emulate the big WTO member, and then the WTO would fall apart," he cautioned.

Members should not underestimate "the consequences of unilateral protectionist measures" which will badly affect the global value chains, the Chinese minister said.

He did not rule out further talks with the US but warned that "for any talks to be successful, one party needs to take the gun off the other party and for any talks to be useful, one party needs to keep to its word."