Info Service on WTO and Trade Issues (Apr18/02)
5 April 2018
Third World Network
China's tit-for-tat response to US planned $50 billion tariffs
Published in SUNS #8655 dated 5 April 2018
Geneva, 4 Apr (D. Ravi Kanth) - China, in a tit-for-tat response to
the unilateral crowbar trade measures being imposed by Washington
on Chinese goods, signalled on Wednesday that it would slap tariffs
on more than 100 American products in 14 categories, including some
big-ticket items like soybeans, automobiles, and chemical products
from the United States.
In what appears to be a calibrated action, following a series of unilateral
trade measures on imports from China, starting with steel and aluminum,
announced by President Donald Trump to be followed by hefty duties
on hi-tech imports from China, Beijing made it clear that its retaliatory
actions will be assiduously based on various agreements of the World
According to a news item in the CCTV (China Central Television), "China's
tariff commission of the State Council has decided to impose an additional
tariff of 25% on 14 categories of 106 products such as soybeans, automobiles,
and chemical products originating in the United States."
China said the implementation date for imposing additional tariffs
on American products will be "determined" by the implementation
of the US government's additional tariffs on Chinese products that
the Trump administration announced on Tuesday.
An online statement issued by the Chinese finance ministry said: "America's
measures [for imposing additional tariffs on a range of Chinese hi-tech
pro ducts] have violated the rules of the World Trade Organization,
and have seriously violated China's legal rights."
China's State Council signalled that it would impose additional tariffs
of 25% on US products including soybeans, cars, and chemicals.
China also unambiguously made it clear that the additional tariffs
to be imposed by China on American goods will be "in line with
our rights and commitments under the WTO" and Chinese domestic
China singlehandedly has taken up the gauntlet to safeguard its exports
as per the international trade rules at a time when other major trading
nations such a s the European Union, Japan, Canada, and Australia
among others remained silent i n the face of the unprecedented unilateral
trade actions imposed by the Unite d States.
On Tuesday, the US Trade Representative Ambassador Robert Lighthizer
made public the list of Chinese imports that will be subjected to
additional tariffs on grounds of US determination of China's unfair
trade practices, in purported forced technology transfer by companies
setting up shop in China and the alleged violation of intellectual
The US disclosed the long list of some 1,300 tariff lines that will
be published in the Federal Register today (4 April).
The USTR said its actions are based on the investigations of Section
301 of US Trade law, that were carried out earlier in the year.
President Trump repeatedly threatened that, for the ostensible purpose
of settling the trade deficit of more than US$350 billion with China,
it will impose ta riffs on approximately $50 billion worth of Chinese
imports and take other actions.
The USTR said, "These policies [such as forced technology transfer
by the foreign companies] bolster China's stated intention of seizing
economic leadership in advanced technology as set forth in its industrial
plans, such as Made in China 2025."
According to Ambassador Lighthizer, the targeted list of Chinese products
which, he said, are being supported and subsidized by the Chinese
authorities, will have minimum impact on the US economy.
According to a report in Washington Trade Daily on 4 April, the Chinese
"sectors subject to the proposed tariffs include industries such
as aerospace, information, and communication technology, robotics
"The list covers approximately 1,300 separate tariff lines and
will undergo further review in a public notice and comment process,
including a hearing set for May 15," the WTD said.
"After completion of the process, USTR will issue a final determination
on the products subject to the additional duties [and] the total value
of imports subject to the tariff increase is commensurate with an
economic analysis of the harm caused by China's unreasonable technology
transfer policies to the US economy, as covered by USTR's Section
301 investigation," the USTR stated, according to WTD.
Last week, the US invoked dispute settlement proceedings against China
at t he WTO, saying Beijing's continued discriminatory policies aimed
at mandatory technology transfer by foreign companies to Chinese entities
violate global trade rules.
In all probability, the US will ask for the establishment of a panel
to adjudicate over the issues it raised in the dispute on IPR violations
So far, the WTO's trade law has not been tested in cases of alleged
technology transfer as demanded by host countries.
Perhaps, the latest US dispute against China is going to be the first
of it s kind.
[According to a post and comments at the IELP blog, while the forced
techno logy transfer issue is in violation of the Chinese accession
protocol and the terms of the WTO working party on the Chinese accession
(and hence needing a WTO DSU determination of Chinese violation),
the US problem has been that the Chine se actions and conditions to
allow investments and access to markets have been oral and not easy
to prove before a dispute panel. SUNS]
Last week (26 March), China's trade envoy to the WTO, Ambassador Zhang
Xiangchen, warned: "the unilateral action of the US Section 301
investigations will not only impair the rights and interests of China
and other WTO Member s, but also seriously undermine the multilateral
Ambassador Zhang said, "Section 301 investigations and measures
are purely unilateral which are per se prohibited by Article 23 of
the DSU, and violate the most fundamental values and principles of
He said according to "WTO rulings and the US commitment, the
US shall by no means determine unilaterally based on a S.301 investigation
that other Members have violated the WTO rules."
"When it comes to matters related to the WTO Agreements, the
US shall strictly abide by the WTO rules and findings of the DSB."
Therefore, "what US has done contradicts the commitments that
the US had "explicitly, officially, repeatedly and unconditionally
confirmed" before t he Panel in DS152 (the dispute raised by
the EU against the US in 1998), that the USTR would base a Section
301 decision only on adopted DSB findings," the Chines e envoy
The panel in DS152 (taking note of the US statements before it on
the US obligations vis-a-vis US S.301 family of laws and US commitments
in signing on to the WTO treaty) in its ruling had also warned that
"should the US repudiate or remove in any way these undertakings,
the US would incur state responsibility since its law would be rendered
inconsistent with the obligations under Article 23," Ambassador
"We have seen in the history that, for a long period of time,
the US has frequently launched unilateral investigations on trade
and economic policies of other countries or regions, and implemented
retaliation and sanctions such as raising tariffs and restricting
investment for reasons of domestic industries' protection," he
"Since 1974, the US has launched 125 Section 301 investigations,
which affected almost all the Members," China's trade envoy said,
arguing that "the unilateral measures of US Section 301 had been
ceased after the establishment of WTO."
"However, upon this time, the US is setting a very bad precedent
by bluntly breaching its commitment made to the world."
"WTO members should jointly prevent the resurrection of 301 investigations
and lock this beast back into the cage of the WTO rules," China's
trade envoy emphasized.
He cautioned the US that China remains fully prepared to "react
to the conclusions and measures of Section 301 by the US, and will
firmly take the WTO rules and other necessary ways to safeguard its
legitimate rights and interests."
Ambassador Zhang admitted that "undoubtedly, China is facing
a tough test, and we're prepared for the difficulties ahead."
"If someone asks what the character of the Chinese people is,
I'd say that it is like a bamboo, resilient enough to dance in the
wind, but strong enough to withstand tremendous pressure," the
Chinese envoy said.
"Unilateralism is fundamentally incompatible with the WTO, like
fire and water," Ambassador Zhang maintained.
"In the open sea, if the boat capsizes, no one is safe from drowning.
We shouldn't stay put watching someone wrecking the boat. The WTO
is under siege and all of us should lock arms to defend it,"
China has circulated a list of US imports worth some $3 billion that
will be subject to retaliatory tariffs because of Washington's allegedly
illegal safeguard measures on steel and aluminium based on "national
In a notification submitted to the World Trade Organization's Council
for Trade in Goods last week, China said the US measures imposed in
the name of "national security" are not consistent with
its obligations under GATT 1994 and the Safeguards Agreement.
Beijing maintained that the suspension of concessions under Article
8.2 of the Safeguards Agreement takes the form of an increase in tariffs
on the US pro ducts based in part because the measures were not taken
as a result of an absolute increase in imports over three years -
2014 to 2016.
China also said it reserves the right to impose further retaliatory
In a separate development concerning its safeguard measures on crystalline
silicon photovoltaic cells from China, the United States shared information
on its consultations with Beijing on February 12.
Washington said it will continue discussions.
China stated that Washington did not act in conformity with Article
8.1 of the Safeguards Agreement and has an obligation to compensate
The United States, it added, will have to make compensation "regardless
of the legality of the measure."
Beijing maintained that it has the right to impose retaliatory measures
on US imports because the measures on its photovoltaic cells were
not taken as a result of an absolute increase in imports or in conformity
with the provisions of the Agreement.
Significantly, the Northern countries - the European Union, Japan,
Canada, and Australia - are aligning with the US even though Washington
is resorting to alleged unilateral actions.
It remains to be seen whether all Southern countries can or will rally
round China in its fight against the global trade hegemon.