TWN Info Service on WTO and Trade Issues (Sept24/08)
18 September 2024
Third World Network

Trade: US is “destroying” multilateral trading system, including WTO – China
Published in SUNS #10077 dated 18 September 2024

Geneva, 13 Sep (D. Ravi Kanth) — China has severely criticised the trade policy as well as allegedly unilateral trade measures adopted by the United States during the past 12 months, calling Washington a “destroyer” of the multilateral trading system, including the World Trade Organization, in a rather scathing indictment of the US for failing to comply with its WTO obligations.

A 64-page report, titled “2024 Report on WTO Compliance of the United States,” issued by the Chinese Commerce Ministry on 12 September, seemingly coincided with the ongoing WTO’s Public Forum that began early this week.

The report sought to portray the US as “a practitioner of unilateralism and bullying behaviors”, and “a disruptor of global industrial and supply chains.”

According to China, though the US is seen as the “role model” for standing up for the core principles of the multilateral trading system, Washington has “continued to take measures that run counter to the WTO rules under the cover of “returning to multilateralism”.”

China said the US “has refused to implement the rulings of the panels (of the WTO) and persistently blocked the appointment of the Appellate Body members.”

Under the pretext of “fair trade,” China argued that the US has continued to help its own industries gain competitive advantage through large-scale discriminatory subsidies.

The US “excluded foreign products and suppliers from government procurement through “Buy American” laws,” while erecting “obstacles to normal commercial investment through unsubstantiated security reviews on foreign investment, and leveraged its dominant position in economic and trade fields to coerce other WTO members to obey its domestic laws and unreasonable demands.”

The report catalogued all the trade and investment-related measures implemented by the US during the past year, maintaining that under the rubric of the “stability of global industrial and supply chains”, Washington has “continuously instigated decoupling and disrupting global industrial and supply chains.”

According to China, the US has “abused its long-arm jurisdiction to force other members to relocate their key industries to the US”.

Since August 2023, said China, the US “has continued to pay lip service to its obligations under WTO rules and kept inconsistency between its words and deeds.”

CREATING NEW RISKS

The US’ de-risking policies seemingly directed at isolating China in the global supply chains has “continued to create new risks globally,” China alleged.

“In recent years, the US has politicized, weaponized and pan-securitized economic and trade issues in the name of “security”.”

Without naming the US national security advisor, who was credited with saying that the Biden administration wants to build “small yards with high fences,” China alleged that the US has been instigating its allies to decouple in their respective trade relations with Beijing.

Subsequently, the US national security advisor, Mr Jake Sullivan, has argued that “we are for de-risking and diversifying, not decoupling,” China maintained.

Quoting Mr Sullivan’s statement, China said that the US’ de-risking policy comprises three main elements.

These elements include: (1) “investing in America’s industrial and innovation capacity”; (2) “diversifying supply chains”; and (3) “taking a series of tailored measures so that American technology cannot be used to undermine the security of the United States and its allies.”

The US, according to China, has also established “the Summit on Global Supply Chain Resilience, the US-EU Trade and Technology Council, the US-Japan Economic Policy Consultative Committee, the Minerals Security Partnership and other mechanisms.”

UNILATERAL SANCTIONS

In its litany of complaints against the US, China alleged that the “US policy for escalating unilateral sanctions has continued to create new obstacles around the world.”

It said while the US has for a long time implemented measures under national security, Washington “abused export control measures to curb enterprises of other countries, [and] undermined the security and stability of global industrial and supply chains.”

China said that the US is now the country that has introduced the largest number of unilateral sanctions in the world, targeting a large number of WTO members.

Further, “the increasing unilateral sanctions imposed by the US have not only directly disrupted the foreign economic and trade activities of the entities and their countries but also exacerbated the contest between sanctions and counter-sanctions, thereby worsening the global economic and trade environment,” China alleged.

ECONOMIC & TRADE POLICIES

China said that the US has deployed several domestic laws that “violate the WTO rules to implement its discriminatory measures, which has severely undermined the rules-based global trade order,” citing the example of using Section 301 tariff measures that violated the WTO rules.

It expressed sharp concern over the growing risk of US violation of various WTO provisions.

Beijing listed the following US measures that it said violated the US’ WTO obligations:

1. “In terms of tariff and non-tariff barriers, the US has been wielding the tariffs “stick” to create new unfair trade.
2. In terms of industrial subsidies, the US has continued to apply discriminatory subsidy policies to eliminate advantages of other countries’ industries.
3. In terms of agricultural subsidies, the US has continued to take a variety of measures to cover up its large amount of domestic support for agricultural products that distort international trade.
4. In terms of trade remedies, the US has been frequently applying the tool of unilateralist trade remedies to force other members’ competitive enterprises to quit the US market.
5. In terms of standards, technical regulations and conformity assessment procedures, the US has been creating technical barriers to trade to restrict exports from other members.
6. In terms of trade in services, the US has been stepping up government intervention in an attempt to maintain its leading edge.
7. In terms of intellectual property rights, the US has been keen on manipulating double standards to stifle its competitors.
8. In terms of export control and economic sanctions, the US has been abusing its sanction measures and escalated its bullying behaviors.
9. In terms of investment review policies, the US has been over-stretching the concept of national security, continuously expanding the scope of review, and even adopting measures such as retrospective reviews, severely disrupting normal cross-border investment.
10. In terms of the “Buy American” policy, the US has been creating obstacles to the market access of foreign products and services, in disregard of concerns from other WTO members.
11. In terms of arrangements in international economic and trade cooperation, the US has been pursuing discriminatory bilateral and regional arrangements based on non-economic factors, constantly creating divisions among WTO members. In short, due to its relentless unilateralist and protectionist practices arising from its domestic political considerations and short-term interests, the US has been deviating from the core values and basic principles of the WTO, as well as the general expectation of other WTO members.”

Consequently, according to China, “the US practices have undermined the authority and efficacy of the WTO, disrupted the normal order of world trade and economy, and harmed the common interests of the vast majority of the WTO members.”

China insisted that it “stands firmly with other WTO members to safeguard the rules-based multilateral trading system, respect the legitimate rights of WTO members to promote their own economic and social development, and actively maintain the security and stability of global industrial and supply chains.”

US COMPLIANCE WITH WTO OBLIGATIONS

China praised the US for its role as a “global leader in foreign trade”, and as a creator of the multilateral trading system, including the founding of the GATT (General Agreement on Tariffs and Trade) and the WTO in 1995, and in the launching of the Trade Facilitation Agreement.

China said that the US is the “principal beneficiary of the multilateral trading system.”

However, since 2017, when the US started pursuing “America First” policies, Washington has adopted “a series of unilateralist and trade protectionist measures, which run counter to the core values and basic principles of the multilateral trading system, and violate its obligations under the WTO,” China argued.

Under the sub-title of “a Destroyer [of] the Multilateral Trading System”, wherein the US resorted to domestic laws over international rules, China said in its report that the US undermined the “dispute settlement mechanism,” particularly the Appellate Body (AB) despite a joint proposal from 130 WTO members to fill the vacancies in the AB.

The US, according to China, has “selectively” implemented the Dispute Settlement Body recommendations.

Washington has also challenged the special and differential treatment of developing countries based on self- designation, China alleged.

In a similar vein, China alleged that the US is a “practitioner of unilateralism and bullying behaviors,” including “abusing National Security Exceptions” while practising “economic coercion.”

China charged the US for being “a disruptor of Global Industrial and Supply Chains,” while promoting “near shoring” or “friend-shoring”, etc, “to pursue the so-called “security” and “resilience” of industrial supply chains.”

In conclusion, China urged the US to “fulfill its commitments, abide by the rules, truly return to the community of the rules-based, open, transparent, inclusive and non-discriminatory multilateralism, and play its due part of safeguarding the authority and efficacy of the multilateral trading system.” +