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TWN
Info Service on WTO and Trade Issues (Apr25/06) Geneva, 8 Apr (D. Ravi Kanth) — The World Trade Organization should convene an extraordinary meeting of its General Council (GC) to discuss the grave situation that has arisen due to the “reciprocal tariff policy” announced by United States President Donald Trump, who appears to have escalated his tariff and trade war on 7 April, by threatening to impose an additional tariff of 50% on Chinese goods, said people familiar with the development. President Trump said that if Beijing does not rescind the retaliatory tariff of 34% on all American goods by 8 April, Washington will impose another 50% tariff on all Chinese goods with immediate effect, according to his post on the Truth Social website on 7 April. He said, “Yesterday, China issued Retaliatory Tariffs of 34%, on top of their already record setting Tariffs, Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long-term Currency Manipulation, despite my warning that any country that Retaliates against the US by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set.” As part of President Trump’s reciprocal tariff policy, the US had announced on 2 April a reciprocal tariff of 34% on all Chinese goods, taking the overall tariff level close to 65% (reciprocal tariff of 34% plus 20% on account of the alleged illegal supplies of fentanyl entering the US plus an earlier 11% imposed by the Biden administration). The tariffs are expected to come into effect on 9 April. In response, China on 4 April announced that it would impose a retaliatory tariff of 34% on all American goods combined with a regime of export sanctions on supplies of critical raw minerals and on the purchase of American farm goods. China’s retaliatory measures will come into effect on 10 April. China also raised a trade dispute against the reciprocal tariffs at the WTO on 4 April, requesting the US to enter into consultations under Article 4 of the WTO’s Dispute Settlement Understanding (DSU) within the stipulated period of 30 days. If the two sides fail to reach an amicable agreement within a period of 60 days, then China is entitled to request for the establishment of a dispute panel to rule on the US reciprocal tariffs. Against this backdrop, President Trump, in his latest post, threatened that, “if China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.” “Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately. Thank you for your attention to this matter!”, he said. However, China has so far not requested any meetings with either President Trump or his senior officials, according to several media reports. In the so-called “war of nerves”, it remains to be seen who will blink first, but all indications are that China might remain firm in its stand to impose retaliatory tariffs, said people familiar with the development. According to a report in the Wall Street Journal on 7 April, the “Chinese policymakers are well-prepared to cope with US tariffs by using policy tools including monetary and fiscal easing, the Communist Party’s flagship newspaper, People’s Daily, said in a commentary printed on the front page of Monday’s edition.” The commentary said that the central bank could trim policy rates any time if the situation requires and that China has room to let its budget deficit widen, according to the WSJ report. Meanwhile, the European Commission’s President Ursula von der Leyen said the EU is ready to negotiate with the US, and had proposed a “zero-for-zero” tariff regime for industrial goods with the US. However, she said that if the negotiations are not able to reach any conclusion, then Brussels is ready to impose countermeasures against American goods. Japan also indicated that it is prepared to negotiate with the US, according to several media reports. NEED FOR SPECIAL GC MEETING It is against the backdrop of a “business-not-as-usual” scenario with the US reciprocal tariffs having “structurally and systemically destroyed” the rules-based WTO, that the need for an extraordinary General Council meeting could not have come a day too soon, said people familiar with the development. During the outbreak of the COVID-19 pandemic in 2020, the WTO held an extraordinary GC meeting to discuss the grave situation that had arisen then, said a former trade envoy, who asked not to be quoted. “The WTO must decide collectively at an extraordinary GC meeting on how to proceed further against the escalating tariff and trade war launched by President Trump,” the trade envoy said. Though the WTO’s Director-General, Ms Ngozi Okonjo-Iweala, made a rather innocuous statement in the wake of the announcement of the US reciprocal tariffs last week, she is “scared” to take any strong step such as urging the GC chair to convene an extraordinary GC meeting to discuss the current grave situation, said another trade envoy, who asked not to be quoted. Meanwhile, as the WTO Secretariat is convening a big celebratory meeting commemorating “WTO at 30” on 10 April, it is somewhat ironic that the meeting is going to discuss several issues when the organization itself is being “systemically decimated”, the trade envoy said. Further, it appears that two former WTO directors-general – Mr Supachai Panitchpakdi of Thailand and Mr Roberto Azevedo of Brazil – have been invited to speak at the meeting along with two former chairs of the General Council, said people familiar with the development. However, the former WTO Director-General Pascal Lamy, who has made several statements against the US reciprocal tariffs while seeking both dialogue as well as retaliatory measures against the US, does not appear to figure in the list of invitees, said a person familiar with the development. CANADA LAUNCHES DISPUTE Meanwhile, in a separate development concerning the Trump administration’s 25% tariff on imports of steel and aluminium as well as on automobiles and auto parts, Canada has requested consultations with the US under Articles 1 and 4 of the DSU, said people familiar with the development. In its request for consultations (WT/DS637/1) circulated on 7 April, Canada said that the “measures adopted by the United States that impose a 25 percent tariff on automobiles, effective April 3, 2025, and a 25 percent tariff on automobile parts, effective on a date to be specified in the Federal Register but not later than May 3, 2025” violated several core provisions of the WTO rules. Canada said the legal instruments through which the US imposes and administers the tariffs, operating separately or in combination, include the following measures: * Section 232 of the Trade Expansion Act of 1962 (Section 232); * Section 301 of title 3, United States Code; * Section 604 of the Trade Act of 1974; * US Department of Commerce Report on the Effect of Imports of Automobiles and Automobile Parts on the National Security, dated February 17, 2019; * Presidential Proclamation No. 9888, dated May 17, 2019; and * Presidential Proclamation No. 10908, dated March 26, 2025. According to the communication, Ottawa “considers that the above measures appear to be inconsistent with the United States’ obligations under the following provisions: 1. Article II:1(a) of GATT 1994, as the measures at issue fail to accord to the commerce of Canada treatment no less favourable than that provided in the United States’ Schedule of Concessions that is annexed to GATT 1994; 2. Article II:1(b) of GATT 1994, as the measures at issue impose duties in excess of the bound rates set forth and provided in the United States’ Schedule of Concessions that is annexed to GATT 1994; and 3. Article VIII:3 of GATT 1994, as the measures impose substantial penalties for minor breaches of customs regulations or procedural requirements.” According to Canada, “The United States’ measures described above, whether or not they are inconsistent with the GATT 1994, nullify or impair benefits accruing to Canada directly or indirectly under the GATT 1994.” Pursuant to the DSU, as a first step, the US is required to enter into consultations with Canada within 30 days, and if the two sides fail to reach an amicable agreement within a period of 60 days, then Canada can request the establishment of a dispute panel to rule on the US tariffs. +
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