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TWN
Info Service on WTO and Trade Issues (Apr25/19) Yerevan, 22 Apr (D. Ravi Kanth) — In the strongest warning yet against the United States, China on 21 April said that it is firmly “opposed to any party striking a deal at the expense of the Chinese side,” threatening that “if such a situation arises, China will never accept it and will take countermeasures in a resolute and reciprocal manner,” as Washington appears to have conveyed to countries that it would not trade with them if they continue with their current trade with China, according to media reports. Responding to reports in the US media, a spokesperson of the Chinese Commerce Ministry on 21 April said that “China is determined and capable of safeguarding its own rights and interests.” While China respects all parties’ rights to resolve their economic and trade differences with the US through consultations on an equal footing, Beijing said that it believes that all parties should stand on the side of fairness and justice regarding the issue of “reciprocal tariffs.” China also conveyed that it is important to uphold historical correctness, and defend international economic and trade rules as well as the multilateral trading system, according to a report in the Chinese publication the Global Times on 21 April. Responding to US media reports that suggested that Washington plans to use the ongoing tariff negotiations to pressure its trading partners into limiting their dealings with China in exchange for reductions in US trade and tariff barriers, the spokesperson from China’s Ministry of Commerce (MOFCOM) said Beijing is aware of such reports. “This represents the implementation of hegemonic politics and unilateral bullying in the realm of trade and economic cooperation under the guise of “reciprocity”,” the spokesperson said, according to the Global Times. Appeasement behaviour will not bring peace, nor will compromise earn respect. Further, pursuing short-term, self-serving interests by harming others’ interests in exchange for so-called “exemptions” is akin to making a pact with the tiger for its skin – it will ultimately leave all parties empty-handed, harming others without benefiting oneself, the spokesperson said, according to the Global Times. “If international trade regresses to the law of the jungle where the strong prey on the weak, all countries will end up as victims,” the Chinese commerce ministry statement suggested. In a report published in the Wall Street Journal (WSJ) on 15 April, it was suggested that “the Trump administration plans to use ongoing tariff negotiations to pressure US trading partners to limit their dealings with China, according to people with knowledge of the conversations.” The WSJ report suggested that “the idea is to extract commitments from US trading partners to isolate China’s economy in exchange for reductions in trade and tariff barriers imposed by the White House.” According to the WSJ report, it was also suggested that the US officials will ask the large pool of negotiators congregating in Washington for bilateral talks “to disallow China to ship goods through their countries, prevent Chinese firms from locating in their territories to avoid US tariffs, and not absorb China’s cheap industrial goods into their economies.” The proposed measures by the US are aimed at undermining “China’s already rickety economy and force Beijing to the negotiating table with less leverage ahead of potential talks between Trump and Chinese President Xi Jinping.” Interestingly, the exact nature of the demands “could vary widely by nation, given their degree of involvement with the Chinese economy.” COLD WAR OR DECOUPLING? The ongoing tariff and trade tensions are gradually leading to a decoupling of the two economies as well as a sustained war-like situation. The WSJ, in its report on 21 April, titled “Breakdown in US-China Relations Raises Specter of New Cold War”, suggested that “today, with economic relations between the two careening off the rails, China and the US are headed toward what could be a Cold War that extends beyond trade – to deepening conflict or even military tension as both seek to form their own blocs.” Unlike in the first phase of the Trump administration during 2016-2020, where the two sides were engaged in contact and consultations, “this time, the two countries have effectively erected trade embargoes against each other in less than three months and are taking economic warfare into new territory. What is at stake is overall global security as well as economic stability for many years to come,” the WSJ said. Citing a former US diplomat, the WSJ said, “the US and China are in a state of economic decoupling and there do not seem to be any guardrails to prevent escalations in trade tensions from spreading to other areas.” “It’s becoming more difficult to argue that we’re not in a new Cold War,” the diplomat suggested, according to the WSJ report. Meanwhile, writing in his Truth Social media website on 21 April, US President Donald Trump claimed that, “Since our announcement of LIBERATION DAY, many world leaders and business executives have come to me asking for relief from tariffs.” “It’s good to see that the world knows we are serious, because WE ARE! They must right the wrongs of decades of abuse, but it won’t be easy for them,” he wrote, without indicating whether there is any ongoing dialogue between the US and China. In another post titled “non-tariff cheating,” President Trump listed the following barriers: “1. Currency Manipulation; 2. VATs which act as tariffs and export subsidies; 3. Dumping Below Cost; 4. Export Subsidies and Other Govt. Subsidies; 5. Protective Agricultural Standards (e.g., no genetically engineered corn in EU); 6. Protective Technical Standards (Japan’s bowling ball test); 7. Counterfeiting, Piracy, and IP Theft (Over $1 trillion a year); 8. Transshipping to EVADE Tariffs!!!” However, according to several World Trade Organization dispute panels, the US continues to implement almost all the non-trade barriers suggested in the above list. President Trump appears to be unaware that VAT or value added tax, is not treated as an export subsidy as per the WTO’s legal jurisprudence, said people familiar with the development. In fact, the practice of dumping below cost has been ruled against by several WTO panels, including against the Byrd Amendment, also known as the US Continued Dumping and Subsidy Offset Act (CDSOA) of 2000. In 2003, the WTO’s Appellate Body struck down the Byrd Amendment on several grounds, while upholding “the finding of the Panel, in paragraphs 7.51 and 8.1 of the Panel Report, that the CDSOA is a non-permissible specific action against dumping or a subsidy, contrary to Article 18.1 of the Anti-Dumping Agreement and Article 32.1 of the SCM Agreement.” The Appellate Body upheld the Panel’s finding, “in paragraphs 7.93 and 8.1 of the Panel Report, that the CDSOA is inconsistent with certain provisions of the Anti-Dumping Agreement and the SCM Agreement and that, therefore, the United States has failed to comply with Article 18.4 of the Anti-Dumping Agreement, Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.” More importantly, the Appellate Body “upheld the Panel’s finding, in paragraph 8.4 of the Panel Report, that, pursuant to Article 3.8 of the DSU, to the extent that the CDSOA is inconsistent with provisions of the Anti-Dumping Agreement and the SCM Agreement, the CDSOA nullifies or impairs benefits accruing to the Complaining Parties under those Agreements.” Perhaps, President Trump seems determined to brush aside all the strictures as to how Washington has allegedly acted illegally on a range of its commitments, said people familiar with the development. +
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