WTO finds U.S. tariffs on China breach trading rules

© Reuters. Flags of U.S. and China are displayed at AICC’s booth during China International Fair for Trade in Services in Beijing

GENEVA/BRUSSELS (Reuters) – The World Trade Organization ruled on Tuesday that tariffs imposed by the United States on more than $200 billion (£155 billion) of Chinese products in 2018 were inconsistent with global trading rules.

A three-person panel ruled that Washington had not shown why the tariffs, imposed after an investigation into forced transfer of technology and intellectual property, were a justifiable exception to Washington’s obligations.

The panel found that the duties were inconsistent with trading rules because they applied only to China and were above the maximum rates to which the United States had committed.

It also found that the United States had not adequately explained the choice of products hit by the tariffs, or why the measures were necessary based on what Washington saw as Chinese companies’ misappropriation and unfair competition.

“…The Panel recommends that the United States bring its measures into conformity with its obligations…,” the report said.

The panel added that it had only looked into the U.S. measures and not China’s retaliation, which Washington has not challenged at the WTO. Noting “unprecedented global trade tensions”, the three-person panel encouraged the two sides to work to resolve the overall dispute.

The United States could appeal against Tuesday’s ruling. The case could then enter a legal void because Washington has blocked the appointment of judges to the appellate body, preventing it from convening the minimum number required to hear cases.

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