According to reports, the World Trade Organisation (WTO) is about to begin an investigation into the US$250bn of Chinese goods that Donald Trump has slapped tariffs on over the last few months. The WTO will launch the inquiry into the US tariffs on Chinese goods, suspecting that the duties are not in line with requirements that all WTO members give each other the same tariff treatment.
The request for an inquiry on tariffs comes from China and is the second time of asking. The first was last month and was vetoed by the US. However, an investigation is likely to move ahead because WTO rules prevent members from blocking a dispute inquiry a second time. It’s not as if this news of a complaint against the Trump administration for unfair trade practices is new news for the WTO. So far, more than 20 disputes have been brought against the current US administration. As the director general of the WTO, Roberto Azevedo, stated ‘These trade tensions are not only a threat to the system, they are a threat to the entire international community’ adding ‘The risks are very real and there will be economic impacts’.
The WTO investigation will come at a delicate time between the world’s two largest economies. The next round of trade talks is due to begin on 30th January, and if a deal isn’t reached by the 1st March, the Trump administration has threatened to raise the tariff rate on $200 billion of Chinese goods to 25% from 10%.
However, the US does seem to be holding all the cards. As it stands the WTO will have too few judges to rule on cases by the end of the year. The US has placed a hold on new appellate judge nominations believing the WTO is dysfunctional, having failed to hold China to account for not opening up its economy as envisaged when Beijing joined the WTO in 2001. Late last year, Dennis Shea, the U.S. Ambassador to the WTO, laid out the Trump administration’s complaints about the way the WTO’s Appellate Body handles appeals in legal disputes. Whilst in some quarters their protests did find some sympathy, overall the idea of blocking new appointments has been widely opposed as it risks crippling a guardian of international law.