Trade War: China Uses WTO To Get Even With The US

24-Oct-2019 Intellasia | Forbes | 6:02 AM Print This Post

China is using the World Trade Organisation (WTO), an American-made institution, to get even with the US.

Beijing is seeking $2.4 billion in retaliatory sanctions against Washington for non-compliance with a WTO ruling in a tariff dispute against the US tracing back in the Obama era.

That’s according to a Reuters report, which states that America could face Chinese sanctions if it does not lift certain tariffs that violate WTO rules.

Ted Bauman, economist and senior research analyst at Banyan Hill Publishing, doesn’t see this ruling having any material significance on the on-going trade war between the two countries. “It’s just one more data-point in the larger ongoing tussle between the two countries,” he says.

Besides, it’s an old issue, according to Bauman. “It’s already known to both parties and is certainly folded into their existing negotiating positions,” he says.

David Bleeden head trader at Metals.com, sees it slightly differently. “China’s request to ‘suspend concessions’ at an annual amount of $2.4 billion is just a money grab.”

Money grab or not, the ruling is a big embarrassment for the US, to say the least. Because, it’s a violation of the rules Washington once wrote.

WTO is an American-made institution. It is the successor of The general Agreement on Tariffs and Trade (GATT), a trade initiative launched by Washington and its allies back in 1947.

GATT’s main mission was to lower trade barriers, like tariffs and quotas, around the world to promote free trade.

For decades, Washington gave free trade lessons to the rest of the world, including China, and helped develop a global market with the creation of the WTO in 1995.

Unlike GATT, which was an informal organisation, WTO is formal members can appeal when other members imposed trade restrictions on their product.

While in theory WTO benefited all members, in practice it benefited the large players more. Like American corporations that had the scale and scope to out-compete smaller players from emerging and frontier market economies around the globe.

Now the same institution America once created is turning against its own policies by a country that it is at trade war with, China.

That certainly doesn’t look good for America, in principle that is. And it can only help China’s cause in the trade war.

https://www.forbes.com/sites/panosmourdoukoutas/2019/10/22/trade-war-china-uses-wto-to-get-even-with-the-us/#6cff03ee50ae

 

Category: China

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