The trade dispute between the US and China, which started at the beginning of 2018, finally had its first outcome in September 2020. The panel of trade experts selected to review the case agreed with China, stating , "the measures at issue are inconsistent with various articles of the GATT,” while recommending the US to “bring its measures into conformity with its obligations.”
Recalling Facts
In April 2018, China officially filed a complaint against the US. The Chinese authorities stated that the tariffs imposed on steel (25%) and aluminum (10%) violated the international trade rules established by the General Agreement on Tariffs and Trade (GATT) in 1994. Tariffs were imposed on over $360 billion worth of products being imported into the US from China to encourage US citizens to choose domestic products over Chinese ones. The US has also accused China of stealing American intellectual property and forcing US companies to transfer technology for access to China’s markets. The Trump administration has imposed the tariffs that are now in question, under Section 301 of the Trade Act of 1974 (the Act).
What do the WTO / GATT Rules Say?
China's complaint is based on the first article of GATT, which is known as the most-favoured-nation (MFN) treatment. According to this clause, "any advantages, favors, privileges or immunities granted by a contracting party to a product shall, immediately and unconditionally, be extended to any similar product."
Thus, the World Trade Organization (WTO)’s ruling is perfectly reasonable, but the full repercussions of the ruling remain uncertain for now. Most of the tariffs are still in place, affecting over half of the Chinese goods that are in the US. If the US chooses to oppose the decision, it would likely end up in legal limbo since a clear resolution for the case is not laid out.
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