It was a mark in history when in 2001, China joined the World Trade Organization (WTO). It added fuel to the growing bi-polar soft power via trade in the globe. The trade war between China and the US had begun since 2018. The tit-for-tat tariff included extra import taxes by both the countries on each other. Approximately on more than $450 billion traded goods, these extra import taxes were levied. The trade war between the two countries not only had an adverse impact on the trade flow between China and the US themselves but also inhibited the global economic growth and diminished the investors. The President of the US, Donald Trump accused China of intellectual theft and practicing the trade unfairly. On the other side, among the Chinese, there is the notion present of America is restraining Chinese trade to contain the rising global economic power of China.
In January of this year, at a White House ceremony, China and the US unveiled a partial trade deal between them. In phase one of this deal, China would import at least $200 billion worth from the suppliers of the US. This will continue for two years. However, there were certain complaints that were to be negotiated in the future. For instance, the Chinese state subsidies and administration for trade practices in the future. In return of this, the US will exempt China from future tariffs in the upcoming stages. These trade deals did not help both the countries and did not inhibit the trade tensions between the two countries. As for the fact, the recently released data, earlier this year, showed that the present trade deficit is at the worst of 12 years of trade ties. Ironically, President Trump in his presidential campaigns and speeches had promised to enhance economic globalization before getting into the position.
When the US did not roll back from the trade tariffs, the Chinese government immediately took steps, and petitioned the WTO to take actions against the unilateral imposition of trade tariff under Trump’s policies.
America has always been at the forefront in terms of economy, politics and military. The American president, Trump’s America First received pushback when on Tuesday, 8th September 2020, the World Trade Organization favored China in the legal challenge against US tariffs and import taxes.
The WTO organized a three-member panel that ruled out the tariffs the US imposed on China over a period of two years in the tug-of-trade-war with China. Around $234billion worth of Chinese goods got stuck under the US commitments, which also disrupted the global trading rules.
Although there is no instantaneous effect on American importers owing to the levied taxes. However, it symbolizes a negative impression of the President’s offensive trade diplomacy. China has retaliated against the actions of the US. While the US has had imposed tariffs on more than $360billion of Chinese goods, China backfired with more than $110 billion of US trade goods. Since 2018 four rounds of tariffs have been delivered by the US. The most recent one with 15% duty on the trade products. The border taxes have not been uplifted, however. This is the reason the business elite and groups call for further talks with the World Trade Organization.
At present, when WTO announced its decision in favor of the Chinese government, the US trade representative Robert E Lighthizer spoke in criticism of the WTO’s statement. He claimed that the World Trade Organization could not stop the Chinese policies from deteriorating the US economy and harming the overall trade around the globe.
Under the decision made by the World Trade Organization, China has been made eligible to impose higher tariffs on the trade products from the US. The tariffs hit back on US trade goods by China varies from 5% to 25%. The US has proposed an appeal to reconsider the terms decided by WTO last week. However, further actions do not look to entertain the US as the administration of WTP has blocked the appointment of a new member in the three-member panel of the World Trade Organization that decided the trade tariffs in the trade battle between China and the US. This means that US demands remain unfulfilled for trade tariffs against China. Nevertheless, the appellate body has acknowledged its decisions amidst the present extraordinary global tensions.
President Trump’s “America First” policy drew strong pushback on two fronts Tuesday, as the World Trade Organization sided with China in a legal challenge to U.S. tariffs and Canadian threats of retaliation led the United States to abandon plans for a fresh set of import taxes. For the Chinese leaders, it is a way to enhance trade ties with the super-power. China gets in the win-win situation as a result of the deals and the decision of the World Trade Organization’s three-member panel discussion.
As per the present decisions taken by WTO, it can be hypothesized that the US will continue to appeal for the changes in the decision and try to include those individuals in the panel who will take explicitly make favorable changes for the trade for the US itself. However, this looks less happening owing to the rejection of the US appeal by WTO. The US still cannot take strict measures, because China is the largest trade partner of the US and its economy is dependent on trade with China. Pragmatically speaking, the US would use its diplomatic power in the security domain to compensate for the trade loss it will have to face as a result of WTO’s decision.
Kaneez Fatima is an MPhil scholar in Sociology and a CSS aspirant. She has her interests in International Politics and Social Institutions. She currently teaches at the Institute of Business Management.