In yet another example of worsening trade tensions, Beijing is planning to go ahead and ask the WTO for permission to slap the U.S. with sanctions in retaliation for what China says is non-compliance with a ruling on dumping duties.
By “dumping duties”, we’re not talking about what Donald Trump calls bathroom breaks at the White House. Rather, we’re referencing a long-running dispute over the way Washington calculates the amount of Chinese exports whose prices purportedly undermine domestically-made products sold to U.S. consumers.
The U.S. uses a practice (“zeroing”) that’s been ruled illegal by the WTO and apparently, Washington missed an August 22 deadline to comply with the rulings.
Now, China wants to do something about that.
“The WTO published an agenda on Tuesday for a meeting of its dispute settlement body on September 21, showing China planned to take the legal step of asking for authorization for sanctions”, Reuters reports on Tuesday.
This comes amid Trump’s ongoing threats to pull the U.S. out of the WTO altogether, a “plan” (if that’s what you want to call it), that’s been variously derided as “insane” among lawmakers.
Read more on Trump and the WTO:
Asked about the WTO late last month by Bloomberg, Trump reiterated his criticism, on the way to saying that “if they don’t shape up, I would withdraw.” He went on to characterize the organization as “the single worst trade deal ever made”, a line he’s also used for NAFTA and really, for every deal of any kind that he wasn’t involved in.
In the linked article above, Reuters notes that the “the string of U.S. defeats [tied to ‘zeroing’] fueled U.S. President Donald Trump’s campaign to reform the WTO.”
As ever, it’s important to remember that facts matter, and here are the facts from The “Economic Report of the President”:
The efficacy of WTO dispute settlement mechanism remains an area of active debate. Davis (2012) finds that the United States gets better outcomes via formal WTO adjudication than negotiation, increasing the probability that the complaint will be resolved and decreasing the time it takes to remove the barrier in question. Mayeda (2017) finds that the United States has won 85.7 percent of the cases it has initiated before the WTO since 1995, compared with a global average of 84.4 percent.In contrast, China’s success rate is just 66.7 percent. Most U.S. WTO cases target China (21) and the European Communities (19). When the United States is the respondent, it still wins 25 percent of the time, a rate that is better than the global average rate of 16.6 percent (Mayeda 2017). In comparison, the EU and Japan have won 0 percent of the cases brought against them, while China has won only 5.3 percent of the time (Mayeda 2017). Nonetheless, because countries may initiate or decline to initiate cases based on their perceived probability of obtaining a favorable outcome in the WTO dispute process, comparisons of WTO dispute statements between countries should be taken with at least some skepticism.
Trump signed off on that report, but he surely didn’t read it.
Needless to say, this will just be one more excuse for Trump to bad mouth the existing system of global trade and commerce and will be yet more fodder for anti-WTO rhetoric both on Twitter and at rallies headed into the midterms.
You can find more information on the dispute in question here and the WTO communication that contains the deadline is embedded below.