WTO Says China Fully Justified In Giving U.S. A $3.6 Billion Slap In The Face

Donald Trump has a new reason to be furious at the WTO, a body which he has variously castigated as the bane of America’s existence, along with any other organization built on cooperation between nations.

A month (almost to the day) after the US got the green light from the WTO to retaliate against $7.5 billion in EU goods per year (in response to illegal subsidies to Airbus), the Geneva-based organization told China it has the right to impose $3.6 billion in punitive measures against America. That’s roughly half of what China was hoping for.

The dispute dates to before the trade war, but that won’t matter to Trump. In all likelihood, the White House will view the ruling as a slap in the face and “evidence” that the WTO is conspiring against America.

The case itself dates to 2013 and was adjudicated in Beijing’s favor some three years later.

In essence, it’s another episode in the long-running dispute over the use of “zeroing”, a practice that’s been ruled illegal by the WTO. The US basically refuses to cooperate on the issue.

If you have any questions at all as to where this is headed, just refer them to Stephen Vaughn, who was, until April, Bob Lighthizer’s general counsel at the USTR.

“For years, US administrations of both parties warned officials at the WTO that decisions like these make it impossible for Americans to trust the dispute settlement process”, Bloomberg quotes Vaughn as saying. “It’s very unfortunate that those warnings haven’t been taken more seriously”.

Don’t worry, Trump takes them “seriously”, and it seems at least possible that the White House will attempt to get this settled in bilateral discussions with China outside of the WTO. In other words, this may become part of the trade talks.

However it’s resolved (or not resolved), it will almost surely fuel Trump’s distrust of the dispute resolution process. “We always get f***ed by them”, the president is said to have told US officials last year, stoking fear that he might try to make good on a threat to pull the US out of the WTO altogether.