“Before the Trump administration came along and decimated the Appellate body, a case like this would be appealed”, Chad Bown, a senior fellow at the Peterson Institute for International Economics, said Tuesday, responding to a largely meaningless ruling from the WTO, which found the US violated international trade rules with tariffs on China.
Reading through the 66-page ruling, one is struck by the sheer futility inherent in embarking on such a laborious exercise knowing that nothing can come of it.
Late last year, the US crippled the WTO’s appellate body – effectively the high court and final arbiter of international trade tiffs – rendering it unable to decide cases. Trump, you’ll recall, blocked all new appointments, forcing the body to conduct its business with only a trio of active members out of a possible seven.
Washington’s refusal to appoint new members means appeals simply float off into the ether, doomed to reside in a kind of legal purgatory. That, in turn, means appeals are tantamount to vetos, a state of affairs which is by design — Trump’s design, that is.
If for some reason the US doesn’t appeal, it still won’t matter, because Beijing imposed a series of retaliatory tariffs during the course of the trade war between the world’s two largest economies, which means asking for the WTO’s “permission” to hit back is redundant. And further, China’s retaliatory measures are likely themselves violations of international rules because Beijing didn’t seek the WTO’s permission to impose them.
So, what are we left with? Well, statements from Bob Lighthizer and the Ministry of Commerce in Beijing. That’s about it.
“This panel report confirms what the Trump Administration has been saying for four years: The WTO is completely inadequate to stop China’s harmful technology practices”, Lighthizer said Tuesday. “Although the panel did not dispute the extensive evidence submitted by the United States of intellectual property theft by China, its decision shows that the WTO provides no remedy for such misconduct”, he added.
While some of that is accurate, it’s supremely ironic considering the Trump administration is currently engaged in an effort to compel the forced transfer of the technology and intellectual property behind TikTok to a US company whose founder is a staunch ally and supporter of the president.
For its part, China called the ruling “objective and impartial”, and claimed its efforts to work through the WTO are evidence of Beijing’s “determination to respect and uphold the authority of the multilateral trade system”.
China also said it “hopes that the American side will fully respect the ruling”.
Again, this is all just for show. The ruling may have some symbolic meaning and could conceivably impact negotiations between Washington and Brussels, but other than that, this was an exercise in futility.
Lighthizer emphasized that is has no bearing on the “phase one” trade deal between the two countries which, you’re reminded, is not on track.
Rabobank has a granular take. “Up to July 2020, China imported $115 billion of US goods and services (annualized) covered by the phase one trade deal, but for China to be on track for the annual target of $210 billion for 2020, the 12-month sum of goods and services exports should have reached $175 billion in July”, the bank wrote earlier this month.
The read-through is that “China has to crank up imports of US goods and services by almost $100 billion in five months to reach the 2020 target”, Rabobank added, something they say “seems highly unrealistic”.
Bown summed it up best. “There are no winners in this dispute”, Bloomberg quotes him as saying. “The United States, China, and especially the WTO are all losers”.
Nobody wins in a trade war. Who knew, right? (Something about “good” and “easy to win”.)