Global Crisis Blog

WTO – China Wins Again!

By Shlomo Maital

    Here is a simplified account of U.S. vs. China in a recent ruling of the World Trade Organization’s Appeal Board, that decided against America in two key issues.

    America claimed China subsidizes (illegally) certain products and industries.  (It does and has for years.  There is a smoking gun:  Large Chinese trade surpluses with the U.S. that persist, despite recession in the U.S. and despite the falling dollar). 

   Using  itsWTO rights, America imposes CVD’s (countervailing duties, or tariffs) and AD’s (anti-dumping restrictions on Chinese imports).  (Dumping is the claim that export goods are sold below their domestic cost). 

   China, always aggressive in these matters, presses charges in the WTO.  WTO rules against China. 

    China appeals.

     1.   WTO says the U.S. Dept. of Commerce failed to ‘prove’ that certain Chinese companies were ‘public bodies’ capable of conferring subsidies, even though the Chinese govt. held a majority of the shares! 

     2. Second, WTO says the U.S. applied both CVD’s and AD’s, without proving they had adjusted them to avoid ‘double tariffs’.   

     Another long legal wrangle will take place, delaying America’s efforts to balance its China trade and flatten the playing field.

     I wonder who mismanaged America’s WTO defense. I wonder why China can win, even though it is patently obvious that many Chinese firms, even those without government shareholding, are powerfully subsidized by the Chinese government, e.g. through cheap plentiful credit.  I wonder when the U.S. President will simply declare China is in violation of WTO and proceed accordingly, appeal board or no.

    WTO rulings and cases are esoteric and are poorly covered by the media.  But often they are crucial.  It is high time that some high-profile journalist (Tom Friedman) should cover this topic, write clearly, and lead a campaign to get America some justice. 

    By the way – America’s trade deficit with China in 2010 was $270 b., the largest deficit America has ever had with a single nation.  If ever there was a smoking gun, that is it.