Group #10 - Tori Whiting and Maria Zachrisson DS 544 and DS 542 Group #10 - Tori Whiting and Maria Zachrisson

U.S.-China Bilateral Trade Current trade deficit of $502,001 Million Dollars (goods and services) Goods: - $751,051 Services: $259,050 US – China Trade war The is US positioned with a trade deficit needs to renegotiate its standing with China “China does not want to fight a trade war but is absolutely not afraid of a trade war,” a Commerce Ministry representative said in a statement. https://www.nytimes.com/2018/03/23/business/china-tariffs-response.html

https://apps.bea.gov/international/factsheet/factsheet.cfm

US – China Trade Tensions 2018 Jan 22 – US imposes a new tax on Solar panels - a key Chinese export March 1 – US Hikes tariffs on steel and aluminum March 23 - US filed against China - TRIPS April 2 - China proposes tariffs against US, week long tit-for-tat escalating tensions. A list of 128 goods rivaling the steel and aluminum imports tax. April 3 - US unveils list of a proposed list of 1,300 Chinese goods to be hit with 25% tariffs April 4 – China responds to with 106 item list, this time including soybeans, cars, airplanes all subject to 25% April 5 – China files against US WTO – Steel and Aluminum April 16 - 7 year ban on ZTE – due to violations on tariffs May 13 - Trump tweets May 13 that he is working with Chinese President Xi Jinping to get ZTE back into business

US – China Trade Tensions 2018 June 7 – Less than a month alter ban on ZTE comes to an end June 15 – 50 Billion of Chinese goods subject to 25% tariff . More than 90% are intermediate inputs or capital equipment. China reciprocates with $50 billion too. June 18 - US proposes to add a further $200 billion in import taxes for the country, meaning nearly all of the $505 billion in Chinese products coming into the United States would be placed under tariffs July 6 - U.S. starts implementing duties of 25 percent on $34 billion Chinese goods August 7- Reuters reports China's July exports rise more than expected despite U.S. tariffs September 24 – USTR issues a statement that $200 billion worth of Chinese imports that will be subject to additional tariffs. September 25- the United States, Japan, and the European Union meet to discuss key trade issues that relate to the ongoing Trade disputes with China.

DS 544 United States - Certain Measures on Steel and Aluminum Products

Issues Presented by Offended Parties China claims that the following actions of the United States are inconsistent with WTO commitments: “Adjusting Imports of Steel Into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States (Presidential Proclamation 9705, issued on 8 March 2018)” “Adjusting Imports of Aluminum Into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States (Presidential Proclamation 9704, issued on 8 March 2018)” “Adjusting Imports of Steel into the United States (Presidential Proclamation 9711, issued on 22 March 2018)” “Adjusting Imports of Aluminum into the United States (Presidential Proclamation 9710, issued on 22 March 2018)” https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=246042,246040,244782,244785,244724,244720,244658,244602,244375&CurrentCatalogueIdIndex=8&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True

Issues Presented by Offended Parties “Requirements for Submissions Requesting Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel Into the United States and Adjusting Imports of Aluminum Into the United States; and the Filing of Objections to Submitted Exclusion Requests for Steel and Aluminum (U.S. Department of Commerce)” “Section 232 Tariffs on Aluminum and Steel, Additional Duty on Imports of Steel and Aluminum Articles under Section 232 of the Trade Expansion Act of 1962 (U.S. Customs and Border Protection)” “Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. §1862), cited in the Presidential Proclamations above for vesting authorities in the President of the United States to take the actions therein” “The Effect of Imports of Steel On the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, As Amended (U.S. Department of Commerce, 11 January 2018)” “The Effect of Imports of Aluminum On the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, As Amended (U.S. Department of Commerce, 17 January 2018)” https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=246042,246040,244782,244785,244724,244720,244658,244602,244375&CurrentCatalogueIdIndex=8&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True

Issues Presented by Offending Parties The U.S. claims the following in response to China: “Issues of national security are political matters not susceptible to review or capable of resolution by WTO dispute settlement. Every Member of the WTO retains the authority to determine for itself those matters that it considers necessary to the protection of its essential security interests, as is reflected in the text of Article XXI of the GATT 1994.” “The tariffs imposed pursuant to Section 232 are not safeguard measures but rather tariffs on imports of steel and aluminum articles that threaten to impair the national security of the United States. The United States did not take action pursuant Section 201 of the Trade Act of 1974.” “Therefore, there is no basis to consult pursuant to the Agreement on Safeguards with respect to tariffs imposed under Section 232.” https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=246042,246040,244782,244785,244724,244720,244658,244602,244375&CurrentCatalogueIdIndex=7&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True

WTO Agreements Involved Agreement on Safeguards Articles 2.1 and 2.2 - A country can only implements safeguards if it determines “that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products. Safeguard measures shall be applied to a product being imported irrespective of its source.” Articles 4.1 and 4.2 - These articles define what constitutes as “injury” Article 5.1 - “A Member shall apply safeguard measures only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment.” Article 7 - Duration and Review of Safeguard Measures Article 11.1(a) - “A Member shall not take or seek any emergency action on imports of particular products as set forth in Article XIX of GATT 1994 unless such action conforms with the provisions of that Article applied in accordance with this Agreement.” Articles 12.1, 12.2, and 12.3 - Notification and Consultation https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#articleX

WTO Agreements Involved GATT 1994 Article I:1 - Most Favored Nation Treatment Articles II:1(a) and (b) - Schedule of Concessions Article X:3(a) - “Each contracting party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.” Articles XIX:1(a) and XIX:2 - Emergency Action on Imports of Particular Products https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#articleX

Dispute Timelines April 5, 2018 China files a request for consultation at the WTO April 17-19, 2018 India, Russia, Thailand, EU, and Hong Kong request to join consultations October 19, 2018 DSB lists China’s request for the establishment of a panel on its agenda for meeting on Oct 29

China filed a request for the establishment of a dispute resolution panel, which will be discussed at the DSB meeting on October 29, 2018. The case will likely go to the DSB, but it is uncertain if the WTO Appellate Body will be fully functional following the panel decision of this case. Odds are the trade war will continue until the costs are too much for the American people DS 544 Potential Outcomes https://www.wto.org/english/news_e/news18_e/dsb_agenda_29oct18_e.pdf

DS 542 China - Certain Measures Concerning the Protection of Intellectual Property Rights

WTO Agreements Involved The US cites the TRIPS Agreement negotiated in the Uruguay Round of GATTS in 1994 for the enforcement of Intellectual Property Rights against China referencing: Article 3 - National Treatment shall be no less favorable than that it accords to its own nationals with regard to the protection of intellectual property Article 28 - Rights Conferred 1. A patent shall confer on its owner the following exclusive rights. 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts. https://www.wto.org/english/docs_e/legal_e/27-trips_03_e.htm

Issues Presented by Offended Parties In its request for consultation at the WTO the US stated: “China denies foreign patent holders the ability to enforce their patent rights against a Chinese joint-venture party after a technology transfer contract ends. China also imposes mandatory adverse contract terms that discriminate against and are less favorable for imported foreign technology. Therefore, China deprives foreign intellectual property rights holders of the ability to protect their intellectual property rights in China as well as freely negotiate market-based terms in licensing and other technology-related contracts.”

Dispute Timelines March 23, 2018 US files a request for consultation at the WTO May 4, June 4, 2018 Japan, EU and Saudi Arabia request to join consultations October 19, 2018 DSB lists China’s request for the establishment of a panel on its agenda for meeting on October 29.

The U.S. filed a request for the establishment of a dispute resolution panel, which will be discussed at the DSB meeting on October 29, 2018. The case will likely go to the DSB, but it is uncertain if the WTO Appellate Body will be fully functional following the panel decision of this case. Odds are the trade war will continue until the costs are too much for the American people DS 542 Potential Outcomes https://www.wto.org/english/news_e/news18_e/dsb_agenda_29oct18_e.pdf

What we learned... Both the U.S. and China believe that the other party is taking actions that are inconsistent with its obligations to the WTO. The U.S. is primarily taking unilateral action, while also utilizing the WTO to some extent, and China is both retaliating and using the WTO. These disputes could become more complicated if the trade war continues to escalate, especially as the Appellate Body continues to deplete. Many countries that are party to the WTO agree that reform is needed and met to discuss the creation of a committee to determine potential reforms.