Japan and EU Decline to Back US at WTO Debate on Section 301 Tariffs

The Chinese government complained that U.S. actions regarding China's intellectual property record are destroying the World Trade Organization -- calling unilateral action "fundamentally incompatible with the WTO, like fire and water." According to a Geneva trade official's summary of the March 26 debate, Japan and the European Union agreed that any trade measures against China should be consistent with WTO agreements, even as they said "they share US' concerns of the need for stronger protection of intellectual property rights and concerns over technology licensing and transfers in China."

This split among countries affected by China's forced tech transfers is exactly what experts predicted would happen because of President Donald Trump's go-it-alone posture on trade (see 1803220034).

China’s WTO ambassador Zhang Xiangchen said, "In the open sea, if the boat capsizes, no one is safe from drowning. We shouldn’t stay put watching someone wrecking the boat. The WTO is under siege and all of us should lock arms to defend it." The U.S. representative to the WTO said China is violating the TRIPS (trade-related aspects of intellectual property rights) Agreement, by not enforcing patents and by requiring technology licenses for foreign companies that domestic companies are not subject to. It said these policies are affecting other countries, too, and noted that it had filed a request for consultations on the issue on Friday. However, by the time it asked for the consultations, Trump had already announced a process to choose tariffs and investment restrictions designed to inflict the same sorts of costs on China the U.S. has experienced because of Chinese violations.

In the same meeting of the WTO Goods Council March 26, the EU, Switzerland, Korea, Malaysia and Singapore sided with China in questioning the legitimacy of U.S. safeguard tariffs on solar panels and washing machines. The EU urged the U.S. to "refrain from taking any other broad trade restrictive actions." The U.S. said it was acting within the WTO rules structure with regard to these tariffs, because solar panel and washing machine imports are growing so fast that they've seriously injured the domestic industry.

However, there was one coalition against China during the debate that included America. Canada, the EU, Australia, the U.S. and New Zealand complained that China's restrictions on scrap imports (see 1708220009) are disrupting recycling, and the changes should have been more gradual. China said countries generating the waste have the ultimate responsibility for disposing of it, and it needs to manage its own domestic waste. But China said its government "will take into consideration members' statements."