Imposition of trade tariffs by the USA on China: implications for the WTO and international trade law

Pages:69-84
SUMMARY

Purpose The increased integration of national economies and the belief that international trade is beneficial to societies has led to the formation of the World Trade Organization (WTO), to regulate the conduct of international trade by national governments. Using US domestic legislation and case laws, as well as the provisions of the General Agreement on Tariffs and Trade (GATT) 1994, the... (see full summary)

 
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Imposition of trade taris by the
USA on China: implications for the
WTO and international trade law
Uchechukwu Nwoke
Department of Commercial and Corporate Law, Faculty of Law,
University of Nigeria (Enugu Campus), Enugu State, Nigeria
Abstract
Purpose The increased integration of national economies and the belief that international trade is
benecial to societies has led to the formation of the World Trade Organization (WTO), to regulate the
conduct of internationaltrade by national governments. Using US domestic legislation and case laws, as well
as the provisionsof the General Agreement on Tariffs and Trade (GATT) 1994,the purpose of this paper is to
analyze thelegality or otherwise of the recent impositionof unilateral trade tariffs by the USA on China.
Design/methodology/approach This paper adopts a doctrinalapproach through a critical review of
extant legislationand case laws. Drawing from existing literature in the area of WTO and internationaltrade
law, the paper argues that the impositionof tariffs by the Trump administration is outside the scope provided
for by the WTO rules.
Findings The paper nds that the imposition of unilateral tariffs by the Trump Government, while in
breach of US domestic legislationand case laws, as well as the countrys obligations under the GATT 1994,
portendsa clear dangerto the continued existence of the WTO and to internationaltrade in general.
Originality/value This paper is an originalstudy of the author, which extends the body of knowledge in
the area of internationaltrade law, by analyzing the possible implicationsof the imposition of trade tariffs by
the USA on China and offeringsuggestions on how the impasse can be resolved.
Keywords China, WTO, USA, Protectionism, International trade law, Trade tariffs
Paper type Research paper
Introduction
In recent years, the interdependence of nations has become an acceptable and recognizable
characteristic of economicinteraction (Surgiu and Surugiu, 2015). In the course of over 6,000
years of recordedhumanexistence, the gradual development of a world economy, in which
human actors are interdependent to some degree, has become the dening standard of
international trade (Ikenberry, 2018). As Melder (1940, p. 121) submitted more than six
decades ago, this growing association encapsulates mans gradual conquest of the natural
barriers to human intercourse, the water hazards of oceans, rivers, and lakes, the
topographical barriers of mountains and forests, and the communicationbarriers of space.
In recent years, there has been even more dramatic progress toward a rapid integration of
the world economy (Shangquan, 2000). Advancements in land technology, water and air
transport has greatly helped in the realization of a true world economy and an attendant
shrinking of space for economicactors all over the world (Melder, 1940).
Nevertheless, the shrinking of economic space has elicited different reactions from
different societies across the world. These reactions have generally fallen within the
corresponding categoriesof politics and economics, and are often symbolized by the creation
of articial impediments to trade. To some degree, these impediments replace the natural
Trade taris
by the USA on
China
69
Received10 January 2019
Revised28 May 2019
21June 2019
Accepted23 August 2019
Journalof International Trade
Lawand Policy
Vol.19 No. 2, 2020
pp. 69-84
© Emerald Publishing Limited
1477-0024
DOI 10.1108/JITLP-01-2019-0003
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1477-0024.htm
geographical hindrances to human interaction, which man has removed in his development
of the technology of travel, transport and communicationhighlighted above (Melder, 1940).
These responses usually amount to obstacles to free trade and have come to be commonly
identied as trade barriers(Puig, 2018).
Historically, legal trade barriers as we think of them today accompanied the rise of
modern nation-states as the feudal economic order gave way to an economic order of
commercial capitalism(Ricupero, 2008, p. 129). Trade barriers consisting of tariffs1,
import duties, embargoes and navigation acts, were adopted as national politico-economic
policy primarily for the purpose of building strong nation-states. The body of positive
doctrines and principles, which rationalized trade barriers came to be known as
mercantilism(Melder,1940).
The principal objective of these doctrines was to enable policymakers to manipulate
trade and resources to maintain an advantageousbalance of trade in which commodity
exports are in excess of imports. This, in turn, authorized the acquisitionof a net balance of
precious metals. The supposition was that a large reserve of gold and silver is essential to
the strength of a nation-state and tariff duties and embargoes t into this scheme as a
principal method of promotingadvantageoustrade balances, rather than forthe protection
of home industries against the market competition of foreign producers (Barnes, 1934).
However, the modern policy of imposing trade barriers, while enjoying some of the
characteristics of the old state builders, is one, which is primarily concerned with the
building of an economy of self-sufciency,rather than the acquisition of a maximum store of
treasure in the form of preciousmetals.
This paper discusses the unilateral impositionof trade barriers against China by the US
administration under President Trump, and the implication of this action on international
trade. It begins with a highlight of the underlying tensions driving the USChina trade
relations. It then discusses the recent actions of the USA in imposing unilateral tariffs on
other countries, particularly China. It proceeds to look at the economic costs of this policy
directive, before undertaking a criticalanalysis of both US legislation and the provisions of
Article XXI of the World Trade Organization(WTO), to ascertain the legality of the US tariff
imposition.
Through analysis of both the domestic laws (including legislation and case laws) of the
USA and the WTO jurisprudence (including General Agreement on Tariffs and Trade
(GATT) Article XXI and dispute panel decisions),the paper contends that the imposition of
trade tariffs by the USA on China is untenable. Using the recentdecision of the WTO panel
in Russia Measures Concerning Trafc in Transit (DS512), the paper argues that the US
insistence that its measures under Article XXI of the GATT cannot be subjected to review
by a dispute panel is no longer acceptable. Based on its ndings, the paper makes
recommendations on how the impasse of tariff imposition by the USA against China could
be resolved.
Underlying tensions driving the USAChina relations
Since the 1970s, the Peoples Republic of China (PRC)has emerged as an important actor in
global governance. China has acquired membership in various institutions of international
cooperation, most notably the United Nations Security Council in 1971 and the WTO in
2001. According to Ikenberry (2018), China as an emerging great power does not want to
contest the basic rulesand principles of the liberal international order; it wishes to gain more
authority and leadershipwithin it. Indeed, todays power transition representsnot the defeat
of the post-1945 world order, in which liberalism played a major role, but its ultimate
ascendance (Ikenberry, 2018). Nevertheless, China is not integrating into the liberal
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