A World Trade Organization (WTO) dispute panel report concluded Tuesday that actions taken by the United States to combat China’s alleged theft of U.S. technology and intellectual property were inconsistent with the global trade body’s rules.
The panel found that punitive tariffs imposed on a wide range of Chinese imports were inconsistent because they applied only to products from China and because they were applied in excess of the rates to which the United States had previously agreed upon.
This finding drew swift criticism from U.S. Trade Representative (USTR) Robert Lighthizer.
“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. “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.”
The USTR said the U.S. must be allowed to defend itself against unfair trade practices and the Trump administration “will not let China use the WTO to take advantage of American workers, businesses, farmers and ranchers.”
USTR issued a Section 301 report in 2018 documenting how China had engaged in unfair forced technology transfer practices, such as exploiting its foreign ownership and administrative requirements to extort U.S. intellectual property rights or supporting commercial cyber theft from U.S. entities. The report cited hundreds of sources and thousands of pieces of evidence, including reports from governments, firms, business associations, think tanks and researchers, and others. These unfair trade practices and other actions by China have cost U.S. innovators, workers, and businesses billions of dollars every year, USTR said.
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“It is important to note that this report has no effect on the historic Phase One Agreement between the United States and China, which includes new, enforceable commitments by China to prevent the theft of American technology,” Lighthizer said.
China initiated this WTO dispute, “United States-Tariff Measures on Certain Goods from China,” in April 2018. In January 2019, the WTO established a panel at China’s request. The dispute covers two of the trade actions in the Section 301 investigation of “China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property and Innovation: the $34 billion trade action announced in June 2018 and the $200 billion trade action announced in September 2018.”
The WTO panel concluded that the U.S. had not provided an explanation demonstrating how the imposition of additional duties on the selected imported products in List 1 and List 2 was apt to contribute to the “public morals, or standards of right and wrong” invoked by the United States, including norms against theft, misappropriation and unfair competition.
The report also noted that the U.S. had not initiated action at the WTO with respect to measures that China had imposed in response to its measures at issue in this dispute. The panel added that it encouraged the two countries to continue to work toward a mutually agreeable solution.