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The facts and China's position on China-US trade friction

China Daily | Updated: 2018-09-26 08:00

Unilateral actions by the United States have triggered condemnation and countermeasures from multiple countries

In March 2018, pursuant to its Section 232 investigation report, the US administration announced 25 percent tariffs on imports of steel products and 10 percent on aluminum products. On April 2, 2018, in response to the loss caused by the US Section 232 measures, China decided to suspend tariff concessions and impose tariffs on some imports originating in the US. From May 18 to 21, five WTO members-the EU, India, Russia, Japan and Turkey-notified the Council for Trade in Goods and Committee on Safeguards of the WTO about their plans to retaliate in kind on the US measures on steel and aluminum. From June 5 to July 1, Mexico, the EU, Turkey and Canada retaliated against the US Section 232 measures. On April 5, 2018, China took the lead to initiate a WTO dispute procedure against the US Section 232 measures on steel and aluminum. From May 18 to August 15, India, the EU, Canada, Mexico, Norway, Russia, Switzerland and Turkey initiated dispute procedures over the US Section 232 measures on steel and aluminum under the dispute settlement system of the WTO.

The US has conducted Section 201 investigations against products of multiple countries. In May 2017, on the basis of its Trade Act of 1974, the US initiated Section 201 investigations 55 on imported washing machines and photovoltaic products. In January 2018, it decided to impose a maximum of 50 percent tariffs for three years on washing machines and a maximum of 30 percent tariffs for four years on photovoltaic products. These were the first Section 201 investigations initiated by the US since 2001. As a major source of washing machines imports to the US, the ROK submitted a request for consultations to the WTO in May and announced that it would suspend tariff concessions on some US products as a response to the US imposition of tariffs on its products. On August 14, 2018, China resorted to the WTO dispute settlement system over the Section 201 measures on photovoltaic products.

The US has initiated Section 301 investigation against China. In August 2017, the US initiated a Section 301 investigation against China based on its Trade Act of 1974. 56 A 25 percent tariff was imposed on US$50 billion worth of goods from China in July and August 2018, followed by a continuation of escalating tariff measures. Another tariff of 10 percent on a further US$200 billion worth of China's exports to the US was imposed from September 24, 2018. A Section 301 investigation is a trade investigation based on relevant provisions of US domestic law. It requests other countries to accept the intellectual property standards and market access requirements of the US, or face retaliatory trade sanctions. Such practice was described as "aggressive unilateralism" as early as in the 1990s.

Historical data show that it is very rare for a Section 301 investigation to be initiated-most cases are settled through consultation. According to a report from the Peterson Institute for International Economics released in March 2018, 57 from 1974 to the present, the US government has conducted 122 such Section 301 investigations, but there has been only one new Section 301 investigation since 2001. In 1994, the US government issued a "Statement of Administrative Action", stating that the Administration intends to use Section 301 under the WTO rules, and that it would only impose sanctions under Section 301 with authorization from the WTO Dispute Settlement Body (DSB). In 1998, the European Communities filed a case to the WTO DSB against Section 301, and the Panel came to a preliminary finding that in respect of the statutory language, Section 301 is inconsistent with WTO rules. The US government has initiated a Section 301 investigation in the course of its current trade frictions with China, and imposed huge tariffs on Chinese goods in the absence of WTO authorization. These actions have clearly violated its afore-mentioned commitments, and are completely illegal.

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