The trade war between the world’s top two economies landed at the World Trade Organization on Wednesday, as the United States demanded a “reckoning” over China’s membership in the body.
China’s WTO “trade policy review” scheduled before Washington lit the fuse on a tariff battle with Beijing served as a new front in the widening economic confrontation between the two powers.
In a report submitted ahead of the three day review, China insisted it had “been a strong advocate for free trade” since joining the WTO in 2001 and “comprehensively fulfilled its commitments.”
US ambassador Dennis Shea, who was among the first to speak at the closed-door review, argued that China had exploited its membership to take advantage of other nations and that if unchecked Beijing’s misconduct would ruin the WTO.
“China’s failure to fully embrace the open, market-oriented policies on which this institution is founded must be addressed, either within the WTO or outside the WTO,” Shea said according to prepared remarks released by the US mission.
“This reckoning can no longer be put off,” he added.
“If the WTO is to remain relevant to the international trading system, change is necessary.”
The comments came after President Donald Trump’s administration threatened fresh tariffs on another USD 200 billion in Chinese goods and Beijing vowed to retaliate, the latest salvo in the escalating tariff battle.
China’s compliance with WTO guidelines lies at the heart of the conflict, notably over Beijing’s alleged state support for purportedly private companies.
“China provides massive, market-distorting subsidies and other forms of state support to its domestic industries,” Shea said.
He noted that while WTO rules permit some government support for national industries under specific circumstances, the Chinese approach results in “skewing the playing field against imported goods”.
Trump, who has reportedly weighed quitting the 164-member WTO, has voiced particular irritation over the fact that China continues to self-identify as a developing nation.
In an April Twitter post, Trump said this allowed China to “get tremendous perks and advantages, especially over the US. Does anybody think this is fair.
“We were badly represented. The WTO is unfair to US,” he added.
In its policy agenda released in January, the US trade office said the WTO needed to change its “self-declare” policy for developing nations to stop major economies like China and India from getting the preferential treatment that should be reserved for the world’s poorest nations.