China continues to impose illegal duties on US imports despite a ruling by the World Trade Organization (WTO) that they were wrongfully imposed. The US argues that a country’s use of the security exception in trade disputes cannot be challenged in the WTO, while others, including China, argue that the WTO has the right to investigate. The US and Russia have both invoked the security exception in the past, prompting concerns about the impact on global trade. The US has blocked appointments to the Appellate Body, preventing it from hearing cases for almost five years. Clarifying rules and implementing mechanisms to allow for counterbalancing measures could be potential solutions, or economic allies could meet outside of the WTO to agree on trade rules.
China Exploiting WTO Ruling on US Imports
Despite a ruling by the World Trade Organization (WTO) that China wrongfully imposed duties on US imports, China continues to enforce these illegal duties as it awaits an appeal to the defunct Appellate Body. The United States is largely responsible for creating this situation, and China is taking advantage of it.
Debate over the Security Exception
The security exception, Article XXI, allows for otherwise illegal measures in the name of security. The US position, supported by Russia, is that a country’s use of Article XXI cannot be challenged by the WTO. However, other countries, including China, the European Union, and South Korea, argue that the WTO should have the right to investigate whether a plausible link exists between a country’s use of Article XXI and an actual security interest.
Concerns for Global Trade
The increasing intersection of economic security and international trade raises concerns about the self-judgment of the security exception. Allowing countries to invoke Article XXI without oversight could have devastating effects on global trade. Potential solutions include countries invoking their own self-judging right, clarifying WTO rules to align with US and Russian opinions, or establishing trade rules outside of the WTO among like-minded countries. However, these solutions come with their own challenges and risks.