China can hit U. S. with $ 3.6B in sanctions

GENEVA — TheWorld Trade Organization said Friday that China can impose tariffs on up to $ 3.6 billion worth of U. S. goods over the American government’s failure to abide by antidumping rules with regard to Chinese products.

Themove hands China its first such payout at the WTO at a time when it is engaged in a big dispute with the United States. The two sides have recently imposed tariffs on hundreds of billions of dollars’ worth of goods, but did not do so through the WTO, which helps solve trade disputes.

Friday’s announcement from a WTO arbitrator centers on a case with origins long before the current trade standoff: a Chinese complaint filed nearly six years ago seeking over $ 7 billion in retaliation.

The decision means China can impose higher tariffs against the United States than China is currently allowed under WTO rules, and will be given leeway as to the U. S. products and sectors it would like to target.

Parts of aWTO ruling in May 2017 went in favor of China in its case against some 40 U. S. antidumping rulings, involving trade limits on Chinese products that the United States says are or were sold belowmarket value.

However, the WTO arbitrator honed down the award to base it on some 25 Chinese products— including diamond sawblades, furniture, shrimp, solar panels, automotive tires and a series of steel products— that were affected by U. S. antidumping measures. That explains why the award was less than the sumChina had sought.

The decision comes as the United States is fresh off a highprofile WTO award against the European Union over subsidies given to European plane maker Airbus, which has let Washington slap tariffs on $ 7.5 billion worth of EU goods including Italian cheese, Scottish whiskey and olives from Spain.

That was a record award from aWTO arbitrator in the trade body’s nearly quartercentury history.

The award announced Friday ranks as the thirdlargest.

In the Chinese antidumping ruling, the WTO faulted two techniques that the United States uses to set penalties for dumping. Its socalled “zeroing methodology”— long a problem for the trade body— involves cherrypicking violators and neglecting lawabiding producers in a way that lets U. S. officials artificially inflate the penalties imposed.

The other technique involves treatingmultiple Chinese companies of a product as a single entity, in essence penalizing some producers that do not violate antidumping rules along with those that do.

While these tariffs are allowed by the WTO under international trade law, the Trump administration has in its disputes with China and other commercial partners exchanged tariffs unilaterally, without any green light from the WTO.

The U. S. and China have filed a number of complaints with the WTO against each others’ tariffs, but dispute resolution can take years.