U.S. trade poli­cies­drew­ strong­ push­back, ­ as­the ­world ­trade Or­ga­ni­za­tion ­sided­ with­China­on ­tariffs ­andCana­dian ­threats­ of­ re­tal­i­a­tion­led­ the­ u.s. ­toa­ban­don ­plans ­for­ newim­port­taxes.

The Washington Post - - FRONT PAGE - BY DAVID J. LYNCH david.lynch@wash­post.com

Pres­i­dent Trump’s “Amer­ica First” pol­icy drew strong push­back on two fronts Tues­day, as the World Trade Or­ga­ni­za­tion sided with China in a le­gal chal­lenge to U.S. tariffs and Cana­dian threats of re­tal­i­a­tion led the United States to aban­don plans for a fresh set of im­port taxes.

The pair of de­vel­op­ments — cou­pled with the re­lease ear­lier this month of data show­ing the trade deficit at its worst point in 12 years — re­flected the in­com­plete state of the pres­i­dent’s promised glob­al­iza­tion over­haul seven weeks be­fore he faces vot­ers.

A three-mem­ber WTO panel struck at the core of Trump’s trade war on China, rul­ing that the tariffs he im­posed more than two years ago on $234 bil­lion worth of Chi­nese goods ran afoul of U.S. com­mit­ments un­der global trad­ing rules.

The rul­ing will have no im­me­di­ate im­pact on U.S. cus­toms of­fi­cials’ abil­ity to col­lect the levies from Amer­i­can im­porters, but it rep­re­sents a diplo­matic dent in the pres­i­dent’s trade of­fen­sive.

Sev­eral hours later, the ad­min­is­tra­tion said it was aban­don­ing a tar­iff on alu­minum from Canada that the pres­i­dent had im­posed just last month, set­tling in­stead for mak­ing pub­lic its ex­pec­ta­tion that im­ports will de­cline. The move came hours be­fore Chrys­tia Freeland, Canada’s deputy prime min­is­ter, who had vowed a “dol­lar for dol­lar” re­sponse, was ex­pected to an­nounce re­tal­ia­tory tariffs on Amer­i­can prod­ucts.

“Both ac­tions re­flect the iron law of trade re­tal­i­a­tion. When the U.S. im­poses im­port taxes on for­eign goods, other coun­tries will hit back,” said John Veroneau, a part­ner at Cov­ing­ton & Burl­ing and a for­mer U.S. trade ne­go­tia­tor in the ad­min­is­tra­tion of Pres­i­dent Ge­orge W. Bush.

That view has not al­ways been ac­cepted by se­nior Trump ad­min­is­tra­tion fig­ures. In 2018, Peter Navarro, one of the pres­i­dent’s clos­est trade ad­vis­ers, in­sisted that U.S. trad­ing part­ners would not re­spond if the pres­i­dent made their prod­ucts more ex­pen­sive for Amer­i­can buy­ers.

“I don’t be­lieve any coun­try is go­ing to re­tal­i­ate for the sim­ple rea­son that we are the most lu­cra­tive and big­gest mar­ket in the world,” Navarro told Fox Busi­ness. “They know they’re cheat­ing us, and all we’re do­ing is stand­ing up for our­selves.”

The ad­min­is­tra­tion had ar­gued be­fore the WTO that its tariffs were needed to curb years of trade cheat­ing by China. But in a 66page re­port, the panel re­jected that claim.

“The United States has not met its bur­den of demon­strat­ing that the mea­sures” are jus­ti­fied, the panel con­cluded.

Robert E. Lighthizer, the U.S. trade rep­re­sen­ta­tive, is­sued a state­ment crit­i­ciz­ing the de­ci­sion, say­ing it showed that the WTO was un­able to pre­vent Chi­nese poli­cies from dis­tort­ing global trade and harm­ing the U.S. econ­omy. The pres­i­dent im­posed the tariffs on Chi­nese goods fol­low­ing an in­ves­ti­ga­tion by Lighthizer’s of­fice that con­cluded China rou­tinely en­gaged in un­fair trade prac­tices, in­clud­ing com­pelling for­eign firms to trans­fer tech­nol­ogy se­crets and vi­o­lat­ing in­tel­lec­tual prop­erty safe­guards.

“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 United States 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,” Lighthizer said.

In a sep­a­rate an­nounce­ment, Lighthizer said the ad­min­is­tra­tion was drop­ping a 10 per­cent tar­iff on Cana­dian alu­minum, which took ef­fect Aug. 16.

The U.S. move fol­lowed con­sul­ta­tions with the Cana­dian govern­ment and came as Cana­dian of­fi­cials were pre­par­ing to un­veil re­tal­ia­tory tariffs on U.S. goods. Lighthizer said the United States had scrapped its tar­iff plans based on “ex­pec­ta­tions” that Cana­dian ship­ments of the in­dus­trial metal would de­cline by 50 per­cent from lev­els dur­ing the first half of this year, and he re­leased spe­cific per­mis­si­ble monthly to­tals for im­ports in each of the next four months.

The United States re­serves the right to reim­pose the im­port levies if im­ports ex­ceed 105 per­cent of those lev­els, though Lighthizer’s state­ment ef­fec­tively post­pones any re­sump­tion of the tar­iff fight un­til af­ter the elec­tion.

Freeland bluntly de­scribed the U.S. de­ci­sion as a “uni­lat­eral” one and re­it­er­ated that Canada would strike back against any fu­ture threats.

“This is not a ne­go­ti­ated deal be­tween Canada and the United States,” she told re­porters. “We have not agreed to any­thing. We have not ne­go­ti­ated an agree­ment with the United States on quo­tas.”

The United States first im­posed tariffs on im­ports of steel and alu­minum in 2018, cit­ing the threat to na­tional se­cu­rity from a reliance upon for­eign sup­pli­ers. The pres­i­dent ex­empted Canada and Mex­ico from the levies the fol­low­ing year when a new North Amer­i­can trade pact was com­pleted.

When Trump an­nounced last month that he was reim­pos­ing the alu­minum tariffs, cit­ing an im­port surge, Cana­dian of­fi­cials said they would re­tal­i­ate against $3.6 bil­lion in U.S. goods, in­clud­ing bi­cy­cles, wash­ing ma­chines and re­frig­er­a­tors.

The items were “ex­plic­itly tar­geted at prod­ucts that were po­lit­i­cally sen­si­tive” and made in swing-state fac­to­ries, ac­cord­ing to Eric Miller, pres­i­dent of Rideau Po­tomac Strat­egy Group, a trade con­sul­tancy.

The on-again, off-again na­ture of the pres­i­dent’s tariffs has con­founded Amer­i­can busi­nesses, leav­ing many un­cer­tain of their raw ma­te­rial costs from one month to the next. The Alu­minum As­so­ci­a­tion, an in­dus­try group, en­dorsed the de­ci­sion to drop the tariffs, which it called “dis­rup­tive and un­nec­es­sary.”

The U.S. Cham­ber of Com­merce, which of­ten has been crit­i­cal of the ad­min­is­tra­tion’s tar­iff diplo­macy, also wel­comed the move.

“What Amer­i­can man­u­fac­tur­ers need now is cer­tainty that these tariffs won’t make an­other reap­pear­ance. Set­ting aside these threats once and for all will al­low Amer­i­can job cre­ators to fo­cus on eco­nomic re­cov­ery,” said My­ron Bril­liant, ex­ec­u­tive vice pres­i­dent of the U.S. Cham­ber.

In the case of the China tariffs, the WTO rul­ing could even­tu­ally au­tho­rize China to im­pose higher tariffs on a range of U.S. prod­ucts. But the United States can ef­fec­tively stall any fur­ther ac­tion by ap­peal­ing Tues­day’s rul­ing. The ad­min­is­tra­tion has blocked for months the ap­point­ment of new mem­bers to the WTO’S ap­pel­late body, leav­ing the or­ga­ni­za­tion un­able to ful­fill its as­signed role of ad­ju­di­cat­ing trade spats. The panel ac­knowl­edged its rul­ing comes amid “un­prece­dented global trade ten­sions.”

JABIN BOTSFORD/THE WASHINGTON POST

Robert E. Lighthizer, the U.S. trade rep­re­sen­ta­tive, said the World Trade Or­ga­ni­za­tion’s de­ci­sion showed the group was un­able to pre­vent Chi­nese poli­cies from dis­tort­ing global trade.

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