China's WTO Complaint on the Section 301 Tariffs

China's consultations request on the U.S. Section 301 tariffs is here. This is the key part:

On 22 March 2018, the United States published related documents of the Section 301 investigations against China. On 3 April, the United State published a list of products of Chinese origin, as identified in the Annex to the Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301, that an additional ad valorem duty of 25 percent are proposed to be imposed on. The proposed duties would be only applied to China's products and in excess of the United States's bound rates in its Schedule of Concessions and Commitments annexed to the GATT 1994.

The legal documents through which the United States implements its proposed tariff measures include:

1. Section 301-310 of the Trade Act of 1974, as amended (19 U.S.C., paragraphs 2411-2420);

2. Findings of the investigation into China's acts, policies and practices related to technology transfer, intellectual property and innovation under Section 301 of the Trade Act of 1974, dated 22 March 2018;

3. Actions by the United States Related to the Section 301 Investigation of China's Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation, dated 22 March 2018;

4. Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, dated 3 April 2018.

This request for consultations also concerns any amendments, or related, successor, replacement, or implementing measures to the measures identified above.

These measures appear to be inconsistent with the relevant provisions of the WTO covered agreements including:

1. Article I.1 of the GATT 1994, because the measures at issue fail to extend immediately and unconditionally to China an "advantage, favour, privilege or immunity" granted by the United States "[w]ith respect to customs duties and charges of any kind imposed on or in connection with" the importation of products originating in the territory of other Members.

2. Article II.1(a) and (b) of the GATT 1994, because the measures at issue fail to accord to the products originating in China identified in the above mentioned documents the treatment no less favourable than that provided for in the United States's Schedule of Concessions and Commitments annexed to the GATT 1994.

3. Article 23 of the DSU, because the measures at issue fail to recourse to, and abide by, the rules and procedures of the DSU, when the United States seek the redress of a violation of obligation or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements.

In addition, and as a consequence of the foregoing, the measures at issue appear to nullify or impair benefits accruing to China directly or indirectly under the cited agreements.

Of course, no tariffs have actually been imposed yet, but I don't think that will matter too much. The tariffs will flow from the actions taken so far, and should be considered as part of this complaint. If China is at all worried about that technical problem, it can file an additional consultations request after the tariffs are imposed.

Two of China's legal claims are pretty straightforward. If the United States imposes tariffs on China, at a rate above the bound rate in the U.S. Schedule, there will be a violation of GATT Articles I and II. As I mentioned yesterday, I haven't heard of any defense the U.S. will put forward to these claims, but perhaps it will come up with something. (Some kind of creative GATT Article XX(d) argument?)

As for DSU Article 23, the issue here is going to be whether the concerns the U.S. is reacting to are covered by WTO obligations. If the U.S. tariffs are not related to WTO obligations, DSU Article 23 is not implicated. Some of the issues raised by the U.S. about Chinese actions are probably not covered, while for others there is at least an argument that they are covered. This is going to make things a little complicated, as some of the tariffs might be for WTO issues, whereas others are not.

A final question: Will China also file a WTO complaint about the Section 232 tariffs?