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Bell Weather for Reforms: New WTO Panel Decision in USA - China Dispute

The recent WTO Panel Report has stated that USA has broken its rule while imposing tariff under Section 301 of Trade Act 1974 in USA- China Trade War.  USA has the option to file an appeal in the defunct WTO DSB Appellate Body to fight out this current ruling.  Such a move would tactically maintain the status quo but it will bring the question of challenging sovereign power of US senate in this election year in the background of current geopolitical tensions. Similar situation was the major reason for BREXIT. If USA does not appeal in WTO DSB and parallelly fails to implement panel decision, it will amount to the violation of Trade body’s decision.  This could be equated with China’s behaviour in implementing the judgement of International Court of Justice (ICJ) in the South China Sea issue. Considering the fact that USA has been expressing displeasure on several international organizations, the current scenario will further deteriorate its relation with WTO. Most of the countries will avoid to delve in this subject with the objective of improving international relations. In the Chinese perspective, it appears that it has not gained out of this panel decision initially. But China has the ability to create a new opinion in the international relations. Perhaps it is necessary to examine whether WTO is going in WHO way? This needs a deeper scrutiny!


USA has been struggling to bilaterally tackle China for last one decade in the context of unfair trade practices and technology transfers.  USA was keen to resolve the matter bilaterally instead of taking it to WTO DSB. After several years of China’s accession in WTO, USA has realised the gap between WTO rules and Chinese syndromes such as lack of free market economy, doubtful integrity of statistics and information, transparency and human rights. The panel report reflects that neither USA nor WTO DSB is able to address this subject in the current framework of WTO rules.  It could be inferred that this could be the reason why USA was keen to proceed the matter bilaterally. 


By taking this case to WTO, China has displayed a new character of not respecting the bilateral agreement reached between USA and China in the trade war.  On the other hand, USA has not initiated any action under the WTO DSB with respect to measures that China had imposed in response to the United States measures at issue in this dispute.  Therefore, the sanctity of bilateral agreement between USA and China is under question.  However, China will denounce such arguments by saying that it respects multilateralism.  


The above panel decision had merely revolved around the subject of Most Favoured Nation (MFN) and its other rules but it failed to interpret and address the fundamental characteristics of trade and its vital definitions. The current decision of WTO DSB will strengthen USA’s disbelief to get any respite from this global body in the future. India should view this case with a strategic perspective to develop new trade regimes. After resignation of WTO DG Robert Azevedo, the WTO panel decision is the final bell weather for the larger reforms in this quarter century old institution. 







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