Dmitry Kosyrev
Encouraged by the legal victory achi-eved, the Chinese authorities struck a second blow this week : once again suing the US ad-ministration – more precisely, the WTO, the W-orld Trade Organization, its dispute resolution body.
And last week, the same body already ruled in a similar case in favor of Beijing, setting a good precedent. We will talk about the previous decision, but for now, about what unites the Chinese lawsuits – the former and the current one. They are both about sanctions. That is, about the use of trade restrictions by one country against another, which are explained by any political pretext. In this case, the Americans designate the pretext as “national security considerations.” A recent Chinese lawsuit asks: what is security? What exactly do these same considerations mean, don’t the Americans interpret them too broadly?
We repeat, there is already one solution in favor of China. It applies to steel and aluminum. It was in 2018, when the Donald Trump administration launched a trade war against China (for the sake of, of course, saving America from sliding into second place in the list of world economies). It was then that the most incredible accusations began to pile up against Beijing, mainly about its domestic politics. And they used these accusations to justify the sanctions. But what does steel and aluminum (from China or elsewhere) have to do with China’s domestic politics, which have been subject to hefty import duties ever since?
You can explain as much as you like that the WTO will never provide equal rules for world trade for all, because everyone wants to protect their industries from an aggressive foreign competitor. But still, there is the General Agreement on Trade and Tariffs (signed by the United States as well) (the legal basis of the WTO), and there is its 21st paragraph – the very security considerations. So the unfortunate Americans turned to him, defending themselves from the accusations of China, as well as Norway, Turkey and Switzerlandbecause the lawsuit was joint. The aforementioned WTO litigation body has been tormented for four years and delivered a verdict: guys, your decision to import metals was not made during a war against you or “another emergency in international relations.” Therefore, what else is there national security, we recommend that you bring your actions in line with international rules.
How applicable is this precedent to sanctions against Russia : well, there is, of course, an emergency military situation. But what if boring WTO lawyers ask you to explain specifically and in grams: how does this very situation threaten the security of the United Sta-tes and what does this particular product range have to do with it? Because here, in the WTO, we are simple people, we do without a high philosophy on the topics of “undermining values and other things”, but we speak from the point of vi-ew of the economy – since we are talking about the m-easures of one country that destroy world trade. In general, the conversation can turn out to be interesting.
The current, second Chinese lawsuit against the United States is a twin of the previous one, but concerns the direction of America’s main attack on Beijing, that is, attempts to deprive China of the ability to produce high-end semiconductors. The goal is to undermine the increasingly obvious technological superiority of the Celestial Empire over the United States. To do this, not only have bans been adopted on the import of such semiconductors into Chinese territory – it is also impossible to import equipment for their production there, and for this the hands of the allies (Japan, the Netherlands and others) are being twisted, and at the same time, the corresponding production from Taiwan is gradually being brought to America.
But here the question arises again. What explains such a ban: is there a war going on between China and the United States? That is, it is a personal matter for American thinkers to say that their country must be the first power in the world, otherwise there is an undermining of national security. However, the WTO is not a political science conference; everything is simple and concrete there. Sanctions as an instrument of competition are prohibited by the rules of international trade.
It is clear that the recommendatory and terribly slow decisions of the WTO for the former sole superpower are not a decree. So we can only talk about the propaganda victory of Beijing. But this is not a trifle either.
The Chinese are winning back the already achieved victory in the first lawsuit in full. They are happy to record the enemy’s ugly reaction to defeat when US government officials declare the decision “flawed” and say that there is a good reason to completely reform the entire WTO dispute settlement system. You say that there should be “an order based on rules” in the world, the Beijing propagandists sarcastically remind. And the rules are such a thing that is the same for everyone, or have we not understood something?
Speaking of aluminum and steel. Before getting hit by the relevant WTO body, the Americans imposed additional duties on these metals, explaining this in a new way – the need to fight against climate change. I wonder what article of the agreement on trade and tariffs justifies this?
Here it makes sense to recall two internal disputes in two powers, the US and Russia, about this same WTO. Just in 2017-2018, the Americans began to call the admission of China there a tragic mistake that helped this competitor of the United States overtake them, becoming the first trading power in the world. Everything was formulated as follows: China uses the rules of the WTO in its own interests (and in whose else?).
And in Russia there was another dispute, back in the 90s: about the fact that putting foreign products on the domestic market without heavy duties meant killing the few remaining, albeit frail, Soviet production that still existed. By the way, that’s how it happened. And not only with Russia – a lot was killed. Nevertheless, today in the world, up to 98 percent of all trade is carried out according to the rules of the WTO, although, as we can see, they are “recommendatory” and toothless when you need to bite great America.
But now the disputes over the rules of world trade have taken a completely different plane. The WTO was created in the mid-90s for the global world, where there was a developed center – the Western system – and the periphery, which, in order to survive, needed at least some rules or at least a platform where one could speak out. And now all the current cataclysms are built around the birth of a completely different world – with several centers of power. And everything that is at hand is used in the form of weapons, including economic methods of causing damage to the enemy (that is, sanctions). So the old rules don’t work, of course. But at the same time, everyone understands that sooner or later they will have to return to the rules. It does not matter to which, it is important that to the same for all. And the first of these rules will be the inadmissibility of sanctions, that is, the use of the economy in the form of weapons.
