China has officially filed two complaints with the World Trade Organisation (WTO) against the United States, in response to its 30% Section 201 and 25% Section 301 tariffs.
Will China and the US be able to sort out their differences?
On August 15, China’s Ministry of Commerce said it would file a WTO complaint in response to the Section 201 safeguard tariffs imposed on crystalline silicon solar cell and module imports into the United States announced on January 23. At the time, however, no filing could be found on the WTO website.
The document, circulated to the Dispute Settlement Body, is now available, dated August 16. In it, the Chinese government requests consultations with the United States over Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Article 22 of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”), and Article 14 of the Agreement on Safeguards.
The Chinese questions argue, among other things: The “U.S. failed to make a proper determination, including a reasoned and adequate explanation, that the subject imports increased ‘in such quantities and under such conditions’ to cause serious injury to the domestic industry”; the safeguard measures are “not supported by a reasoned and adequate explanation of how the imports ’caused or threatened to cause’ serious injury to the domestic industry”; and the U.S. “did not provide the interested parties with sufficient opportunities to participate in the investigation”.
The complaints add: “China is concerned that the safeguard measure on imports of crystalline silicon photovoltaic products appears to nullify or impair the benefits accruing to China directly or indirectly under the above agreements.”
In a separate filing, dated August 23, China has requested consultation with the United States over the 25% Section 301 tariffs announced on August 7. They affect 279 product lines from China worth around $16 billion, including solar cells and modules.
China specifically requests consultations on Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article 23 of the General Agreement on Tariffs and Trade 1994.
The complaint states: “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.”
Further to the two sets of tariffs cited above, the Trump administration is also mulling the application of 10% tariffs on inverters, AC modules and non-lithium batteries. These could potentially rise to 25%. A hearing was scheduled for August 20-23, although no word has yet been heard on the outcome.
While the safeguard duties make importing solar from China, and other affected locations, impractical, they are unlikely to have a significant impact on trade flows or on the U.S. market, with manufacturers outsourcing operations overseas.