A World Trade Organization panel has ruled Trump administration tariffs on $US200 billion worth of Chinese goods are illegal.
The finding vindicates Beijing even if the United States has all but incapacitated the WTO’s ability to hand down a final, binding verdict.
The decision marks the first time the Geneva-based trade body has ruled against a series of high-profile tariffs President Donald Trump’s government has imposed on a number of countries – allies and rivals alike.
Trump has repeatedly claimed the WTO treats the US unfairly.
The ruling, in theory, would allow China to impose retaliatory tariffs on billions’ worth of US goods.
But it is unlikely to have much practical impact, at least in the short term, because the US can appeal the decision and the WTO’s appeals court is currently no longer functioning – largely because of Washington’s single-handed refusal to accept new members for it.
In its decision, the WTO’s dispute settlement body ruled against the US government’s argument China has wrongly engaged in practices harmful to US interests on issues including intellectual property theft and technology transfer – and it quickly drew criticism of US trade representative Robert Lighthizer.
“This panel report confirms what the Trump administration has been saying for four years: The WTO is completely inadequate to stop China’s harmful technology practices,” Lighthizer said in a statement.
He said the United States had presented “extensive evidence” of China’s intellectual property theft and the WTO has offered no fixes.
“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,” he added.
The Chinese ministry of commerce said the ruling was “objective and fair” and called on the US to respect it.
The appeals court issues final rulings in trade cases and stopped functioning last year when the terms of two of its last three judges expired with no replacements.
That means the United States can appeal the decision “into the void,” said Timothy Keeler, a lawyer at Mayer Brown and former chief of staff for the US trade representative.
The US tariffs target two batches of Chinese products.
Duties of 10 per cent were imposed on some $US200 billion ($A274 billion) worth of goods in September 2018, and were jacked up to 25 per cent eight months later.
An additional 25 per cent duties were imposed in June 2018 against Chinese goods worth about $US34 billion in annual trade, targeting industrial products and items like airplane propellers, water purifiers and motorcycles.