U.S. and Chinese national flags fly outside a company building in Shanghai, China (Photographer: Tomohiro Ohsumi/Bloomberg)  

U.S.-China Trade Fight Unfolds as Diplomats Spar in Geneva

(Bloomberg) -- Just a month after President Trump upended the global order with threats of tariffs against allies and adversaries alike, his ambassador to the World Trade Organization took aim at both China, a main focus of Washington’s ire, and the global trade body itself.

China’s “trade-distorting policies” represent a “threat to the international trading system,” Deputy U.S. Trade Representative Dennis Shea said in Geneva on Friday during his first public comments on the matter. China’s technology transfer policies harm every WTO member and industry that “relies on technology for maintaining competitiveness in world markets.”

Trump has proposed tariffs on up to $150 billion in Chinese imports as punishment for what his administration sees as widespread violations of U.S. intellectual property rights. Beijing has vowed to retaliate in kind, with levies on everything from American soybeans to airplanes. Treasury Secretary Steve Mnuchin, U.S. Trade Representative Robert Lighthizer and National Economic Council Director Larry Kudlow will travel to Beijing next week for trade talks with top Chinese officials.

It’s a “very delicate” moment in relations, and the conflict has the potential to curb economic growth and weaken the WTO’s role as a global trade arbiter, according to WTO Director-General Roberto Azevedo. “Progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” Azevedo told reporters earlier this month.

Unilateralism, Protectionism

China’s Deputy Permanent Representative Yu Benlin said on Friday that Washington’s tariffs are unilateral and don’t comply with WTO rules.

The U.S. actions are “challenging the foundation of the rules-based multilateral trading system,” Yu said, according to a copy of his prepared remarks. “We believe the time has come for all members to join with each other to take actions against the unilateralism and protectionism manifested in the U.S. conduct.”

Shea dissented, saying the U.S. measures are legal and they aim to counter China’s “harmful trade distorting policies,” according to a copy of his remarks. “Instead of addressing its damaging and discriminatory policies, China accuses the United States of ‘unilateralism’,” Shea said. “This criticism has absolutely no validity.”

“If the WTO is seen as a shield protecting those members that choose to adopt policies that can be shown to undermine the fairness and balance of the international trading system then the WTO and the international trading system will lose all credibility and support among our citizens,” Shea said.

©2018 Bloomberg L.P.