`Up Is Down' in Crazy Trade World as China-U.S. Clash at WTO

(Bloomberg) -- A U.S. envoy to the World Trade Organization condemned China’s trade policy and said Beijing’s exhortations against protectionism have “entered the realm of Alice in Wonderland.”

“It is amazing to watch a country that is the world’s most protectionist, mercantilist economy position itself as the self-proclaimed defender of free trade and the global trading system,” Deputy U.S. Trade Representative Dennis Shea said on Tuesday. “White is black. Up is down.”

Chinese and U.S. ambassadors to the WTO clashed at the regulatory body’s general council meeting in Geneva, where Beijing lashed out at President Donald Trump’s proposed tariffs on $150 billion of Chinese goods. Washington defended its measures and criticized China’s vows of retaliation.

The verbal fisticuffs come less than a week after Treasury Secretary Steven Mnuchin led a U.S. delegation to China to try to negotiate a way out of the rising tensions. Trump tweeted on Tuesday that he would speak to Chinese President Xi Jinping later in the day on trade, “where good things will happen.”

‘Rabbit Hole’

Today’s meeting “was extraordinary in its intensity,” WTO Spokesman Keith Rockwell said. “We had the two most powerful members of the WTO weighing in on their views of each others’ policy in a way I have not seen in my many years here.”

Trump has threatened tariffs against allies and adversaries alike in the name of protecting national security or in retaliation for alleged violations of intellectual property.

The U.S. tariffs on steel and aluminum can’t be justified on national security grounds and the measures may “trigger systemic risks undermining the multilateral trading system,” European Union Ambassador Marc Vanheukelen said at the meeting. The EU “and its member states are very concerned by the direct and indirect impact that the measures could have -- on the U.S. market, the EU market and on third country markets,” he said.

Several WTO members found fault with the U.S.’s refusal to appoint new members to the WTO’s appellate body, which could render the decision-making body powerless by late 2019 as it won’t have the required number of panelists to sign off on rulings.

“Without such system, the WTO trade rules will no longer be effectively enforced, and the trust and credibility of the multilateral trading system will be deeply undermined,” Chinese Ambassador Zhang Xiangchen said at the meeting.

But the U.S. representative wasn’t cowed.

“The truth is, it is China that is the unilateralist, consistently acting in ways that undermine the global system of open and fair trade,” Shea said. “The WTO must avoid falling down this rabbit hole into a fantasy world, lest it lose all credibility.”

©2018 Bloomberg L.P.