WTO panel issues report re: US 25% tariffs against Chinese products under sec. 301

On 15 September 2020, the WTO panel reviewing “United States — Tariff Measures on Certain Goods from China” (DS543) released its panel report, which found that the section 301 tariffs imposed by the US against certain Chinese goods were prima facie inconsistent with various provisions of the General Agreement on Tariffs and Trade (GATT).

For the reasons set forth in the Report, the Panel concluded that:

a. the parties have not reached a mutually satisfactory solution within the meaning of Article 12.7 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), or otherwise relinquished their rights to pursue WTO dispute settlement action on the measures at issue in this dispute;

b. all measures challenged by China fall within the Panel’s terms of reference, and it is appropriate for the Panel to make findings and recommendations with respect to the first measure as identified in China’s panel request (additional duties of 25% on List 1 products), and the second measure as amended on 9 May 2019 (additional duties of 25% on List 2 products);

c. the challenged measures are prima facie inconsistent with Articles I:1, II:1(a) and II:1(b) of the GATT 1994; and

d. the United States has not met its burden of demonstrating that the measures are provisionally justified under Article XX(a) of the GATT 1994.

As a consequence, the Panel concluded that the measures at issue are inconsistent with Articles I:1, II:1(a) and II:1(b) of the GATT 1994.

Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment. The Panel concluded that, to the extent that the measures at issue are inconsistent with certain provisions of the GATT 1994, they have nullified or impaired benefits accruing to China under that agreement within the meaning of Article XXIII:1(a) of the GATT 1994.

Pursuant to Article 19.1 of the DSU, the Panel recommended that the United States bring its measures into conformity with its obligations under the GATT 1994.