China Officially Requests WTO Dispute Consultations Over US Chip Controls
China officially requested dispute consultations with the U.S. at the World Trade Organization Dec. 15 over American export controls on certain semiconductors, the WTO announced. China, which announced the move earlier in the week (see 2212120061), said the restrictions violate Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT), Article XXII of the General Agreement on Trade in Services, Article 8 of the Agreement on Trade-Related Investment Measures and Article 64.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights.
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The U.S. restrictions, administered by the Commerce Department's Bureau of Industry and Security, are "motivated by political considerations for preserving the United States' edge in technology sectors," China said, and "constitute discriminatory and disguised trade restrictions." China said it has a range of issues with the controls, including BIS' application of the foreign direct product rule, with places restrictions on certain non-U.S.-origin goods that are made with certain U.S. parts or technology. China also cited the fact that the U.S. restricts certain items and equipment if they will be used for certain semiconductor manufacturing and supercomputer end uses in China.
China said the measures violate Article I of the GATT because the U.S. "fails to accord immediately and unconditionally the advantage, favor, privilege and immunity granted to products destined for other WTO members to like products destined for China." The measures amount to restrictions via export licenses on the export of the goods meant for China, in violation of Article XI of the GATT, China said. It also alleged the U.S. violated Article X of the GATT by failing to promptly publish the trade restrictions in a way that lets governments and traders become acquainted with them and by failing to administer its regulations in a "uniform, impartial and reasonable manner."
China said several chip companies were "informed by BIS of the future publication" of the controls in September, a month before they were officially published, "and were required to halt their exports in advance." Those entities may have included NVIDIA, AMD and others (see 2209010059). "In other words, the United States enforces certain trade-restrictive measures before the promulgation of such measures," China said.
The country also said BIS has a "procedural discrepancy" in adding to and removing entities from its Entity List, which "constitutes an instance for the United States' failure to administer its export control regime in a uniform, impartial and reasonable manner." It also said BIS employs an "uncertainly broad scope" for exports designated as EAR99 of the Export Administration Regulations, which include items that generally don't require an export license. That uncertainty "results in restrictions on non-sensitive and commercial items and on commercial entities that should not have been restricted under the export control regime," China said.
A Commerce spokesperson last week directed questions to the Office of the U.S. Trade Representative, which said the WTO is "not the appropriate forum to discuss issues related to national security" (see 2212130002).