The World Trade Organization arbitrator will not announce a decision on the size of retaliatory tariffs on the U.S. over Boeing subsidies until the fall, according to Reuters, citing unnamed sources. The U.S. has already imposed tariffs on European food, beverages, aircraft parts and a few other products, because a WTO arbitrator said the European Union had not come into compliance with a decision that said it gave too-large subsidies to Airbus. The decision had been expected in May or June, and EU officials were hoping that if they were granted the right to retaliate, that would convince the U.S. to negotiate a civil aviation settlement that would lift the U.S. tariffs. Instead, the Office of the U.S. Trade Representative is talking about adding more products to its 25% tariff list (see 2006240017).

One of the nominees for director general of the World Trade Organization, Hamid Mamdouh, told the Washington International Trade Association that the failings of the appellate body are because the WTO has abandoned negotiations. This is the same view held by the U.S., which has brought the issue to a head by killing the appellate body. Mamdouh, a senior counsel at King & Spalding, was speaking during a WITA webinar June 23.

President Donald Trump was wrongheaded for suggesting the U.S. could sever ties with China, a Chinese Foreign Affairs Ministry spokesperson said June 19, according to a press conference transcript in English. “In this era of globalization, the interests of all countries are closely intertwined,” he said. “Global industrial and supply chains are formed and developed in such ways as determined by market forces and business decisions. As such, it is unrealistic and insensible to try to sever them or wish political forces would override economic law. Such practices will not help solve America's domestic problems. Instead, they will only cause more harm to the ordinary American people.” The spokesperson sidestepped questions about whether Trump’s threats could endanger the U.S.-China phase one trade deal. “... the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China,” Trump tweeted June 18, the day after U.S. Trade Representative Robert Lighthizer told Congress decoupling wasn’t a reasonable trade policy.

China’s World Trade Organization challenge to the European Union’s non-market economy treatment of its goods in antidumping duty cases has now fallen further into inactivity. The WTO on June 15 issued a notification that it is disbanding a panel requested by China in 2017 to decide the dispute, one year after China asked the WTO to suspend the panel. Under WTO rules, a panel may only be suspended for a year before its authority lapses. A similar WTO challenge filed by China against its continued non-market economy treatment by the U.S. never made it past initial consultations (see 1612120019 and 1710300043). China had argued in both cases that a provision of its agreement to join the WTO required that all countries treat it as a market economy beginning Dec. 11, 2016.

China asked the U.S. to clarify how it defines “foreign adversaries” named in the May executive order that bans the use of some bulk power equipment and parts from foreign adversaries (see 2005040040). It suggested, during a June 10 World Trade Organization meeting, that the U.S. could be abusing the national security exception to the WTO rules. The U.S. replied that because the restriction pertains to national security, it should not be open to discussion at all, according to a Geneva trade official.

Panelists talking about the future of the World Trade Organization are picturing a world in which the U.S. and China continue to argue about the issues of industrial subsidies and state-owned enterprises while other countries ally at the WTO to work on notifications, a binding dispute settlement process and how to share a vaccine for the COVID-19 virus around the globe.

At a time that the World Trade Organization is under stress -- its appellate body disbanded, and its director general quitting before his term is up -- member countries are also resisting moving proceedings online. Nigel Cory, associate director of trade policy for the Information Technology and Innovation Foundation, said other groups have “shifted these critical high-level meetings online,” but the WTO canceled its June ministerial meeting. Cory said that the Organization for Economic Cooperation and Development is negotiating online on the matter of digital taxes, so it is showing it can be done.

Although China, the U.S. and the European Union have taken actions during the COVID-19 pandemic that are damaging to the goal of free trade, Canadian diplomats and scholars at the Peterson Institute for International Economics said that doesn't mean we're headed for a new round of sphere-of-influence-style trading chains rather than global integration.

Canada announced May 19 that a ban on non-essential travel from the U.S. would continue another month, and the U.S. also said it would continue that freeze on non-essential travel through June 20 (see 2004210046). Trading and workers commuting to jobs in essential industries can continue. Department of Homeland Security Acting Secretary Chad Wolf said it's likely the ban on personal travel between the U.S. and Mexico also will be extended.

The struggle the U.S. is having to manage the COVID-19 pandemic is a higher priority than what's happening at the World Trade Organization, said Dennis Shea, U.S. ambassador to the WTO. He noted that the U.S. has a third of the world's reported cases of the disease, and that more Americans have died from COVID-19 than citizens in any other country.