Global trade war: tensions spill into WTO session over China overcapacity, Trump tariffs
Overproduction focus a ‘waste of time’, Beijing says, stressing real issue is protectionism as US-led group blasts China for alleged subsidies, industrial overflows
The stormy session showed the precarious nature of the global trading system and profiled what appeared to be irreconcilable differences between some of the world’s key trading nations.
According to the sources, the US first took the floor to claim that China’s “extensive, state-driven subsidies are uniquely responsible for persistent and harmful global overcapacity”. The US representative said subsidies, including “cheap land” and “large-scale financing”, “artificially boost production in sectors like steel, solar, electric vehicles and chemicals far beyond domestic or global demand”.
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‘Fake news’: Chinese officials dismiss claims of US trade war consultations
The US representatives claimed the trend was causing factories to close from South Africa to India, and that China’s “reluctance to discuss the issue highlighted how sensitive the matter is for China and how it seeks to avoid transparency regarding the impact of its subsidies”, the source said.
The US side ridiculed an appeal for “stability” from China, claiming that it was “cover for its ambition to dominate global supply chains”.
The intervention was co-sponsored by Britain, the EU, Japan, Australia, Canada, New Zealand and Brazil, each of which took the floor to express their concerns about China’s industrial excesses.
Brazil, calling for dialogue rather than unilateral measures which may worsen trade distortions, said green subsidies could disadvantage developing countries “due to limited fiscal space and exposure to subsidy-driven competition and trade barriers”.
The EU pointed to research showing that China’s weak domestic demand and growing trade surplus stemmed from “non-transparent, large-scale state intervention rather than market competition”.
China responded with several lengthy rebuttals, dismissing the attacks on overcapacity as a “false narrative”, since there was no agreed definition for determining the phenomenon.
Beijing claimed that its huge export growth showed its comparative advantage and pointed to similar trade patterns among some of its accusers, noting that the US exported more than half of certain agricultural goods that it produces, whereas Japan exported almost half of its manufactured cars.
The Chinese side said the issue was “being politicised and misused as a pretext for protectionist actions aimed at containing China’s growth”, and urged the committee not to “waste time on the overcapacity issue”. Instead, Beijing’s representative said, it should “focus on the real issue of unilateralism and protectionism … the United States’ use of ‘reciprocal tariffs’”.
Beijing’s representatives clashed with the EU over Brussels’ tariffs on Chinese-made electric vehicle imports and over China’s probes into subsidies in the EU’s dairy sector, which the European side said was based on “questionable allegations and insufficient evidence”.
The session came as Trump threatened to shake up the global trading system with a series of deep tariff moves pointed at allies and rivals alike. The tensions highlighted the divergences among many WTO members, suggesting that it could become a front for fighting on some of the most fiery issues of the day.
Trump’s huge tariffs on Chinese imports have also stoked fears among third countries – particularly in Europe – that they could become a dumping ground for China’s industrial overflows.
Facing tariffs of more than 120 per cent, many Chinese goods are effectively blocked from the US market, with the EU repeatedly warning Beijing against cut-price trade diversion that could put its local manufacturers under fresh pressure.
During its intervention in Geneva on Tuesday, the EU called for an upgrade to the WTO’s rules to deal with “structural distortions”. It also reaffirmed its commitment to “take necessary actions to protect European industries in line with WTO principles”.