China has asked to join World Trade Organization consultations that Brazil opened against US tariffs of up to 37.5 per cent.
Beijing filed the request in Geneva on Monday, telling the trade body it held a substantial commercial interest in the case.
The move was first reported by the Brazilian newspaper Folha de S. Paulo and independently confirmed to the South China Morning Post by a Brazilian government source.
In the request, China said Washington could apply comparable measures to Chinese goods, and that such measures would affect all Chinese exports to the American market, subject to specific exemptions.
It said the additional duties altered the conditions of competition for Chinese products sold in the United States. The document had not yet appeared in the WTO’s public records on Monday.
The grounds Beijing set out concern its own exports rather than the treatment of Brazilian goods. China has challenged Section 301 of the US Trade Act of 1974 at the WTO since 2018. It argues the statute lets Washington determine violations and impose penalties without multilateral authorisation.
Under WTO rules on dispute settlement, a member claiming a substantial trade interest may notify the parties and the Dispute Settlement Body within 10 days of the circulation of the original complaint. The country being challenged decides whether the claim is well founded, and a member turned away is free to open a case of its own.
A member admitted to the consultations does not become a complainant in the dispute. It takes part in the discussions and sees what is exchanged. It cannot make claims of its own or ask for a panel, and would have to open a separate case to do either.
The forced labour investigation that produced part of the Brazilian tariff covered 60 economies, including mainland China.
A Chinese commerce ministry spokesman said in March that the inquiry was “highly unilateral, arbitrary and discriminatory” and noted that the United States has never ratified the Forced Labour Convention of 1930.
Beijing made representations to Washington while the two sides were holding trade talks in Paris, the spokesman said.
Chinese officials have repeatedly invoked a September 2020 WTO panel report that found American tariffs on Chinese goods under Section 301 inconsistent with global trade rules. Washington appealed.
The report has never taken effect, and China has separate consultations pending against American tariff measures adopted last year. The Trump administration extended 178 product exclusions from the Section 301 duties on Chinese goods to November after the president met Xi Jinping in November.
Brazil requested consultations on July 27 and the trade body circulated the complaint three days later under the case number DS646. It targets two actions taken by US President Donald Trump’s administration, the first an additional duty of 25 per cent in force since July 22.
That duty followed an investigation by the Office of the United States Trade Representative into digital trade and electronic payment services, including the Pix instant payment system, as well as preferential tariffs, anti-corruption enforcement, intellectual property protection, ethanol market access and illegal deforestation.
The second measure is a duty of 12.5 per cent, in force since July 24, imposed after the separate inquiry into the enforcement of bans on goods made with forced labour.
Brazil contends the two measures exceed the tariff ceilings in the American schedule of concessions and breach the most favoured nation rule, which bars a member from giving one trading partner worse terms than it gives the rest.
It also argues that Washington sought redress through unilateral determinations rather than through the dispute settlement system, the same claim China brought in 2018.
The United States has accepted the request for consultations, according to Folha, although no date has been set for the talks to begin.
The Brazilian foreign ministry said the duties reached more than 23 per cent of the country’s exports to the American market.
A Brazilian government source, who spoke on condition of anonymity because they were not authorised to discuss the case publicly, said Brasilia read the Chinese request as “a signal of support” and as confirmation that its complaint “reached beyond Brazilian interests”.
But the same source admitted that the dispute would remain “largely political” until the WTO appellate body is restored, because the organisation cannot penalise the United States over the tariffs.
The appellate body is the final stage of WTO litigation and needs at least three members to hear a case.
It lost its quorum in December 2019 after Washington blocked replacements for departing members, and the seats remain empty. A losing party at panel stage can appeal to a body that cannot hear the case, which leaves the ruling unadopted and blocks any authorisation to retaliate.
Should the consultations fail within 60 days, Brazil may ask for a panel of experts to rule on the measures.
The country brought a similar case last year against duties of 10 per cent and 40 per cent that Trump imposed under emergency economic powers, which the US Supreme Court ruled on February 20 did not authorise tariffs at all. The administration imposed the current duties under Section 301, a trade statute that does not depend on the authority the court rejected.
The Chinese embassy in Brasilia did not immediately respond to a SCMP request for comment and the commerce ministry in Beijing has not addressed the filing publicly. -- SOUTH CHINA MORNING POST
