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US Imposes Tariff on China in Light of Corona Virus: A Comment with Reference to GATT Agreement

Updated: Oct 11, 2020

Let me introduce you to two of the most powerful nations in the world. First being, China, a country all over the news these days, being blamed for almost everything that is going wrong in today’s world, some of these conspiracy theories seem true like the “String of Pearls” in Asia and some seems just another lie after the one which claimed that coronavirus is scientifically engineered by China. China, on its way to challenging the global dominance of the United States of America, has deteriorated its reputation and conception in the whole world. It is pertinent to mention that just after a week’s lockdown in China’s centre, Beijing re-wrote the rules in Hong Kong to gain control, while the world population is distracted amid coronavirus. Second, the United States of America, the world’s dominant player with the strongest economy and presently with a President whose utmost priority is the economy of the country, besides everything else. The US, at present, counts more than 2 Million cases of confirmed Covid-19 patients. It seems that the numbers increase so drastically because of the notion in the head of Mr President. Initially, the US was of the view that it is just a flu. Later, April 23, 2020, the President responded a question by saying, “This wasn’t just flu, we were attacked.” The United States has been open since then about coronavirus being a weapon of China for world domination.

“Since 1949, US-China relations have evolved from a tensed standoff to a complex mix of intensifying diplomacy, growing international rivalry, and increasingly intertwined economies,” says Council on Foreign Relations. According to a report by Oxford Economics in January 2017, the US-China trade relationship actually supports roughly 2.6 million jobs in the United States in different industries, which includes jobs which Chinese companies have created in the US. It was then estimated that over the next decade, the rapid expansion of the Chinese middle class will result in significant job opportunities and lucrative customer base for the United States. Now, if we contemplate the current situation of the US-China relationship – After about two years of trade war both the countries signed the Phase One Trade Deal which was in expectation to end the trade war and improve the relationship; The Trump administration in January 2020 barred all the non-US citizens, who have recently visited mainland China, from entering the United States because of Covid-19; By March, the World Health Organization designated the outbreak a pandemic, after it spreads to more than one hundred countries. Leading officials of both US and China blame each other for the pandemic; It is pertinent to note that during these circumstances, a spokesperson from Chinese Foreign Ministry claimed that the U.S. military brought the virus to China, without any evidence, on the other hand, President Trump makes repeated references to the “Chinese virus” which according to him spread because of failures by the Chinese government; In April, Trump Administration blames and criticises the WHO for being biased towards China and stops U.S. funding to the organization.

We signed a trade deal where they're supposed to buy, and they've been buying a lot. But that now becomes secondary to what took place with the virus. The virus situation is just not acceptable” said Donald Trump.

Things became even more serious when on May 02, 2020, the Trump Administration denoted that imposing tariff on China for mishandling the coronavirus outbreak is ‘certainly an option’. Let us consider, what is the basis of such an imposition under General Agreement on Tariffs and Trade? There is no certain answer to this question, however, hints of such an imposition can be found under Article XX of GATT: General Exceptions, specifically the sub-clause (b) which deals with the situation in which it is necessary to take measures to protect human, animal, plant life or health. The only valid explanation to this can be the importation of products from China may risk exposure to Covid-19, which also now stands disproved as the novel coronavirus cannot sustain for such a time period (the time taken for transportation of goods from China to the US). Further, Trump Administration, threatens China for the imposition of tariffs as retaliation, in order to punish China for mishandling the coronavirus which seems to be an inappropriate action with no legal support. It must be noted that WTO on numerous instances has allowed sanctions by China against the US during multiple filings in the trade war, roughly from 2017 to 2019.

As per the latest announcements, the US is planning to impose a tariff of 10% on almost all the $US 300 billion worth of Chinese imports, starting September 01, 2020. The products mainly targeted are clothes, shoes, blankets and bedding, curtains, lighting fixtures, furnishings, toys and electronic goods including mobile phones, laptops, tablets, and televisions, but only those from China. The GATT promotes the utmost principle of trade liberalization of “countries cannot normally discriminate between their trading partners” provided under Article I of the GATT. The United States is playing on a General Exception to this principle which is stated under Article XX of the GATT as – “the agreement shall not prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interest.”

Considering the severity of the issues raised between the two countries in the past few years, only denotes a rivalry in achieving world dominance and emergence of bipolarity in the world.

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