China initiated a dispute against the U.S. at the World Trade Organization (WTO) over Washington’s sweeping semiconductor export curbs that look to cut the world’s second-largest economy off from high-tech components, CNBC reported.
According to CNBC, the Chinese Ministry of Commerce confirmed the trade dispute in a statement on Monday and accused the U.S. of abusing export control measures and obstructing normal international trade in chops and other products. It said the WTO dispute is a way to address China’s concerns through legal means.
In October, the U.S. imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in an effort to prevent American technology from advancing China’s military power. The rules would require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in artificial-intelligence, calculations and supercomputing – crucial technologies for modern weapons systems, senior administration officials said.
The Wall Street Journal reported that Beijing will use the WTO’s dispute settlement mechanism to challenge U.S. export controls on products such as chips to China to defend its rights and interests, its Ministry of Commerce said in a statement posted to its website. The ministry said it was responding to a media question in making the announcement.
According to The Wall Street Journal, the rules being challenged require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in advanced artificial-intelligence calculations and super-computing. Biden administration officials have said the rules are needed to prevent China from building up its military and developing new, state-of-the-art weaponry.
The Wall Street Journal also reported that a spokesman for the Office of the U.S. Trade Representative confirmed that the U.S. has received a request for consultations from the People’s Republic of China related to certain U.S. actions affecting semiconductors. “As we have already communicated to the PRC, these targeted actions relate to national security, and the WTO is not the appropriate forum to discuss issues related to national security,” he said.
Reuters reported that the regulations made by the U.S. aimed at kneecapping China’s semiconductor industry, prompting a complaint from a top China trade group.
“China takes legal actions within the WTO framework as a necessary way to address our concerns and to defend our legitimate interests,” said a statement by China’s commerce ministry, its diplomatic mission in Geneva relayed.
According to Reuters, the so-called request for consultations is the first step in a long procedure at the global trade body. The United States has blocked appointments to the WTO’s top ruling body on trade disputes, meaning some rows never get settled.
It sounds like the complaint made by China is going to languish at the WTO, especially since the request appears to have a long procedure attached to it before a decision is made. As such, China shouldn’t assume that they are going to get “next-day-service” from the World Trade Organization.