Latest news with #WTO rules
Mail & Guardian
06-08-2025
- Business
- Mail & Guardian
Trump's tariffs are illegal under international trade law
US President Donald Trump. Photo: Supplied The Trump administration's trade tariffs are illegal and fall outside the legal framework of international trade law. South Africa should call out the US government for violating basic principles of international law South Africa is subject to a 30% US tariff rate, announced during the so-called liberation day tariffs declaration on 2 April, and will take effect from 1 August. The South African economy is likely to be significantly affected by these tariffs, particularly the agricultural sector and vehicle industries. The specific regions that will be affected are the Eastern Cape vehicle corridor and citrus fruit small towns in the Western cape. The tariffs are eroding the rule-based international trade order by unilaterally imposing tariffs to balance American trade deficit with its trading partners. The United States, being one of the chief architects of the international trade system is now questioning the benefits of the rule based global trade order. The first assault of the global trade order was in 2017, when the US, under Trump, started blocking all new appointments to the World Trade Organisation (WTO) appellate body as the terms of its Judges were expiring. Trump started his trade war with China in early 2018, when he started setting tariffs and other trade barriers against China. Breach of the WTO rules Trade within the auspices of the WTO is rules-based and has been a source of international economic stability and success in many of the world's economies. Established through the General Agreement on Tariffs and Trade (GATT) of 1948 and subsequently the WTO in 1994, the rules-based international trade law has been founded on what is known as diffuse reciprocity. Diffuse reciprocity essentially negates formal numerical equality in tariffs within the context of the global trade system. This is because reciprocal tariffs are a fundamental rejection of the WTO rules. Throughout the years, the international trade system has been based on the principle of non-discrimination amongst the member countries of the WTO. Non-discrimination principle promotes universal equal treatment between the WTO member countries. This trade without discrimination is known as the Most Favoured Nation (MFN) Treatment. The MFN is the first article of the GATT agreement, which regulates trade in goods. It requires a nation providing a trade concession to one trading partner to extend the same treatment to all. Therefore, countries cannot discriminate between their trading partners. For example, if country A offers a lower custom duty rate to country B, it has to extend the same treatment to others. Similarly, if a country imposes additional restrictions on the WTO member nation, it must do the same to all the other trading partners. A Generalised System of Preferences (GSP), Free Trade Agreements and Customs Union are some carve outs and exceptions to the MFN principle. For instance, the African Growth and Opportunity Act (Agoa) is an exception to the MFN rule under the WTO legal Framework. But it should be noted that although South Africa's membership in Agoa gives preferential access to the US market, economists have said that only 20% of our exports constitute the Agoa export. Therefore, most of the country's exports are not under the Agoa preferential access. Beginning on 1 August 2025, the US will continue to violate Article I of the GATT by unilaterally imposing 30% reciprocal tariffs on the South African government. For example, while the Indian exporters will now face 20% US tariffs, South Africa's exporters will face 30% tariffs on the same products. The US is also in breach of its commitment under Article II of the WTO's GATT agreement, which deals primarily with the schedule of concessions. This provision details the tariffs commitments the WTO member states have made to other countries. It mandates the WTO member countries to provide treatment not less favourable than the one provided under its schedule of concessions, including adhering to bound tariffs that a country has committed itself to. By unilaterally imposing reciprocal tariffs that are not agreed to by other member states of the WTO, the US violates its legal commitment that it has made under Article II of the WTO's GATT agreement. While the US is permitted under Article XX VIII of the GATT to unilaterally modify its tariff commitment under international trade law, this approach requires a negotiated compensation with the affected member states. The Trump administration has not adopted this approach. Furthermore, the reciprocal actions also undermine the WTO law principle of special and differential treatment accorded to least developed and developing countries, to which South Africa is one of them. The rationale behind the special and differential treatment principle is to allow least developed countries and developing countries to provide less than full reciprocity in their tariff obligations to developed countries. Criticism of the US reciprocal tariffs Many countries have criticised the US reciprocal tariffs for violating basic principles of international trade. China has openly criticised the US government saying that the US move disregards the balance of interest reached in multilateral trade negotiations over the years and the fact that it has long benefited greatly from international trade. China has instituted a WTO case against the US for breaching of its WTO obligations. The second critic of Trump is the Singaporean government. The country's prime minister recently remarked that the US appears to be withdrawing from the global leadership to a less predictable international trade system and the messier world. He said the era of rule- based globalisation and free trade is over. He has labelled the US new tariff regime as a repudiation of the MFN principle. Likewise, the Canadian government has challenged the legality of the US tariffs. It has retaliated to the US tariffs by imposing 25% tariffs on $30 billion of US imports and has plans to expand to $155 billion after consultation. In addition to this, Canada has filed a legal claim against the US by requesting WTO dispute consultations with the US concerning the imposition by the US of import duties on certain steel and aluminium products from Canada. The initiation of this dispute has been circulated to all the WTO member countries. The actions by these countries are justified. The US government should be held accountable for its erosion of international trade rules. The South African government has not condemned the Trump administration for its violation of international law; it has instead insisted on one-sided attempts to negotiate trade deals with the US government. South Africa's position therefore does not explicitly express its discontent with the US illegal tariffs, but it is hoping that its negotiation will yield some trade deals with the US. One wonders if the results of that trade deal itself will be compliant with the WTO trade rules, but this will be seen once the US tariffs decision on South Africa has taken effect. The South African strategy On 7 July, the South African president issued a statement attempting to push back on Trump's imposition of 30% tariffs, saying that they are an inaccurate view of US-South Africa's trade relations. He has argued that these tariffs are not an accurate representation of available trade data. But this is not enough. South Africa appears to be hesitant to publicly call out the illegal tariffs of the US government, possibly because such public condemnation of Trump tariffs would not be in the interests of South Africa. According to the joint statement by the ministers of international relations and trade, industry and competition, South Africa is seeking to secure favourable quota agreements and additional exemptions by ensuring that its industries still maintain access to the US market including sectoral cooperation. The joint statement has reiterated that the country is committed to the mutual beneficial trade relationship between the US and South Africa. Instead of calling the tariffs illegal and against international trade law, the joint statement expresses concerns over shared prosperity between the two nations and it acknowledges these tariffs as constituting barriers to trade. Other countries have continued to negotiate with the US government on this tariff issue while taking it to the WTO dispute settlement system. If South Africa were to take a similar approach, it would continue to negotiate with the US government while reminding it of its commitment to the global trade rules. Perhaps the South African government might argue that this will not yield any results, given that the WTO settlement body is dysfunctional. The other impediment is that the appellate body of the WTO is not currently functional, because the US has blocked the appointment and reappointment of its judges. But China and Canada have continued to file legal claims against the US government. They understand the use of the global trade rules to enforce their claims against the violator of the trade system. As it did with the International Court of Justice case against Israel, history should remember South Africa as a country that fought for the stability of the multilateral trade system, a fair system of international trade and revitalisation of the WTO dispute settlement system. Mmiselo Freedom Qumba is a lecturer at the University of Pretoria and an admitted attorney of the High Court of South Africa.
Yahoo
17-07-2025
- Automotive
- Yahoo
Beijing warns Labour over EV grants
Beijing has warned Labour that it will 'resolutely safeguard' its electric car industry after it emerged that the Government will block Chinese electric cars from a new grant scheme. A spokesman for the Chinese embassy called on the UK to follow World Trade Organisation (WTO) rules and create a 'non-discriminatory environment for investment'. WTO rules stipulate that members must not give favourable treatment to one country over another when it comes to trading goods and services. Department for Transport (DfT) officials intend to reject Chinese applications for the £650m Electric Car Grant (ECG) scheme, which will reduce the purchase price of a new electric vehicle (EV) by as much as £3,750 for vehicles costing up to £37,000. The scheme will reject applications from nations with poor sustainability records or high carbon emissions. China's electric car manufacturing and battery production industries are reliant on fossil fuels, barring them from the discounts. Lilian Greenwood, the transport minister, told the BBC's Today programme on Wednesday: 'We don't expect any cars that are assembled in China to be eligible for this scheme. 'The grant is restricted to those manufacturers that reach minimum environmental standards. And, frankly, if you generate a lot of the electricity that powers your factory through coal power stations, then you are not going to be able to access this grant.' However, the restrictions have prompted a backlash from Chinese officials at a time when manufacturers are battling intense competition in the country while trying to gain a foothold in the West. An embassy spokesman said: 'China has abolished all market access restrictions on foreign investment in manufacturing and remains open to international carmakers, including those from the UK, who can fully share in the dividends of China's big market. 'We hope the UK's industry policy will observe WTO rules, respect market economy laws and provide an open, fair, just and non-discriminatory environment for the investment and operation of businesses from all countries, including China. 'The Chinese side is closely following the situation and will resolutely safeguard the legitimate rights and interests of Chinese companies.' Carmakers including BYD and MG, which assemble their vehicles in China, are expected to blocked from the scheme. BYD, which recently overtook Tesla as the world's largest EV manufacturer, said it still planned to push for inclusion in the scheme for vehicles such as the Dolphin Surf, which is on sale in the UK for less than £20,000. The company is also preparing to scale up car production at a new factory in Hungary to build cars for the European market. Bono Ge, BYD's UK country manager, said: 'We welcome the new electric car grant and its potential to help drive awareness and uptake of electric cars in a key, price-sensitive part of the new car market. 'Like other car brands, we have informed the DfT of our intention to make an application for inclusion in the ECG scheme and look forward to being part of it.' BYD sales have climbed rapidly in the UK since it started selling its cars last year. It has sold about 20,000 vehicles so far this year compared with 8,700 across the whole of 2024. UK officials hope the grants will encourage drivers to switch to electric cars ahead of a pledge by Labour to ban the sale of new petrol and diesel vehicles from 2030. Under the Government's zero emission vehicles mandate, 28pc of cars sold this year must be pure electric. Carmakers that miss the target risk being punished with fines. The European Union has been engaged in a trade dispute with China over its EV imports as cut-price Chinese car brands flood the bloc and threaten the traditional dominance of French and German carmakers. Chinese electric carmakers have been locked in a vicious price war in their home market, with concerns that it has become saturated while demand for EVs remains tepid. On Wednesday, China's cabinet warned of 'irrational' competition in the country's car market and vowed to scrutinise prices. A DfT spokesman said: 'Our electric car grant will give drivers across the UK access to discounts on dozens of new electric car models, helping them save up to £3,750 per car and putting money back into the pockets of working people.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
17-07-2025
- Automotive
- Telegraph
Beijing warns Labour over EV grants
Beijing has warned Labour that it will 'resolutely safeguard' its electric car industry after it emerged that the Government will block Chinese electric cars from a new grant scheme. A spokesman for the Chinese embassy called on the UK to follow World Trade Organisation (WTO) rules and create a 'non-discriminatory environment for investment'. WTO rules stipulate that members must not give favourable treatment to one country over another when it comes to trading goods and services. Department for Transport (DfT) officials intend to reject Chinese applications for the £650m Electric Car Grant (ECG) scheme, which will reduce the purchase price of a new electric vehicle (EV) by as much as £3,750 for vehicles costing up to £37,000. The scheme will reject applications from nations with poor sustainability records or high carbon emissions. China's electric car manufacturing and battery production industries are reliant on fossil fuels, barring them from the discounts. Lilian Greenwood, the transport minister, told the BBC's Today programme on Wednesday: 'We don't expect any cars that are assembled in China to be eligible for this scheme. 'The grant is restricted to those manufacturers that reach minimum environmental standards. And, frankly, if you generate a lot of the electricity that powers your factory through coal power stations, then you are not going to be able to access this grant.' However, the restrictions have prompted a backlash from Chinese officials at a time when manufacturers are battling intense competition in the country while trying to gain a foothold in the West.
