WTO / US and China Clash Over National Security Exception at Goods Council Meeting

China and the United States clashed at the meeting of the Council for Trade in Goods (CTG) on April 3-4 over trade restrictive measures imposed on the basis of the national security exception. The conflict arose as China raised new specific trade concerns and requested clarification about actions taken by the United States, Japan, and the Netherlands to impose export restrictions on electronic chipmaking equipment.

Despite disagreement on the list of names for new chairs of CTG subsidiary bodies, members were said to have taken an important step towards World Trade Organization (WTO) reform by adopting concrete action to improve the practical functioning of the Council and enhance its transparency.

China criticized the United States for implementing "disruptive and restrictive measures in the name of national security" since 2018, citing US export control measures under the Foreign Direct Product Rule as an example of extreme unfairness. China also raised concerns about battery components made in China being considered a potential threat to US national security.

In response, the United States stated that the Goods Council was not the appropriate forum to discuss issues related to national security.

China further raised concerns related to the "United States Section 301 duties on certain goods from China," which has been extended despite a panel ruling that these measures were inconsistent with WTO rules. The US replied that China's decision to continue raising this matter has been a waste of WTO resources, given that China has already unilaterally imposed the only remedy that the WTO dispute settlement body could potentially authorize.

China also raised a new concern about the "Agreement between the United States, Japan and the Netherlands on export restrictions on the export of chips," asking if the agreement exists and if so, if it should be notified and reviewed by WTO members.   The United States repeated that the Goods Council was not the appropriate forum to discuss issues related to national security, including export controls.

The Council heard a total of 41 trade concerns on maintained or newly introduced measures by over 20 WTO members, which included non-tariff barriers on agricultural products, quality schemes for agricultural products and foodstuffs, tariffs and tariff rate quotas (TRQs), technical barriers to trade, sanitary and phytosanitary measures, import/export bans and restrictions, subsidies, domestic certification and administrative procedures.

Members were unable to agree on a proposed list of names of chairpersons for the 14 subsidiary bodies that report to the CTG, including the Market Access Committee, Agriculture Committee, Sanitary and Phytosanitary Measures Committee, Technical Barriers to Trade Committee, and others. Despite this, the CTG took an important step towards WTO reform by adopting concrete action to enhance transparency and improve the practical functioning of the Council.