The World Trade Organization (WTO) ruled on July 14th that U.S. tariff imposed on Chinese solar panels is a wrongful action that broke international trade rules. Previously, the U.S. believed that China has gained unfair trade advantages because of excess implicit subsidies received from the Chinese government. If the ruling turns effective, U.S. will have to adjust policies in regards to anti-subsidy tariffs or revoke the action. If U.S. decides not to revoke, China can take legal retaliatory actions.
A WTO board judged the U.S.'s actions rule-breaking and that it amounted to illegal protection of its own solar producers, refusing to accept Washington's evidence that state-owned or partially state-owned Chinese companies accused of passing on the subsidies were, in fact, "public bodies."
Meanwhile, the committee believed that the U.S. has adopted wrong ways to calculate the subsidies for Chinese products. The U.S. calculated the cost of Chinese exported products based on a basic standard rather than actual trade and that made them think it’s the Chinese subsidy that’s twisted the Chinese market. However, the committee believed that it’s the problems of overcapacity and intense competition that caused Chinese product prices to be the lowest in China and overseas.
Yet, the WTO does not support all of China’s point of views. Instead, they believe it does not count as violation when the U.S. learned of the unfavorable facts, subsidy profit calculation, and special orientation on subsidy during the anti-subsidy investigation.
