After the imposition of punitive tariffs on imports of aluminium and steel, China and India also announced retaliatory tariffs on US products.

THE CURRENT TRADE WAR between the United States on the one hand and some of the world's largest economies and trading nations on the other has put the relevance of the World Trade Organisation [WTO] under question.

If countries or blocks can impose punitive tariffs on each other's imports in tat-for-tat  moves, does the existence of the multilateral organisation, which sets the rules for international trade, really matter?

The inordinate stalemate is concluding the Doha round has already raised questions about the efficacy of WTO.

The WTO agreements confer certain rights and obligations on members with regard to both general rules or principles, which together define what members are entitled to do and and what they cannot do, and specific commitments which each member has undertaken, such as tariff reductions and elimination of quantitative restrictions.

As the WTO is a rule-based system, its members can impose additional tariffs on imports over and above their commitments only subject to following due process.

The WTO body of agreement spells out the special circumstances in which additional tariffs can be imposed together with the procedure which must be followed.

As we shall see, a resort of retaliatory tariffs is in principle prohibited.

First, under the General Agreement on Tariffs and Trade [GATT], a country can impose additional import tariffs as well as quantitative restrictions to overcome a serious balance of payment [BOP]  problem.

Two, under the Agreement on Safeguards, a country can restrict imports of a product if they increase to such a high level as to cause or threaten to cause serious injury to competing domestic products.

Imports can be restricted either by increasing the bound rate of tariffs or by clamping quantitative trade restrictions or quotas on them.

The honor and serving of the latest Global Operational Research on WTO continues. The World Students Society thanks author and research Hussain Zaidi.


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