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Sunday, April 14, 2024

China petitions WTO as more countries promise semiconductor sanctions

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Countries like the United States have been making efforts to introduce sanctions against China regarding the production of semiconductors. It seems these have finally taken their toll, as Reuters reports China has launched a dispute at the World Trade Organisation against the measures that have been put in place to control the export of semiconductor chips.

The regulations against China passed by the United States in October have already seen suppliers halt business with China over national security. There’s no surprise that the global super power is pushing back, with China’s commerce ministry stating that the sanctions have “threatened the stability of the global industrial supply chains”.

“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 the ministry.

Some of these concerns hold truth too. While Taiwan is still set to dominate the semiconductor industry for a while, China certainly does a lot of business when it comes to buying up chips to use in manufacturing. It’s logical that these flow on effects for Taiwan, and the semiconductor industry at large, could have real implications. 

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That doesn’t mean we can expect the rest of the world to back down any time soon. According to Bloomberg, Japan and the Netherlands are set to join the crusade. Both countries have at least agreed to do so in principle, and are expected to announce their own actions in the coming months. 

China could be going to the WTO now to try to nip this in the bud before it continues to bloom. The process is set to be a long one and is only just in the initial phases.

“We have received a request for consultations from the (People’s Republic of China) related to certain U.S. actions affecting semiconductors,” said Adam Hodge, spokesperson for U.S. Trade Representative’s office.

“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,” Hodge told Reuters in an emailed statement.

The United States doesn’t exactly have a track record of playing nice with the WTO either. It blocked the appointment of WTO judges to settle disputes, and recently rejected the findings of the organisation regarding a dispute with China around metal tariffs. So even if China does get a favourable ruling, it remains to be seen what good it would do for the country’s efforts. 

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