The latest update on political tensions involving the world’s largest trading bloc is arriving.
A diplomatic row between the U.S. and its closest Asian ally led to a short-lived decision Monday that could delay a key World Trade Organization meeting scheduled to begin this week.
Major questions remain unanswered about U.S. restrictions on Chinese solar panel imports as Washington argues for higher tariffs to offset unfair Chinese subsidies.
The WTO trade body’s ruling on a dispute with China will now not come as expected on Tuesday, trade officials told CNN Business. The organization is also on track to rule on the United States’ breach of multilateral trade deals following a WTO investigation into tariffs the U.S. imposed on steel and aluminum exports from foreign countries.
The WTO allows for such three-month delays, but on occasion holds a special meeting to resolve such matters.
It’s unclear what prompted Monday’s announcement. One official close to the meeting said the meeting could have taken place despite the delay, while the WTO said only that the government of Malaysia was unable to attend.
The Wall Street Journal first reported the hiatus.
Malaysia is the current chair of the WTO’s 152-member conference. The country sent an official to a preparatory meeting on Thursday, suggesting a meeting was still planned for Tuesday.
‘No confidence’ in WTO
U.S. Ambassador to the WTO Kirk S. Wagar said in a statement that the new delay is “highly regrettable,” noting that the organization is already facing “unprecedented pressure to stall its work.”
“Countries and business actors that depend on the services of the WTO are understandably growing increasingly fearful that their membership of the global trading system could be eroded,” Wagar said.
Relations between the U.S. and China have been strained over the last couple of months after Beijing demanded Washington drop tariffs on Chinese steel, aluminum and solar panels.
China says it’s an effort to address what it says are legitimate trade complaints.
“USTR needs to rethink its approach to China and does not want to take tough and sustained action for fear of a US trade war,” another trade official said, referring to the U.S. Trade Representative’s office.
U.S. President Donald Trump has hit China hard with the tariffs, arguing that American workers, farmers and manufacturers have been hurt by decades of unfair trade ties with the Asian country.
Late last week, the U.S. Chamber of Commerce — the top lobby group for the U.S. business community — said the tariffs could do irreversible damage to the U.S.-China relationship.
A host of other global businesses have also weighed in, including British companies Coca-Cola and Unilever.
Washington’s trade dispute with China is not the only source of tension for the WTO.
In June, U.S. President Donald Trump’s Trade Representative Robert Lighthizer called the negotiations a “Ponzi scheme” on Twitter. The WTO retaliated by publishing a position paper on the issues, arguing that the U.S. tariffs “are a serious violation of the WTO rules and a blow to the institution itself.”
An early, bright spot from the WTO’s meeting
The WTO’s troubles add to a difficult week at the WTO, where key divisions among the 159 members are a fixture.
India’s agricultural agenda, for example, has divided other WTO members. The WTO’s main committee on agriculture finished its work ahead of schedule this week, but needs to get to the group’s big meeting later this month in Dubai.
And a dispute involving Indian textiles and textile products remains unresolved. A dispute committee last month issued a recommendation for the WTO to declare India an “unfair trade partner.”
Monday’s possible postponement of the WTO’s Seoul meeting will give nations more time to hammer out details of how the tensions will be resolved, trade officials told CNN Business.