Substantially raising tariffs on China: the true nature of repeated American economic sanctions

1. The substance of the U.S. government’s additional tariff increase on China

On 14, the U.S. government announced an additional increase in tariffs on China.

The main measures involve raising import duties on electric vehicles (EVs) made in China from 25% to 100%, on semiconductors and solar panels from 25% to 50%, and on other products such as automotive batteries, steel, and aluminum to 25%.

They were implemented under Section 301 of the Trade Act, a U.S. domestic law that provides sanctions against unfair trade practices.

China criticized these measures, arguing that the sanctions under Section 301 of the Trade Act violated World Trade Organization (WTO) rules.

“We will take decisive measures to protect our interests, “ a Chinese official stated, calling for the immediate removal of additional tariffs.

Japanese media also made critical comments on the U.S. government’s announcement, saying, “Since few Chinese electric vehicles are distributed in the U.S., the basis for the additional tariffs is vague. According to WTO rules, in order to impose additional tariffs as a reciprocal measure as in this case, it is necessary to prove that the domestic industry is practically damaged.” (Nihon Keizai Shimbun, May 14).

2. Problems with economic sanctions under Section 301 of the Trade Act

Section 301 of the Trade Act is a domestic law of the United States.

If each country applies its own rules to a foreign country, the other country would retaliate against it, increasing the risk of escalating conflicts and plunging into a protectionist trade war.

If free trade is impeded, countries will not be able to trade freely, and this will be a major obstacle to the economic development of the world as a whole.

The damage is particularly great for small and medium-sized countries, which are limited in the kinds of products they can produce in their own territories.

One of the factors that triggered World War I and World War II was making economic blocs caused by the intensification of protectionism.

After World War II, in order to prevent such a world war from happening again, countries worked together to establish a free-trade system.

The General Agreement on Tariffs and Trade (GATT), signed by countries around the world in 1947, was the first to set universal rules for the liberalization of international trade.

Taking over the idea, the World Trade Organization (WTO) was established in 1995.

If countries restrict free trade to protect their own interests, so as not to intensify trade friction caused by protectionism, they are allowed to file a complaint with the WTO first, and if it is found that the damage has been caused by the protectionist actions of the other country, they are allowed to implement sanctions.

That is the original internationally agreed procedure.

However, the latest U.S. economic sanctions against China were imposed unilaterally in accordance with U.S. domestic law without following such procedures.

It is clear that this is against the rules agreed by each country.

If China stresses the importance of the rule of law, it should file a complaint with the WTO, wait for the WTO to make a decision on the measures taken by the U.S., and then take appropriate countermeasures.

China itself has retaliated against the U.S. in response to U.S. economic sanctions without waiting for the WTO to make a decision.

The Chinese sanctions are milder compared to the severe sanctions imposed by the U.S., but they have the same problem as the actions of the U.S. government in that China does not follow the procedures based on internationally agreed rules.

3. Position and diplomatic attitude of Japan, which respects the rule of law

Both the U.S. and China have thus deviated away from international rules, repeatedly resorting to sanctions and retaliation, which is contrary to the principle of the rule of law.

The Japanese government has repeatedly emphasized the solidarity of countries under the rules-based multilateral trading system centered on WTO.

In particular, it has strongly urged China to act on the rules, not to mention trade issues.

But the problems are common to both the U.S. and China.

It is clear to all that the U.S., in particular, has been implementing economic sanctions against China in defiance of internationally agreed rules in order to show its hard-line stance toward China as part of the measures for Congress in domestic politics and for the presidential election.

Nevertheless, it is unfair that the Japanese government does not criticize this.

The history of Japan’s suffering from pressure on the country based on the domestic political situation in the U.S. from the 1980s to the 1990s is well documented in Chapter 4 of Volume 1 of Japan’s Economy and Economic Policy in the Period of Bubble/Deflation (published in March 2011) compiled by the Economic and Social Research Institute of the Cabinet Office.

It is difficult to gain international trust if Japan does not point out problems because the U.S. is an ally, even though it has suffered from such experiences and has a good understanding of the nature of the problems.

4. Japan has known the defects of the rule of law for hundreds of years

In the international community, rule-of-law mechanisms are used by superpowers such as the U.S. and China to control other small and medium-sized countries, and superpowers often prioritize their own interests and ignore rules.

Therefore, the stricter the rules, the more freedom small and medium-sized countries are deprived of, and the wider the gap between them and superpowers becomes.

The problem is not limited to the rule of law in the international community, and it represents the intrinsic feature of the rule of law itself.

This point is clearly stated in a famous book which is said to have been read by all Japanese intellectuals during the Edo period.

It is Okina Mondo (Dialogue with an old man), a masterpiece by Nakae Toju (1608 – 1648), who was widely respected as a saint of Japan during the Edo period.

In this book, there is the below-quoted statement about the rule of law.

Author’s interpretation: The fundamental and ideal way of government is for the leader of the nation to realize a model for all people in his or her own behavior by practicing what he or she should do as a person in a way that is obvious to everyone. The provisions of the legal system are the trivial details of government. Abandoning the spirit to stress the importance of morality that should be the fundamental principle of national government, and governing the nation in accordance with detailed trivial rules is called the rule of law, and this is not desirable.

Author’s interpretation: The rule of law always governs people strictly according to various rules. The stricter the rule of law is, the more disrupted society is (because people concentrate only on following the rules and do not think independently about what they should do as a person).

Author’s interpretation: In the moral-based government, the leader always keeps his or her mind righteous first and then seeks the righteousness of the mind from people. In the rule-based government, the leader attempts to demand people’s minds to be righteous without his or her own attitude to do so.

It is clear from the above that any intellectual in the Edo period would have immediately recognized the true nature of the problems in the current international community between the United States and China.

Japan should impartially ask both countries that are taking such problematic actions to keep their minds to be righteous.

Wouldn’t anyone in the Edo period think that preoccupied with their immediate interests, the current national leaders, including those not only in the U.S. and China but also in Japan, which has not shown a willingness to correct their stance, have led their country astray?