The U.S. is taking drastic steps to cut China off from high-tech semiconductors, dragging down China’s chip industry, the world’s second-largest economy. China has retaliated against the measure and initiated a formal complaint procedure against the United States through the World Trade Organization.
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China has launched a dispute with the United States at the World Trade Organization (WTO) over Washington’s drastic semiconductor export curbs that would cut China, the world’s second-largest economy, away from high-tech components.
In October, the United States introduced rules restricting exports to China of chips made using U.S. tools and semiconductors designed for artificial intelligence applications. brought China’s semiconductor industry to its knees.
China’s Ministry of Commerce confirmed the trade dispute in a statement on Monday, accusing the United States of abusing export control measures and obstructing normal international trade in chips and other products.
WTO disputes are a way of addressing China’s concerns through legal means, he said.
Washington has argued that export restrictions are in national security interests.
China’s chip controversy comes days after the WTO ruled that tariffs imposed by former President Donald Trump on steel and aluminum imports violated international trade rules. China is one of the countries that took action against the United States.
Trade disputes through the WTO can take years to resolve. China took the first step by requesting consultations. WTO rules also have provisions that allow countries to impose restrictions for national security purposes. This could make it difficult for China to win this particular dispute.
Pranay Kotastan, chairman of the high-tech geopolitics program at the Takshasila Institute, tweeted, “If this is a response to export controls, it suggests China has limited options.”
“Given that the WTO has exceptions for broadly defined national security concerns, it is unlikely to lead to a change in policy.”
A spokesperson for the Office of the US Trade Representative was not immediately available for comment when contacted by CNBC.
But spokesman Adam Hodge told Reuters on Monday that the United States had received a request for talks from China over semiconductor export restrictions.
“As we have already communicated to the People’s Republic of China, these targeted actions are related to national security, and the WTO is not the proper forum to discuss issues related to national security,” Hodge said. .
