What Is the WTO? China Just Complained to It About U.S. Tariffs

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The WTO is the World Trade Organization. 

Let's get to the news for before explaining how the WTO works. 

The News: China Challenges U.S. Tariffs

China filed a legal case to the WTO regarding the U.S.' recent trade policy. Tariffs of 15% on $300 billion worth of Chinese goods went into effect Monday, an escalation of an existing trade war. China has already enacted retaliatory tariffs on U.S. oil. 

China says, without providing further detail, the recent tariff on $300 billion of it goods violates part of the agreement the two nations made in Osaka, Japan at the G-20 meeting in late June. The tariff is worth too much, and puts the U.S. over the top of what it should be allowed to tariff, some may argue. 

WTO - What Is It?

The World Trade Organization is an intergovernmental body comprised of 164 member nations, which agree to abide by WTO rules. The organization oversees fair international trade and sets standards and rules for how countries can transact. 

But one of its main objectives is to incentivize more free trade rather than less. It aims to limit the number of anti-import tariff incidents around the globe.

But how does the WTO enforce all of this? Those member countries that do not abide by the WTO's rules or violate agreements that were in accordance with WTO rules can ultimately be punished by the WTO. Usually, the two countries in disagreement have a window of time to settle their dispute. The U.S. and China have 60 days to do so. If there is ultimately no agreement, and after the WTO has stepped in to adjudicate a legal process, the WTO can grant the complaining country the right to sanction the other. 

Within a few years, if there is no agreement between the U.S. and China, the WTO could grant China permission to sanction U.S. goods. 

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