On December 12, 2022, China filed a dispute with the World Trade Organization  ("WTO") over US restrictions on chip exports.

China’s Ministry of Commerce ("MOFCOM") said that its WTO complaint was a legal and necessary measure to defend its “legitimate rights and interests.”  The MOFCOM accused the U.S. of taking “a typical practice of trade protectionism” in curbing the export of chip products to China on security grounds, and “[i]n recent years, the US side has continuously overstretched the notion of national security, abused export control measures, [and] hindered the normal international trade of chips and other products.” 

The complaint comes just weeks after US president Joe Biden and his Chinese counterpart Xi Jinping used their first in-person meeting to signal a joint desire to improve ties between the world’s two biggest economies after relations plunged to a multi-decade low. 

China’s complaint also comes days after a landmark ruling in which a WTO panel backed Beijing against Washington. In a report published on December 9, the WTO said the US was not justified in arguing the Trump administration’s 2018 tariffs — on steel and aluminium from China and other countries — were necessary to protect its national security.

A U.S. Trade Representative spokesperson said: “As we have already communicated to the PRC [People’s Republic of China], these targeted actions relate to national security, and the WTO is not the appropriate forum to discuss issues related to national security.”

The U.S. has also been negotiating with Japan and the Netherlands on an export controls agreement that would see the countries bar their companies from selling chipmaking tools for advanced Chinese semiconductors. On December 12, 2022, the White House national security adviser Jake Sullivan said that the U.S. had been talking to its partners about a “broad alignment” on China.

China’s compliant marks the first step in the WTO’s lengthy dispute-settlement process. The U.S. will have 60 days to enter into consultations. If consultations fail, Beijing can ask for the establishment of a WTO panel.

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