electronic Global Trade Credit Platform/eGTCP's Blog: Unilateral Action Could Spur Trade War

Last week, an article said that President Donald Trump has directed the U.S. trade representative (USTR) to determine whether to investigate into China's trade practices, Washington may take unilateral moves harming China-U.S. trade and economic ties. Around this event, "No one can force China to obey other countries in conducting trade activities." Experts say.

The US rule being used to look into Beijing's trade practices is too out of date to provide effective measures to relieve its trade deficit with China, and international trade friction can never be solved through unilateral acts, senior experts from both countries said.

The US trade representative initiated the investigation on Friday under Section 301 of Trade Act of 1974, examining China's intellectual property policies and practices. That came just four days after President Donald Trump signed a memorandum authorizing the trade representative to determine if an investigation was necessary.

image credit: internet

The move by the United States signals that the current bilateral economic and trade relations are "at a crossroad", said Wei Jianguo, vice-president of Beijing-based China Center for International Economic Exchanges.

"China needs to prevent the Trump administration from replacing the bilateral, multilateral and global trade rules with unilateralism on trade," the former vice-minister of commerce told China Daily on Sunday.

Wei said the "Cold War mentality" of the US is dangerous. "It will result in global trade recession and chaos," he said.

"The trade imbalance is caused by the distribution of the global value chain and the differentiated industrial structure," said Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation in Beijing.

Bai said the labor in the US costs more than in China, therefore it does not have an advantage in manufacturing to compete with China, but it has a notable edge in high-tech products and service trade with China.

"Such unilateral trade sanctions on China will not stop the progress of globalization and such action will only weaken the ability of companies to earn in both countries," said Bai. "No one can force China to obey other countries in conducting trade activities."

China has warned the US of its actions after Trump signed the memo last week. The Ministry of Commerce responded on Tuesday by saying China will take all necessary and appropriate measures to protect its commercial and trade interests if the US wrongly accuses China of theft of US technology and intellectual property.

Foreign Ministry spokeswoman Hua Chunying said last week that "any member of the World Trade Organization should observe its rules in taking trade measures".

"Given the increasingly converging China-US interests and the close-knit pattern of the two countries being mutually dependent, there will be no future or winner but only losers in a trade war," she warned.

How will the event evolve and what is the future of trade between US & China? We can only be sure of China’s abidance by the world trade rules and standards and its unwavering stance in defending proper national interest.

Free services in global trade: