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The US rule being used to look into Beijing's trade practices is too out of date to provide effective measures to relieve its trade deficit with China, and international trade friction can never be solved through unilateral acts, senior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

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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.

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USTR to determine whether to investigate China's trade practices

President Donald Trump is doing it again! This time is about trade between China and the United States. Will he break WTO’s trade rules?

The U.S. administration said on Saturday that President Donald Trump will direct on Monday the U.S. trade representative (USTR) to determine whether to investigate China's trade practices, triggering concerns that Washington may take unilateral moves harming China-U.S. trade and economic ties.

The USTR Robert Lighthizer would consider whether to probe China's trade practices under Section 301 of the Trade Act, senior administration officials said, but they declined to say when the USTR's decision would be made.

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If Lighthizer decides to go ahead with an investigation, the United States would first consult with China and the investigation process could take as long as a year, officials said.

The Section 301, which was passed in 1974 and heavily used in 1980s and early 1990s, would allow the U.S. president to unilaterally impose tariffs or other trade restrictions against foreign countries. But the United States has rarely used that obsolete trade law since the World Trade Organization (WTO) came into effect in 1995.

"It became no longer necessary really for the United States that they have to use that law, because now we have an effective dispute settlement system under the WTO," Chad Bown, a senior fellow at the Washington D.C.-based Peterson Institute for International Economics, told Xinhua, adding that the legal timeline of the process under Section 301 doesn't work well with the rules of the WTO.

"A decision to trigger Section 301 today is problematic because it would provide additional fuel to the already simmering argument that the Trump administration is undoing the American commitment to rules-based trade and decades of work to establish international cooperation," argued Bown, who worked as a senior economist for international trade and investment in the White House Council of Economic Advisers and the World Bank.

Michael Froman, former USTR under the Obama administration, has also warned that the United State could face retaliation if the country moves away from resolving trade disputes through the WTO and instead starts taking unilateral actions.

"It will just lead other countries to retaliate against us or perhaps even worse, imitate us, and take actions on their own without regard to international obligations," he said.

The Chinese Ministry of Commerce has stressed the importance of China-U.S. trade ties and urged U.S. authorities to abide by WTO rules in its trade measures.

As we know, any trade measures taken by WTO members must conform to WTO rules. China's trade with the United States has always maintained the basic principle of win-win cooperation, and the two parties will resolve differences through dialogues and consultations. 

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