Business / Economy

Businesses unite to cope with trade frictions

(Xinhua) Updated: 2012-05-08 10:59

Beijing - More than a decade after China's accession to the World Trade Organization (WTO) exposed its businesses to unprecedented trade frictions, the once-disoriented companies are learning to cope with the disputes with concerted efforts and new tactics.

Zhu Gongshan, president of Golden Concord Holdings Limited, a leading enterprise in the photovoltaic (PV) industry, said his company now holds regular teleconferences with other prominent PV makers, including Suntech and CanadianSolar, to discuss measures to counter US government anti-dumping and anti-subsidy probes that have hampered the Chinese companies' export chances.

"We are not doing this for a pure coalition, but to join efforts to actively respond to the practices of trade protectionism by some countries," Zhu told Xinhua.

China-made solar panels have been accused of being underpriced because of government subsidies, while Chinese manufacturers maintain the accusations are the outcome of trade protectionism aimed at shielding local businesses.

After a preliminary investigation, the US Department of Commerce announced in March that it planned to impose tariffs of 2.9 percent to 4.73 percent on Chinese solar panel imports. It will decide in mid-May whether it considers Chinese companies to be dumping solar panels below cost.

Instead of simply waiting for the results, with fingers crossed like many businesses used to do, the industry is now moving actively to respond to investigations and learn to use international rules to claim their due rights.

"To ease the impacts of the probe on the Chinese makers, these enterprises are actively lobbying the US government, members of its Congress, trade associations and international trade arbitrary bodies to gain their support," according to Zhu, who believes China should turn to laws and regulations in such trade disputes.

The change in the companies' tactics comes as China, with its blistering growth, a large trade surplus and low-cost goods, has become a major target of rising trade protectionism in recent years.

Vice Commerce Minister Zhong Shan noted earlier this year that China will face intensifying practices of trade protectionism during the 2011-2015 period in light of the complicated external environment.

Facing China's competitive edge in price, the US government, which vowed to boost its manufacturing sector, will undoubtedly resort to trade barriers to lessen the impact of China-made goods on its local enterprises, analysts have warned.

According to Zhong, as of the end of March, China saw eight cases of trade disputes this year and they involved a total of $2.28 billion, an increase of 80 percent year-on-year. As such, for the 17th consecutive year, it faces more trade disputes than any other country.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, said Chinese enterprises should boldly go abroad and follow internationally accepted measures, such as lobbying, to make their voices heard in the ruling process.

In the rare earth industry -- another sector that has come under vehement attacks from abroad -- an association was recently created to spur healthy development and coordinate efforts to cope with international trade frictions.

In the latest dispute, the European Union, the United States and Japan last month formally asked the WTO to settle a dispute with China over restrictions placed on exports of raw materials including rare earth elements.

Gan Yong, president of the association, said the body will help enhance international communications and "properly" handle the trade disputes according to international standards and WTO rules.

"A majority of China's medium- and small-sized enterprises have limited resources to diffuse risks and still need the backup of government departments and associations," Mei said, adding business people should familiarize themselves with legal knowledge overseas and use it when disputes arise.

While pooling efforts to jointly face trade disputes, Chinese businesses are also making production improvements to meet the international standards and adapt to market requirements, which Zhu described as an essential factor in the handling of disputes.

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