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Commentary: Time for plain talk on trade
( 2004-02-03 09:39) (China Daily By Zhu Qiwen)

The United States is apparently determined to insist that China has not adequately fulfilled its commitments to the World Trade Organization (WTO), even though it has become the world's fourth largest trading power thanks to robust growth over the past year.

Meanwhile, a recent Chinese report on US trade policy indicates the world's largest economic power has failed to practise what it preaches about free trade.

For a developing country like China, a total annual foreign trade volume of US$851.21 billion - about 60 per cent of its gross domestic product in 2003 - offers ample testimony to the nation's commitment to opening up.

Despite that, the office of United States Trade Representative criticized China's WTO compliance in its annual report to the US Congress in December.

"In a number of different sectors, including some key sectors of economic importance to the United States, China fell far short of implementing its WTO commitments," the report stated.

It was a clear indication the US administration is blaming China for lagging in trade reform.

However, in light of China increasing access to its fragile banking sector for foreign competitors and voluntarily slashing export tax rebates in 2003, the US criticism is unfounded.

In fact, US trade officials are fully aware of how well China pursued its commitments in its second year of WTO membership, and how that progress benefited the US economy.

Two years after ascension to the WTO, China has become America's third largest trading partner and the sixth largest market for US exports. The US report specified that while domestic exports to the rest of world decreased by 10 per cent over the past three years, US exports to China increased by 66 per cent.

In an attempt to justify its biased focus on China's perceived shortcomings on WTO compliance, the report denied the obvious fact that business with China is very good for many American companies.

Given the challenging social and economic backdrop against which China's WTO implementation efforts have taken place, its compliance record has been widely acclaimed by other members of the global trade body.

Meanwhile, a report released by China's Ministry of Commerce last month indicated that rising protectionism in the United States has become a serious cause for concern, especially regarding trade relations between the two countries.

As a major player in global trade, the United States has made significant contributions to international trade rules and garnered many benefits from those rules. Nevertheless, to revive the American economy, the US administration has adopted more and more protective measures in recent years. This has sent out mixed signals over its commitment to the WTO free trade agenda.

For example, the US administration signed a farm bill involving billions of dollars, which went against its commitment to the international community to reduce such trade-distortion subsidies. It also slapped tariffs on steel imports in March 2002 - a clear violation of WTO rules.

In a sense, such protective practices have severely undermined international momentum and confidence to promote the WTO's efforts to give developing nations a larger share of trade benefits.

The surge of disputes over the past six months was triggered by the growing US trade deficit with China. But the report by the Ministry of Commerce pointed out the United States abused anti-dumping and special safeguard measures in these cases.

Though China agreed the United States can maintain its anti-dumping measure for 15 years after China's admittance to the WTO, the remarkable development of China's market economy is an undeniable fact.

The United States continues to regard China as a "non-market economy" by turning a blind eye to the drastic changes in the country's economic and trade system. By discriminating against China, the Americans have violated the WTO principle of fair trade, stressed the report.

In addition, US domestic politics are playing a negative role in improving the bilateral economic and trade relationship, noted the report.

In a presidential election year it is predictable that US domestic politics will exert extra pressure on bilateral trade relations, but China and the United States should be working toward establishing a mechanism for the resolution of trade issues.

The Sino-US joint committee on commerce and trade headed by Chinese Vice-Premier Wu Yi and US Secretary of Commerce Don Evans and Trade Representative Robert Zoellick will have much work to do this year.

The two reports have shed some new light on each country's trade policies, but it is important to ensure they are properly interpreted in order to enhance mutual understanding of the importance of this bilateral trade.

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