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Trade disputes to become hotter, but won't boil over

By Ding Qingfen | China Daily | Updated: 2012-05-30 07:04

Trade frictions between China and the United States will probably become more heated in the months ahead, but no trade war will break out between the two biggest economies in the world, Pascal Lamy, director-general of the World Trade Organization, said on Tuesday.

"As Chinese trade with the rest of the world grows, there is a normal statistical proportion of trade frictions, and we believe that the frictions can be handled peacefully," said Lamy.

"But nothing like a trade war."

Lamy made the remarks in an interview conducted at the Beijing 2012 Round Table for Least-developed Countries on Best Practices in the WTO Accession Process, which was held in the capital city.

During the forum, Chen Deming, minister of commerce, said China is willing to help the least developed countries join the WTO. Having them in the organization will be good for the world economy and global trade, as well as for China.

China, together with other countries in the WTO, is calling for a simplification of the procedures countries must go through to join the trade organization. Agreements meant to bring about that goal are expected to be signed by July, Chen said.

Last week, the Ministry of Commerce said in a statement on its website that policies used to support wind, solar and other sorts of renewable energy projects in five US states - Washington, New Jersey, Massachusetts, Ohio and California - violate WTO policies and trade treaties. China also complained to the WTO about the US' imposition of anti-subsidy duties on $7.29 billion worth of Chinese goods from 22 different categories that were imported to the US last year.

The announcements came on the heels of the US Commerce Department's preliminary decision to place anti-dumping tariffs of up to 250 percent on imports of Chinese solar cells.

Analysts at home and abroad expressed worries that China's response to that action will provoke a trade war between the two nations.

Lamy, though, said a member of the WTO has the right to challenge other members if it thinks they have violated trade rules.

"Sometimes, China challenges the US and EU with anti-dumping or countervailing duties, and sometimes it is the other way round," he said.

"There are trade frictions, trade disputes, but there are no trade wars," Lamy said.

As the US presidential election draws near, the US may take further actions against China and its trade policies in the hope of quieting critics who complain about their country's trade deficit with China and high unemployment rate, experts said.

US President Barack Obama has announced plans to establish a trans-agency trade enforcement unit that will be charged with investigating the policies and practices of the country's most important trade partners.

In November, China began investigating whether the US was improperly using subsidies to lower the price of US products. That scrutiny came a month after seven US solar manufacturers filed a complaint with the US International Trade Commission and the Department of Commerce. The Ministry of Commerce said the US has used subsidies in ways that are "inconsistent with WTO rules and rulings in many regards".

"Trade frictions are a normal statistical proportion volume of trade," Lamy said. "As trade grows, the number of trade frictions grows."

The Commerce Department is scheduled to make a final decision on solar tariffs in early October. The US agency also said it would investigate Chinese exports of wind turbines, saying makers of that equipment have received unfair government subsidies. It plans to make an announcement on Wednesday about the duties it will impose on those products.

Along with the EU and Japan, the US filed a complaint to the WTO in March to challenge China's policies governing exports of rare-earth minerals.

"We are concerned that during the financial crisis, protectionism is growing," Lamy said. "That's the reality."


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