TWN Info Service on WTO and Trade Issues (Jul18/11)
13 July 2018
Third World Network
  
China vows to "fight back" against US unilateral measures
Published in SUNS #8720 dated 12 July 2018

Geneva, 11 Jul (D. Ravi Kanth) - China said it will "fight back" against the unilateral crowbar trade measures announced by the United States on Tuesday (10 July) that would come into effect after the Trump administration completes the process for imposing a 10% tariff on an additional US$200 billion of Chinese imports.

On Wednesday, China's ministry of commerce said it "is shocked by US' behaviour."

"In order to safeguard the core interests of the country and the people, China will have to fight back as usual," the Chinese ministry said in a statement.

Describing the US measures as "irrational US actions", China called on the international community to resist what it called "trade hegemony".

The US actions "were hurting China, hurting the entire world and hurting the US itself."

Ironically, the latest announcement by the Trump administration coincided with China's seventh trade policy review at the WTO on Wednesday.

Without naming the US, China warned in its trade policy statement that "continued recovery of the global economy faces risks, and there are many factors that bring instability and uncertainty".

The Trump administration, according to Washington Trade Daily on 11 July, has decided to press ahead with further retaliatory measures against "the Chine se goods ranging from agricultural products and seafood to chemicals to tires to travel goods".

The proposed new tariffs are being justified by the Trump administration under "a Section 301 investigation finding China guilty of stealing intellectual property and forcing US companies to transfer their technological know-how", according to the WTD.

The latest announcement by US Trade Representative Ambassador Robert Lighthizer on Tuesday "comes less than a week after the United States imposed 25% tariffs on US$34 billion in Chinese products, with another US$16 billion coming", according to the WTD.

The US said it is compelled to start the process for imposing an additional tariff of 10% on imports of US$200 billion of Chinese goods due to Beijing's decision to retaliate against American goods worth US$34 billion.

In a statement issued on late Tuesday, Ambassador Lighthizer said "as a result of China's retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10% on an additional $200 billion of Chinese imports."

"This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies," the USTR said.

"On August 14, 2017, President Trump instructed USTR to begin the Section 301 process [and] for many years, China has pursued abusive trading practices with regard to intellectual property and innovation," the USTR said.

Ambassador Lighthizer said that "the section 301 report found that Chinese policies and practices force US innovators [to] hand over their technology and know-how as the price for doing business in China."

Further, "China also uses non-economic means to obtain US technology, such as using state-owned funds and companies to buy up American businesses and imposing burdensome intellectual property licensing requirements in China," the USTR said.

Ambassador Lighthizer said despite our repeated calls to "stop its unfair practices, open its market, and engage in true market competition," China "has not changed its behavior - behavior that puts the future of the US economy at risk."

"Rather than address our legitimate concerns, China has begun to retaliate against US products... There is no justification for such action," the USTR said.

Senior US lawmakers, however, sharply disagreed with the USTR's assessment.

"Although I have supported the administration's targeted efforts to combat China's technology transfer regime, tonight's announcement appears reckless and is not a targeted approach," said Senator Orrin Hatch, who chairs the US Senate Finance Committee.

"We cannot turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy," Senator Hatch said, according to a report in Financial Times on 11 July.

The chair for the powerful US House Ways and Means Committee, Kevin Brady, said "with this announcement [by the USTR], it's clear the escalating trade dispute with China will go one of two ways -- a long, multi-year trade war between the two largest economies in the world that engulfs more and more of the globe, or a deliberate decision by President Trump and President Xi to meet and begin crafting an agreement that levels the playing field between China and the US for local farmers, workers and businesses."

In short, the US administration is not on the same page with the US lawmakers. Nevertheless, the tone and tenor of the USTR's statement reveals that it will press ahead with its unilateral measures that cannot be justified under the multilateral rules that it had crafted at the WTO.

The US, which has lost a countervailing trade dispute against Canada on paper products last week, severely criticized the WTO panel for ruling against its measures.

In response to the escalating unilateral measures by the Trump administration, China is also holding dialogue with the European Union and other countries that have become vulnerable to Trump's unilateral measures.

Without naming the unilateral measures imposed by the US, China said in its report to the WTO that "continued recovery of the global economy faces risks, and there are many factors that bring instability and uncertainty."

It said "the policy changes of major economies [the US] and their spillover effects create uncertainty."

China is expected to assure its trading partners that it "will further ease market access. In manufacturing, China has basically opened up the sector only with a small number of exceptions like automobiles, ships, and aircraft."

"In services, financial services in particular, China will accelerate the opening up of the insurance industry, relax restrictions on the establishment of foreign financial institutions in China, expand their business scope, and broaden areas of cooperation between Chinese and foreign financial markets," China said, according to people familiar with the statement.

In conclusion, China seems determined to firmly oppose the US' unilateral measures while building new alliances with the EU and other industrialized countries.

It remains to be seen whether the Chinese strategy will advance the "developmental" priorities of developing and poorest countries.