Economic review

With trade protectionism, more benefits? Not so, experts say

2017-08-09 11:26:00 (Beijing Time)         Xinhua

0

The U.S. government's threat to investigate China's trade practices is by no means wise, as such a move based on trade protectionism would hurt its own businesses and international image, experts said on Monday.

The administration of President Donald Trump has been mulling to ask the Trade Representative's Office to open an investigation into China's trade practices under the obsolete 1974 Trade Act's Section 301, which enables unilateral U.S. imposition of tariffs on trade partners.

TRADE NOT A ZERO-SUM GAME

Trump and his team attributed the economic slowdown and job losses to trade deficits, which are expected to be reduced by imposing tariffs and other non-tariff trade barriers when necessary, as the administration has promised.

Under the "America First" policy, the United States will also rethink alliances, shifting its focus from multilateral trade pacts to bilateral cooperation to ensure the protection of "American interests."

Many economists and foreign policy experts saw the trade protectionism and anti-globalization tendency in the current U.S. government and rejected the idea that trade is a zero-sum game.

Liu Zhenmin, U.N. under-secretary-general for economic and social affairs, said economic globalization is an irreversible trend, with the establishment of international division of labor and the growing volume of international trade.

"Countries that question economic globalization can hardly escape this process," Liu told Xinhua in a recent interview.

As for China-U.S. trade relations, Stephen A. Orlins, president of the National Committee on United States-China Relations, said that bilateral trade deficits are not really meaningful.

Orlins, who has been doing business with China for more than three decades, said that the United States used to have trade deficits with Japan, South Korea and countries in Southeast Asia.

"What happened over these years is that a lot of the semi-finished goods would go to China (for China to export), so what's happened is the trade deficit we used to have with those other countries has been transferred to China," said Orlins.

"Now that is not China's fault and we should not blame China for that," he added.

Many experts voiced concerns on the U.S. government's plan to adopt Section 301, a trade tool used before World Trade Organization (WTO) came into existence, which allows Washington to unilaterally impose tariffs on another country.

In general, trade disputes among WTO members should be resolved through the WTO mechanism rather than a state's domestic law.

"Even if China has problems with intellectual property rights, the use of Section 301 to punish China will make people think that the United States puts its domestic rules above international law, which will further tarnish the country's international image under President Trump," said Zhiqun Zhu, professor of Political Science and International Relations Bucknell University in the U.S. state of Pennsylvania. [ Zhu added that if the U.S. slaps unilateral sanctions, China will certainly react in tit-for-tat retaliation. In the end, consumers and businesses in both countries will suffer.

"In an age of globalization and interdependence, it is hard to believe that some people still think economic sanctions will solve trade problems," said Zhu, emphasizing that it would be a lose-lose option.

FIRM HAND ON INTELLECTUAL PROPERTY

Chinese companies involved in international trade pointed out that the Chinese government has paid high attention to protecting intellectual property and has implemented regulations as strict as those of the United States.

In 2015, China started a three-year campaign to protect the image of "Made-in-China" products internationally.

By April of this year, more than 43,000 batches of goods suspected of intellectual property rights (IPR) infringement had been seized during the campaign, involving more than 81 million individual items, according to China's General Administration of Customs.

The country has also taken an active part in IPR-related affairs under multilateral frameworks, including the World Intellectual Property Organization and the World Customs Organization.

"Honestly I don't think China would single out the U.S. companies to violate their intellectual property rights. It's simply too costly," said an automotive industry source who declined to be named because the White House has not made a public announcement yet.

The White House initially planned to announce last week the launch of the investigation, but postponed the schedule. The announcement might come out on Wednesday, according to U.S. media.

He added that the Chinese government has attached great importance to this issue, because Chinese companies should learn to respect rules and the spirit of contract in order to do businesses in global markets.

"To be fair, the country has made great improvement in the past three decades," he said.