China Fights to Keep Markets Open
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China launched WTO dispute cases against two major world economies on Friday, flexing its muscles on the world stage in an effort to gain greater access to developed country markets amid the economic downturn. In a two-part move on 31 July, Beijing challenged EU anti-dumping tariffs on Chinese steel fasteners as well as a US ban on the country’s chicken imports.
The two new dispute cases are evidence of China’s “increased maturity” at the WTO and its growing willingness to use the global trade body’s dispute mechanism to fight for its interests, an article in the state-run Xinhua news service said on Sunday. China has been relatively quiet on the dispute front since it joined the WTO in 2001, having launched only a handful of cases despite being a rather frequent target of other countries’ complaints. But the Asian Giant is gradually becoming more engaged in the WTO’s work, and its influence in the organisation is growing.
“As a major trade power, it’s natural that China gradually increase its influence in the world commerce body and plays a more mature role in the making and enforcing of WTO regulations,” the Xinhua article said.
And Beijing is gearing up to fight back against what it has called “a discordant resurgence of protectionism.” An article in the state-run China Daily noted that, from September 2008 to June 2009, “the main World Trade Organization members” - including the US and the EU - initiated 77 dispute cases against China, worth an estimated US$ 9.8 billion, more than double the previous year’s number.
Zhou Xiaoyan, deputy director of China’s Bureau of Fair Trade for Imports and Exports, told China Daily that the government will use the tools available at the WTO to fight for its businesses.
“The US is abusing trade protectionist tools to help its own industries tide over the economic slowdown,” Zhou said. “The loss for Chinese businesses is huge.”
First up: EU anti-dumping tariffs
In the first act of its dual move on Friday, Beijing made an official request for consultations with the EU over tariffs that the 27-nation bloc imposes on imports of Chinese steel fasteners - screws, bolts, and the like. The EU enacted the tariffs - which range from 26.5 percent to 85 percent and are worth an estimated US$ 809 million - in January with the aim of helping European producers compete with the Chinese imports. Brussels says the Chinese components are illegally under-priced, or ‘dumped’, in the EU market. The WTO allows its members to impose retaliatory anti-dumping tariffs if they can show that artificially cheap imports are causing substantial harm to their domestic producers.
“Anti-dumping measures are not about protectionism, they are about fighting unfair trade,” EU spokesmean Lutz Guellner said in a statement on Friday. “The decision to impose measures was taken on the basis of clear evidence that unfair dumping of Chinese products has taken place with state distortion of raw material prices. This is harming the otherwise competitive EU industry, with potentially dire long-term effects.”
Beijing’s complaint against Brussels marks the first time that China has launched a dispute against the EU. In contrast, Brussels has initiated more than 140 ‘anti-dumping investigations’ into Chinese trade policy measures over the past three decades, according to a statement from Beijing that was released on Friday.
Following China’s 31 July request, the parties will now begin a series of bilateral consultations; if that process fails to produce a resolution after 60 days, China can ask the WTO’s Dispute Settlement Body to establish a panel to hear its complaint.
Next target: US poultry ban
Also on Friday, Beijing requested that the DSB establish a panel to hear its complaint against the United States’ ban on imports of Chinese poultry.
Washington has refused entry to China’s chicken products on health grounds since 2007. The extension of the ban was made explicit in March, when US President Barack Obama signed into law a federal budget that included a line, in Section 727, that specifically forbids imports of Chinese poultry products. The clause drew a harsh response from Chinese trade officials, who denounced the ongoing ban as clearly discriminatory.
Following up on its threats, Beijing requested consultations with the US on the matter in April (see Bridges Weekly, 22 April 2009, http://ictsd.net/i/news/bridgesweekly/45436/), but after 60 days of bilateral talks, the parties failed to reach a resolution. On 20 July, China requested that the WTO’s Dispute Settlement Body establish a panel to hear its complaint, but the US blocked the move, exercising a right that the WTO allows each of its members once during a dispute case (see Bridges Weekly, 22 July 2009, http://ictsd.net/i/news/bridgesweekly/51321/). But Beijing repeated its request for a panel on 31 July; this time, the request went through.
In a statement released Friday, the Chinese Ministry of Commerce decried Washington’s “naked discriminative protection measures.”
“These unilateral measures fundamentally violate WTO rules, significantly impede the ordinary Sino-US trade in poultry products, and substantially impair the rights and benefits that Chinese enterprises deserve to enjoy,” the statement said.
In a statement released Friday, the office of the US Trade Representative said that authorities in Washington have not yet determined whether poultry imports from China meet Washington’s food safety standards. The USTR said that it was “disappointed” with Beijing’s decision to pursue the case, but added that it hoped the dispute would not hinder the flow of goods between the two countries.
“The United States and China have a broad and deep trade relationship and we continue to work together closely on a bilateral and multilateral basis to resolve any problems that may arise,” the statement said.
ICTSD reporting; “Trade complaints reflect China’s maturity as WTO member,” XINHUA, 2 August 2009; “China a major target of trade protectionism: Official,” CHINA DAILY, 31 July 2009.
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It’s not in the nature of free market to have shield turned to weapon, as currently world does.