China Programme • Volume 13 • Number 38 • 4th November 2009

US, China Strike Deals on Trade, but Sparring Continues

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Senior-level officials from China and the US met for two days in China’s eastern city of Hangzhou to try to find common ground on a number of trade issues last week, even as new disputes between the two countries continued to crop up outside the conference hall. The officials were hoping to smooth over their sometimes-rocky bilateral economic relations before US President Barack Obama’s first official visit to China in less than two weeks’ time.

“It is critical to make concrete, demonstrable progress today to demonstrate to the people of the US and China that we can work together,” US Commerce Secretary Gary Locke said in his opening remarks to the US-China Joint Commission on Commerce and Trade (JCCT).

Officials from the two sides signed a total of nine new trade deals covering investment, intellectual property, and energy cooperation, among other issues. A couple of highlights from the deals: Beijing agreed to resume imports of US pork products (which were banned in reaction to the outbreak of the ‘swine flu’ virus earlier this year) and end its requirement that most of the materials used in Chinese wind power projects be produced domestically. In return, Washington vowed to eliminate some restrictions on imports of Chinese chicken. Officials from both countries pledged not to impose new trade protectionist measures against each other’s exports.

Notwithstanding the warm feelings emanating from the lakeside conference centre in Hangzhou, officials in Washington and Beijing continued to spar over trade last week.

Chinese Commerce Minister Chen Deming confirmed on 29 October, the second day of the JCCT meeting, that Beijing is planning to launch an unfair-pricing investigation into imports of cars made by the ‘big three’ US automakers - Chrysler, Ford and General Motors. The announcement follows through on a threat Beijing issued in September, immediately after President Obama authorised the imposition of 35 percent tariffs on Chinese tyre imports (see Bridges Weekly, 16 September 2009, http://ictsd.net/i/news/bridgesweekly/55281/).

A Chinese commerce official - speaking to the government-owned China Daily newspaper on condition of anonymity - suggested that the newly announced anti-dumping investigation is more of a political gesture than anything else.

“Launching the investigation on such an occasion, during the two countries’ trade negotiations and before the US president’s visit, is undoubtedly a kind of pressure tactic by our government, which is hoping that the US will not frequently investigate other trade matters in the future,” the official said.

Government officials back in Washington were staying busy as well. Just one day after the JTTC meeting closed, the US’ International Trade Commission (ITC) - an independent federal agency that rules on trade complaints - announced its conclusion that US producers are threatened by some imports of Chinese seamless steel pipes “that are allegedly subsidised and sold in the United States at less than fair value.” The determination launches an investigation that could result in the imposition of retaliatory tariffs.

Also last week, the US Commerce Department imposed preliminary duties on imports of steel grating and steel wire strand on the grounds that the products receive unfairly high levels of support from Beijing.

But US Trade Representative Ron Kirk played down the significance of such disputes in an address to JCCT, saying that the two sides would not “allow any single issue to detract from our broader overall relationship,” The Associated Press reported.

China and the United States are each other’s second-biggest trading partners, after the EU for China and Canada for the US. Bilateral trade in 2008 totalled more than US$ 330 billion dollars, up from a mere US$ 2.5 billion in 1979.

ICTSD reporting; “Auto imports from US under scanner,” CHINA DAILY, 30 0ctober 2009; “Friction over auto exports in US-China trade talks,” THE ASSOCIATED PRESS, 29 October 2009.