China facing rising US trade protectionism

Miao Yingchun
The Stesman, 12 October

Low-priced Chinese exports have helped ease inflation in the US and has have benefited the country's consumers. The use of trade protactive tools is detrimental to US consumers and does nothing to help the less vigorous industries.

On 14 September, China requested the World Trade Organisation (WTO) to settle its dispute with the United States over Chinese coated paper after negotiations with the US failed.

China was seeking WTO help following a preliminary decision by the US Department of Commerce to impose duties on coated paper imported from China.

It was the first time that China has filed a case in WTO against the US since the country’s entry into the world trade body in 2001.

The frequent usage of trade protective tools, like anti-dumping, anti-subsidy duties, guarantee measures and special guarantee measures, has become a source of trade conflicts between China and the US.

According to WTO statistics, China is the most targeted country in US anti-dumping investigations. Since the first anti-dumping case involving menthol produced in China in 1980, Chinese exports have been subject to 10.2 per cent of all anti-dumping cases investigated in the US. The anti-dumping cases involving Chinese exports have significant values, some more than $100 million.

On 30 March this year, the US Department of Commerce decided to impose an anti-subsidy tax on coated paper produced in China. This was a significant change in the US anti-subsidy tax policy. Before that, this tax was only imposed on products from market economies and China had always been treated as a “non-market economy” by the US authorities in nearly all trade-related issues.

The Chinese products involved in the anti-dumping cases are mostly in the light and chemical industries, and machinery and electronic products such as bicycles, colour TV sets and steel pipes.

The products have helped China gain a considerable position in global trade, and has led to more jobs in the country. A conservative calculation shows that the light and textile industries employ 50 million people a year.

In the anti-dumping cases initiated by the US, China is the victim of a high proportion of confirmed dumping. Between 1980 and 2006, the US International Trade Committee (ITC), the institute authorised to give decisions on the anti-dumping litigations, concluded that 70 out of 111 Chinese commodities had been dumped. This rate is much higher than other trade partners of the US.

The US authorities are also using more diversified means to protect its domestic market from Chinese products after China became a WTO member. The frequent use of anti-dumping measures toward Chinese exports by the US is primarily due to economic pressure.

With its huge trade deficit, the US has undergone an industrial restructure. The government has to protect domestic industries from foreign competitors. As one of the biggest trade partners of the US, China has not only increased its exports to the US but has also added value to its commodities in recent years thanks to the development of Chinese manufacturing.

Thus, competition between Chinese exports and US domestic products have become more intensive. It is, therefore, natural for the US authorities to resort to anti-dumping measures to protect their domestic industries.

Another motive is the strategic interests of the US. Researchers from the US National Bureau of Economic Research, Thomas J Prusa and Susan Skeath, found that US anti-dumping cases were often driven by political pressure, national security interests, and historical economic relations.

Theoretically, anti-dumping is meant to fight unfair competition. However, if used to obstruct free trade and protect incompetent industries, it would cause serious damage to global trade.

It affects the commercial interests of exporters, especially those in developing countries.

The abuse of anti-dumping measures has made it a non-tariff trade barrier to protect a country’s market from imported products and services. Thus, consumers have to pay much more for goods or services than they should in an open market.

Low-priced Chinese exports have helped ease inflation in the US, and has benefited the country’s consumers. The use of trade protective tools is a detriment to US consumers and does nothing to help the less vigorous industries.

President George W Bush decided not to provide import relief for the US pedestal actuator industry in 2003 when the ITC believed the industry was threatened by Chinese exports. He argued: “The import relief would have an adverse impact on the US economy clearly greater than the benefits of such action”.

His explanation could be applied to other Chinese exports to the US market. And hopefully, Sino-US trade disputes could be reduced if this was accepted by others concerned.

China Daily/ANN
(The author is a researcher with the Department of World Economics, Wuhan University)