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منگل، 29 مئی، 2012

US And China Set For A Trade War?


 The US too accused China of protectionism and pegging the Yuan 30 percent below its value last February. The US is eager to keep China market open to its products but it appears that globalization rules, run and supported by pro-liberalization corporations in America, are now making trouble for the US itself.
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Heads of the G20 member states pledged in an April 2009 meeting that they would “not repeat the historic mistakes of protectionism of previous eras." As a member of the group of 20 industrialized nations, the United States has not been able to keep that promise, having imposed tariffs on importing products in several cases.
A recent case is about exports from China to the United States. To counter the U.S. protectionist measures, China, a key trade partner of the U.S., has complained to the World Trade Organization about Washington’s anti-subsidy tariffs on 22 Chinese goods. China began the challenge by requesting consultations with the United States through the international organization to resolve the dispute. However, if that fails, Beijing can request a ruling by a WTO panel, which can order the United States to scrap measures found to violate free-trade commitments or to pay compensation.
U.S. mainstream media has said the complaint is not that serious. But Chinese solar panel manufacturers, whose products are now facing U.S. trade barriers, have warned they would push their government to retaliate.
China's Ministry of Commerce says it has found six U.S. policies of supporting or subsidizing the U.S. renewable energy industry which run counter to WTO rules. The ministry claims that these policies constitute trade barriers and distort normal trade between the world's two largest economies.
The U.S. too accused China of protectionism and pegging the Yuan 30 percent below its true value last February. The U.S. is eager to keep china’s market open to its products but it appears that globalization rules, run and supported by pro-liberalization corporations in America, are now making trouble for the U.S. itself.
When the WTO commenced 17 years ago, it aimed to liberalize international trade in an apparent bid to ease trade at a global level. Since then, all countries have been urged, by leading liberal states namely the U.S., to liberalize their trade with other nations by removing policies that serve as “barriers” to trade.
Examples of trade barriers include tariffs and subsidies. Both policies keep foreign producers from selling easily in domestic markets, because when given the choice, most people will buy what is the cheapest.
The WTO was originally considered as a shield against protectionist backsliding. Among supporters of the anti-protectionist policy was the United States or, to be exact, Corporate America - the world of corporations and big business - that sought easier access to additional markets.
Asian markets were among the popular ones the U.S. targeted. As an example, the Chinese market with a 1.3 billion consumers was a good place for products made in mass by American big business. This was, of course, a two-way trade. But, China’s industries were not capable enough, some two decades ago, to produce the goods American companies made for their domestic market.
So the U.S. government had no reason to restrict the Chinese goods to avoid competitiveness issues. However, as China’s industries developed year by year, the United States faced more and more troubles on the way to block the importing goods which mainly competed with domestically-produced goods in the U.S. in terms of price and quality.
Over the past decade, Chinese economy has boomed with an average annual growth rate of 10 percent. That economic growth has been propped up to a large extent by a very strong contribution from exports. Today the country’s exports to the U.S. alone are estimated to be more than $400 billion in value. The U.S. has a trade deficit of almost $300 billion with its giant trade partner. China’s exports vary from electrical machinery and equipment to power generation equipment, furniture, steel, and vehicles.
Well, the situation has been changing. China, already an economic giant in Asia, is set to become an industrialized power on the world stage. This expansion of economy is threatening the monopoly of the U.S. as the largest economy in the globe. And the U.S. has already felt it and has started to react.
Today on the one hand, the U.S. government has to respect WTO protectionism rules and on the other, it should support its troubled domestic factories and manufactures. The production of solar system equipment is among top issues the U.S. companies are worried about as their Chinese rivals are offering more competitive prices for same products in the U.S. market.
Given the faltering U.S. economy, Washington struggles to keep some domestic manufacturers afloat by imposing tariffs on some importing goods. The move, of course, is a sign of withdrawal from liberal rules and values in practice. But for America, this withdrawal does not seem to be of any significance.
The U.S. launched about 30 countervailing cases back in 2008. China complained at the time to the WTO regarding four of the countervailing cases and won support from the Dispute Settlement Body in 2011. But regretfully, the U.S. did not carry out the rulings and repeated its wrongful practices in the following cases, according to Chinese trade officials.
But for how long would the U.S. be able to play the game? Does China’s move to correct the U.S. misuse of trade remedy measures help maintain a “healthy” trade relationship between the two nations as some Chinese officials hope? If it doesn’t, the relationship could lead to a “trade war” as predicted by many economists.

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 (By A. Ramezani, Business Journalist; Press TV)

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