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BIZCHINA / Weekly Roundup

U.S. an irresponsible stakeholder

By Li Zhongzhou (China Daily)
Updated: 2007-06-26 13:42

The author Li Zhongzhou is China's former senior WTO negotiator

China has taken to heart Robert Zoellick's proposition that the United
States and China should behave as responsible stakeholders. But this time
again the US has behaved as a irresponsible stakeholder by further
enlarging export controls on technology goods to China, an act that
hamstrings US competitive industries in their efforts to expand their
exports to China and further worsens the trade imbalance.

It also undermines China's efforts to redress the trade imbalance with
the US.

Following the strategic economic dialogue, China began to take a series
of measures to boost domestic consumption and expand imports from the US
on the one hand, and on the other take dramatic measures to slow down
exports.

The Chinese government has decided to suspend or reduce export rebates
for 2,800 export items as from July 1, this year. This would increase
costs by up to 17 percent for 37 percent of Chinese export products.

However, the US instead of appreciating it, has decided to enlarge export
controls that nullify China's efforts, made in good faith, to solve a US
problem.

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Related readings:
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US curbs on high-tech exports to hurt trade
Penalizing China to hurt US

It appears that by taking such a measure, the Bush administration has
bowed to the will of the protectionist group in Congress. It does not
augur well for the multilateral trading system and China-US trade
relations. Protectionist measures will not improve, but precipitate the
US trade deficit.

The US trade deficit is attributable first of all to an internal
structural problem, for example, the sustained fiscal deficits. Imports
from China, a large part of which is owed to US investment in China,
contributes to keeping a low inflation rate in the US in spite of its
sustained large fiscal deficits.

It is inappropriate for the US to shift all responsibilities to its
trading partners for an internal structural problem.

The US action is protectionist pure and simple. It violates the
fundamental principle of open trade of the World Trade Organization (WTO)
and deprives China's right of access to technology accrued to it under
the general framework of the General Agreement on Tariffs and Trade as
well as the Information Technology Agreement (ITA). Still worse, it
represents a crude discrimination against China in breach of the sacred
principle of most-favored-nation (MFN) treatment for all WTO members.

The restriction is directed against China alone. The US by accepting the
Protocol on the Accession of the People's Republic of China (to the WTO)
committed to grant unconditional MFN to China. It had not entered any
reservation in the accession documents. Therefore, the discrimination
embodied in this latest action by the US cannot be justified by any
excuse. It has breached its WTO obligations.

National security is used as a pretext for export controls. The latest
action has nothing to do with US national security. The true motive
behind it is to prevent China from obtaining foreign technology for the
development of its own civil aircraft. China will forge ahead with
building its own aircraft without US technology.

But the damage to international norms and obligations should not be
tolerated.

China has the right to request for dispute settlement in the WTO to
protect its legitimate rights accrued to it under the WTO agreements.

(For more biz stories, please visit Industry Updates)

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