Solving trade disputes through negotiation
(China Daily)
Updated: 2005-06-30 15:43

As China achieves increasing prosperity against a background of accelerating globalization, international trade friction is also changing.

One of the most noticeable changes is that China has become one of the countries involved in frequent trade disputes along with the world's economic powers, such as the United States, Japan and the European Union.

The disputes have several new features.

First, China is now subject to an increasing number of anti-dumping investigations, cases in which China is accused of selling goods at artificially low prices in order to corner a market.

The number of anti-dumping investigations against China was 6.5 in each year in the 1980s. The number rose sharply to 37.6 each year in the latter half of the 1990s. It was respectively 55, 51 and 47 in 2001, 2002 and 2003.

In the first nine months of 2004, Chinese commodities worth US$1.1 billion were involved in 46 investigations over alleged dumping and other accusations in 12 countries or regions.

China has suffered most in anti-dumping investigations and anti-dumping measures of all World Trade Organization members.

Second, Chinese exports suffer from higher technological barriers. More countries are resorting to technological barriers to limit Chinese exports allegedly to protect local industries.

Such barriers usually include quarantine standards, testing items, customs procedures, intellectual property rights and many other methods.

According to official statistics, at least 60 per cent of export-orientated enterprises in China have had trouble with their exports because of these technological barriers.

Third, more categories of commodities are involved in the trade conflicts.

The volume of commodities involved in these investigations is swelling quickly.

There is an opinion in international society that economic growth in China has changed the world's economy. Some governments even attribute the rise of unemployment in their countries to the growth of Chinese exports.

Fourth, more countries are now involved in trade disputes with China.

Traditionally, trade disputes happened between China and major economic powers, especially developed countries.

In recent years, China is seeing increasing conflicts with developing countries. Although these disputes involve a limited volume of commodities compared with conflict with developed countries, the number of cases is rising.

The causes of this can be found in an analysis to the global trade situation.

The fundamental reason for the worsening trade conflict between China and other countries is a deep-rooted preference towards trade protectionism.

It is true that most countries are following more open trade policies as a result of globalization. But another trend is also a fact in many countries and regions: Governments are taking various measures to limit imports and encourage exports to protect their industries on the international market.

Some developed countries even resort to protectionist trade policies to distract the public from their sluggish domestic economies.

These tactics include technological barriers, anti-dumping investigations and special protection measures, all of which can trigger trade disputes.

The second reason for this change is the concern in many countries about China's rocketing economic growth.

According to official statistics, China has seen an average growth of 14.5 per cent of its import and export each year between 1980 and 2003. This growth rate is much higher than the country's GDP growth and the growth achieved in the world economy and international trade during the same period.

Admittedly, the rocketing growth achieved by China has had an impact on the international trade pattern and the traditional export structure of some countries.

But this does not justify some countries' claims that China is the cause of problems in their own economies. Such opinions are often manipulated to benefit certain groups within the countries.

Several facts have also contributed to the escalation of trade disputes.

The difference between Chinese standards of quality products and those in other countries often obstructs the smooth entry of Chinese commodities into these places and even causes trade conflicts in some cases.

Another fact is that Chinese exports are usually products of industries that have comparative advantage or labour-intensive products with low added value, which often compete with many other similar products.

At the same time, Chinese exports do not have diversified markets. More than three-quarters of Chinese exports are sold to the United States, Japan and EU countries.

These trade disputes are expected to continue for quite some time, and are a major aspect of a world seeking to promote free trade.

They will occur between developed countries and developing countries, as well as among developed countries themselves.

The escalation of trade disputes between China and other countries is a result of China's deepening integration into the world economy.

But such disputes should be containable and should not influence the diplomatic ties China has with other countries.

China is gaining more influence in regional and world economy because of its economic prosperity.

Also, major economic powers, like the United States and Japan, have increasing stakes in China, which also serves to prevent disputes from becoming so severe as to destroy the ties between China and the rest of the world.

As a responsible country, China will keep its commitment to open-up free trade. The trade disputes are issues that should be addressed within the economic field.

The best way to settle them is to find win-win solutions through negotiation.

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