Protectionist Duty?

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China, the US and the EU are all involved in trade disputes (and the odd protectionist thought). One suspects political as well as economic drivers. But let’s hope it does not run off the rails and end in another nasty crash…

While they are nothing new (see here), protectionist tensions are never far below the surface in these days of economic crisis (or recovery), and recent news has been highlighting the problems in relation to China’s trade and currency and its major trading partners (and, interestingly, in relation to Germany’s position within Europe, but that is for coverage elsewhere…).

Insead Knowledge has analysis, from The Beijing Axis, which shows how trade complaints have been on the increase:

“Evidence of an increasing protectionist trend can also be found in the World Bank-sponsored Global Antidumping Database. In a report published in October, it reported that in Q3 2009, WTO-member governments had initiated 44 new product-level investigations for the imposition of import restrictions such as antidumping and global safeguards. The number for Q3 represented a 52.6 per cent increase compared to the same period a year earlier. The cumulative number of such new requests for protection throughout the first three quarters of 2009 rose 30.3 per cent compared to the same period in 2008, which in turn was 36.4 per cent higher than in 2007. While the targeting of imports from China in this regard is not a new phenomenon, industry demand for new import restrictions against China nonetheless increased by 22.7 per cent in 2008, and by an estimated 7.8 per cent in 2009.”

The latest developments for China revolve around an EU anti-dumping probe into paper, a US probe into drill pipe, and a problematic “Buy China” policy (see links below from our Twitter feed):

• Protectionism: RT @China_Daily: EU launches anti-dumping probe into Chinese coated fine paper 10:16 AM Feb 20th

• And another… RT @China_Daily: US panel OKs trade probe against China drill pipe 11:13 AM Feb 20th

• Uncertainty & market access RT @ChinaBizWatch: ‘Buy China’ Policy Alarms Trade Partners Forbes 8:18 AM Feb 17th

It is one thing to probe, and prove points, around specific trade issues, it is another to provoke a politically-motivated protectionist trade war. No doubt these pressures are felt on all sides. No doubt there are market access / dumping issues that need to be resolved. But, of course, China says it is the victim, and also – something we get reminded of all the time – that it would import lots of high-tech goods if current restrictions on exports were lifted.

In the context of Google’s China problems, associated accusations of Chinese hacking, the “state secrets” arrest of the “Rio Four”, and China’s regulatory blocking of Hummer’s purchase by Tengzhong (something that China knows all about from its US / Unocal experience), the air around trade talks is far from clear, and some companies are getting nervous.

Hopefully rational solutions will prevail and, at a time when China is expanding trade links with partners in Asia, the fall-out will not result in a wider, negative impact on US and EU trade with China.

We may see the results of all this soon, as the Insead piece notes, “Because it takes 12 months to prepare a case alleging dumping, China is due for a protectionist backlash in 2010”. Luckily the EU approach seems pretty pragmatic:

“Serge Abou, the Ambassador for the EU Delegation of the European Commission to China, reassured his Chinese audience that trade conflicts are only normal. He compared them to stones on a road. When you walk on a road, he said, the thing you care about should be the destination, not the stones on it.”

Let’s hope that China, the EU and US manage, as the Chinese say, to “cross the river by touching the stones”. And that all those officials do their duty to protect trade. Better than throwing around more of those damaging protectionsit duties…

2 Responses to “Protectionist Duty?”

  1. Archive » Briefly…Top Ten Tweets (From Protectionists, Paper & Pipes, To Hackers, Lawyers & NDAs)| China Business Blog Says:

    […] Comment: China, the US and the EU are all involved in trade disputes (and the odd protectionist thought). One suspects political as well as economic drivers. But let’s hope it does not run off the rails and end in another nasty crash…Read our protectionist post here. […]

  2. Archive » Searching for Solutions| China Business Blog Says:

    […] posted some background on China and WTO here […]

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