Mixing trade, politics a losing idea
Negative news about Sino- US trade ties has appeared frequently recently.
A recent report from Politico, citing two anonymous officials, said that the US was mulling various economic measures against China, including trade restrictions and economic sanctions. Shortly after, media reported that US President Donald Trump was considering invoking Section 301 of the Trade Act of 1974, which would empower his administration to launch an investigation into alleged Chinese violation of intellectual property rights and forced technology transfer, but the plan was postponed at the last minute.
In the meantime, US Secretary of Commerce Wilbur Ross issued an article named “Free Trade is a Two- Way Street” in The Wall Street Journal, blasting China and Europe as “protectionists dressed in free market clothing.” He also stated that the Trump administration “will use every available tool to counter the protectionism of those who pledge allegiance to free trade while violating its core principles.”
Taking a close look at the background of the recent speculation surrounding US trade action against China, it is not hard to discern the logic behind the US re- politicalization of trade issues. Earlier this year, the US government expressed willingness to offer trade “concessions” to China in exchange for China’s help in pressuring North Korea over its nuclear program, highlighting its geopolitical priority over trade policy. The core of the Korean Peninsula issue is the conflict between the US and North Korea. By chattering about and overstating the so- called “China responsibility theory,” the US appears to have gone to the extreme of politicalizing trade and economic issues. Yet, it is dangerous to involve political factors in Sino- US economic and trade relations, which will not help the US achieve either political or trade goals.
However, while accusing other countries of trade protectionism, the US refused to sign the anti- protectionist commitment in the G20 finance ministers’ communique in March this year, forcing the G20 joint trade commitment to go backward from resisting “all forms of protectionism” to “working to strengthen the contribution of trade to our economies.” It has used trade protection measures, subsidies, discriminatory measures and other unfair trade measures in its own trade practices. Take agricultural products as an example. The highest tariff China currently imposes on imports of agricultural products is 65 percent, while US tariffs on such imports could be as high as 350 percent. The US also offered subsidies to multinational companies by various means. Boeing, Ford Motor, General Electric, General Motors and JP Morgan Chase rank among the top recipients of government subsidies, according to media reports.
It is even more disturbing to see that the US might conduct an investigation into whether steel imports pose a threat to US national security under the rarely used Section 232 of the Trade Expansion Act of 1962. It is clearly an abuse of the WTO’s national security exception for the purpose of protecting some outdated and low- efficiency industries in the US. The potential action, combined with the strengthened “security review” over investment projects in the country, has pointed to the US trend and “toolbox” of unilateral policy against its trade rivals, posing a serious threat to world trade.
It must be pointed out that unilateralism does not work on the path of free trade. The best consequence unilateral- ism could achieve is nothing but loss for both sides. China and the US should stick to the basic position of win- win cooperation, adhere to the basic way of resolving problems through consultation, and maintain smooth communication in major economic policies so as to ensure that the development of Sino- US economic and trade relations won’t be derailed. That’s the right two- way path.