U.S. trade protectionism is gaining momentum

A new round of trade friction between China and the United States seems to be coming. U.S. Trade Representative Kirk announced on the 23rd that the United States has already brought China to the WTO dispute settlement mechanism on the issue of restricting the export of important raw materials by the Chinese side. This is the first time that the Obama administration has filed a lawsuit against the WTO on China's trade issues since it took office. It is worth noting that the EU has also joined related lawsuits.

The United States carefully prepared

In his statement on the day, Kirk stated that China's restriction on export measures as a supplier of these important raw materials has harmed the interests of the US steel, aluminum products, and chemical industries, and has given Chinese related industries an “unfair advantage”. . The United States has consulted with the Chinese side on this issue in the past two years and demanded that China terminate this restrictive measure. However, no progress has been made in the negotiations. Therefore, the United States decided to resort to the WTO to seek a solution.

According to the US allegations, the raw materials involved in the above trade disputes include nine kinds of raw materials including bauxite, coke, fluorspar, magnesium, silicon, corundum, yellow phosphorus and zinc. These materials are widely used in steel, chips, aircraft and many other industrial fields. U.S. officials believe that the related trade volume involves billions of dollars.

The U.S. side’s actions have obviously been carefully prepared. Kirk said that the United States does not take frivolous measures, and this move is a deliberate measure. Earlier in his speech at the US-China Trade Committee in Washington, Kirk emphasized the importance of US-China trade and warned on an extremely hard-line stance that the U.S. put U.S. business and workers’ interests first and will be in China. In trade, "more aggressive measures" are taken to safeguard the interests of the United States.

Moreover, in dealing with China, Western countries are adopting a "confluence" attitude. While the United States initiated a lawsuit against China, the EU also filed similar lawsuits on the issue at the WTO. EU Trade Commissioner Catherine Ashton said in a statement: "China's practice of restricting raw materials distort competition, raise the prices of related materials, and make our companies face more difficult situations during the economic downturn."

In addition, Canada also stated that Canada did not rule out the possibility of joining this suit against China. Melisa Leclerc, a spokesman for Canada’s trade minister, Stockwell Day, said: “The Canadian side is closely monitoring the developments of related matters.” Prior to this, China, Europe and Canada had joint efforts in the case of Chinese auto parts restrictions. China sued the WTO and eventually lost the case in China.

According to the relevant rules of the WTO, after the lawsuit is filed in the United States and the European Union, the United States and Europe will conduct bilateral consultations with China on this issue. If the 60-day consultation fails to achieve agreement, the WTO may form a hearing team to review the dispute.

As the related trade lawsuits took a long time, US Trade Representative Kirk stated that in order for the disputes to come to an end as soon as possible, the US’s first choice is to conduct dialogues and negotiations with China. However, he also stressed that if trade diplomacy can be solved, the United States will adopt trade diplomacy; if not, the United States will firmly take the next step in litigation.

Bilateral trade relations will be affected

The U.S. side has already put forward seven WTO lawsuits against China. According to Kirk's tone, as the friction between the US and China intensifies, it is not ruled out that more lawsuits will be announced in the following period. The Chinese side may have to make full preparations, especially in response to the preparation of joint litigation in Western countries.

Moreover, WTO litigation may still be just one aspect of the US side's increased trade friction with China. As another aspect, just last week, the United States International Trade Commission (ITC) issued an affirmative damages ruling on China's passenger vehicle and light truck tire special protection case, and determined that the large increase in Chinese tire product imports has caused the U.S. domestic industry. A serious impact. The special security case involved an amount of 1.7 billion U.S. dollars. U.S. President Barack Obama will make a final decision on this in September this year.

In addition, the U.S. Department of Commerce is also investigating the anti-dumping and anti-subsidy mergers of oil-producing wells in China, which involved a total amount of USD 3.2 billion. In addition to this WTO litigation and special safeguard case, the amount of money involved in this series of cases is huge and time is tight. It is rare in recent years and highlights the rising trend of U.S. trade protectionism under the financial crisis.

As two major trading nations, some trade frictions between China and the United States are normal events. However, a series of trade frictions may not harm bilateral trade relations. For the Obama administration, the Sino-U.S. economy is closely related to each other. The U.S. side cannot talk about protection against trade protectionism while obeying the pressure of domestic protectionism and aggravating the trade friction with China. As far as China is concerned, although trade wars will be lost to both sides, it must not allow the United States to continue to discriminate against Chinese products.