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Negotiation best way for China and the US to solve trade conflict, says US expert
 
A security agent takes his position as U.S. and China's flags flutter over the Forbidden City ahead of the visit by U.S. President Donald Trump to Beijing, China November 8, 2017. Photo: Reuters
 
The only way, which also the best way, for China and the United States to resolve the current trade tensions is negotiation and creation of a new set of rules for trade relationship that are acceptable to both sides, said a US trade expert on Wednesday, as the US is reportedly set to announce tariffs on Chinese imports worth up to $60 billion on Friday (Beijing time).
 
This has raised fears among many that the world’s two largest economies could be sliding toward a trade war, and Trump’s unilateral move would invite China's retaliation that could further hurt the U.S. economy.
 
Forty-five U.S. trade associations representing some of the largest companies in the United States sent a letter to the US President Donald Trump on Sunday urging him not to impose tariffs on China, warning it would be “particularly harmful” to the U.S. economy and consumers.
 
“I don’t know whether there would be trade war … , but I do know the only way to move forward now are negotiations among the major powers, particularly the United States and China,” said Edward Alden, a senior fellow at the Council on Foreign Relations, on Wednesday in Beijing. “The two governments are going to have to work out a new set of rules for trade relationship that both can live with.”
 
On Wednesday, the World Trade Organization ruled that Washington had not fully complied with a 2014 ruling against its anti-subsidy tariffs on various Chinese products ranging from solar panels and wind towers to steel cylinders and aluminum extrusions, according to Reuters.
 
In response, China’s commerce ministry said late on Wednesday that the WTO ruling “proves that the U.S. side has violated WTO rules, repeatedly abused trade remedy measures, which has seriously damaged the fair and just nature of the international trade environment, and weakened the stability of the multilateral trading system.” 
 
According to Alden, there has been tremendous concern about the damage that Trump’s protectionist trade policy will do to the rules of WTO, “as part of the understanding when we created the WTO in 1995 is that countries would not act unilaterally the way that Trump administration is acting. So there is tremendous fear that it’s going to undermine the system of the rules that were the crowning achievement of post-WWII trade policy.”
 
China has repeatedly said it has no wish to fight a trade war, but has also threatened to retaliate if forced to do so. 
 
"The Chinese side never wants to fight a trade war with anybody, but if we are forced to, we will not hide from it," Hua Chunying, spokesperson for the Ministry of Foreign Affairs, told a press briefing on Wednesday, adding that China would "definitely take firm and necessary countermeasures to defend its legal rights."
 
The tariffs Trump is set to announce will be imposed under Section 301 of the 1974 U.S. Trade Act, following an intellectual property probe launched in August last year.
 
“With regards to the Section 301 investigation, China has expressed its position on many occasions that we resolutely oppose this type of unilateral and protectionist action by the U.S.,” the Commerce Ministry said in a fresh statement on Thursday. 
 
“China will not sit idly by while legitimate rights and interests are hurt. We must take all necessary measures to firmly defend our rights and interests.”
 
The Trump administration has repeatedly attributed the US’ economic slowdown and job losses to trade deficits with major trading partners and vowed to change the situation by imposing tariffs and other non-tariff trade barriers if necessary.
 
As Alden put on Wednesday, trade deficit is not the best measure of the health of a trade relationship, but the incumbent administration seems to be overly focused on trade deficit.
 
“Not sure what the long-term plan of the government is. But the hope is by taking this action it will show China that this administration is far more serious than its predecessors were about dealing with problems in the trade relationship,” he said. 
 
In terms of the outcomes of the actions taken by the Trump administration, Alden said the optimistic one is “we finally get negotiations among the big countries including the United States, China and European Union, to try to update the rules for the new situation,” while the pessimistic outlook is that the current situation will move into one where “nobody behaves according to the rules anymore.” 
 

 


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