Promoting Economic Globalization and Opposing Trade Protectionism

From: English Edition of Qiushi Journal Updated: 2011-09-21 09:51
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 At present, the world economy is recovering, economic globalization is continuing, and the flow of capital between territories is picking up in pace. However, in spite of these trends, protectionism still poses a major obstacle to economic globalization and global economic recovery. At the Group of 20 (G20) Summit in Seoul, Chinese President Hu Jintao declared before the world that, “we must be firmly committed to free trade, to the consensuses reached at previous G20 summits, to opposing all forms of protectionism, and to removing existing protectionist measures.” China has taken a clear stand against protectionism. It is dedicated to removing barriers in trade and investment, and thereby contributing to the recovery and sustainable development of the world economy.

 The uncertain path of economic globalization

 The international financial crisis dealt a serious blow to world trade and investment, causing some people to cast doubt on and even reconsider economic globalization. Under this backdrop, anti-globalization sentiments, characterized by economic nationalism and xenophobia, began to emerge in some countries, eroding public support behind policies such as free trade and openness. As the challenge to Western-led economic globalization became increasingly serious, an intense stand-off over the reshaping of globalization ensued between developed nations and newly emerging markets. Thus, strengthening global economic governance became a task for all countries.

 The multilateral trading system is being beset by difficulties. The outbreak of the financial crisis made countries much more eager to trade with one another. The World Trade Organization (WTO) has continued to play an irreplaceable role in coordinating the trade policies of different countries, balancing international trade relations, and reducing trade friction. However, owing to the developmental disparities that exist between the various members of the multilateral trading system, developed members are in the position to set the rules of world trade, while the interests of developing members often go neglected. Thus, the question of how the interests of various members should be balanced has become a major challenge facing the future development of the multilateral trading system. At present, however, the top priority of WTO member countries is the smooth completion of the Doha Round of talks and the conclusion of the relevant agreements. Despite more than 9 years of negotiations, developed members and developing members have been unable to reach consensus on key issues such as the reduction of agricultural subsidies, the lowering of non-agricultural tariffs, and the opening up of service sectors, which are decisive to the success of the talks. Repeated setbacks to the multilateral trading system have hindered the liberalization of trade, and may in turn aggravate trade protectionism around the world. 

 Significant progress has been made in regional economic integration. In contrast to the stalled development of the multilateral trading system, regional economic integration, which is based around the establishment of free trade areas, is starting to flourish. Regional economic and trade cooperation has rapidly gone from low-level integration, which only involves trade and production, to high-level integration covering trade in services, investment, the protection of intellectual property, government procurement, and competition policy. The influence this is exerting on international trade and the world economy is gradually becoming more prominent.

 

 April 1, 2011, a saleswoman sorts shoes at a market stall in Shenyang. Starting from April 1, the European Union removed an anti-dumping duty of 16.5% imposed on leather shoes imported from China. This unreasonable protectionist measure had been in operation since 2006. /Photo by Xinhua

 Emerging markets are playing a more important role in the multilateral trading system. Generally speaking, large emerging markets recovered from the financial crisis sooner than developed markets, which has allowed them to close in on developed countries. As a result, emerging countries have increasingly sought equal status, and are exerting an increasingly large influence in global affairs. 

 New features of trade protectionism

 With the resumed increase of international trade, trade friction is becoming increasingly common, and new trends of trade protectionism are emerging.

 First, trade friction has become a political issue in some countries. Trade policies have become a means of mitigating domestic conflicts and political pressure in certain Western countries that exercise election-based political systems. To gain favor with voters and shift the blame for domestic grievances, legislatures and governments in certain countries have often proposed and adopted protectionist trade measures, thereby gaining politically. Imported products have become an easy target for politicians aiming to shift the focus of domestic grievances and seek political gain.

 Second, some countries are attempting to coerce trade partners into changing their economic systems and policies by capitalizing on trade frictions. In a bid to export Western values of human rights and Western models of economic development, some countries and regions have launched frequent anti-subsidy investigations, abused trade remedy measures, criticized the exchange rate mechanisms of certain emerging economies, classified the undervaluation of currencies as a form of trade protectionism, challenged the policy measures of trade partners in regard to public finance, taxation, finance, industrial development and resource allocation, and even imposed quotas on imports under the pretext of labor standards and low-carbon standards. 

 Third, certain countries have made constant attempts to sow discord among emerging economies. Certain countries have spread the idea that foreign trade is a threat to Latin America and Africa. In order to set developing countries against one another, these countries have claimed that imports will damage local industries and that foreign investment is a ploy to plunder local resources. 

 Fourth, certain countries have provoked trade friction as a means of gaining bargaining chips in trade talks. Showing disregard for the reality of bilateral trade and the objective laws of international industry transfer, certain countries have deliberately provoked trade frictions, initiated dispute settlement procedures in the WTO, and enforced stringent trade remedies domestically in an attempt to force trade partners to compromise on issues of concern at trade talks. 

 Trade frictions remain grave in the post-financial crisis era. There is a danger that trade frictions will become increasingly political, and that this will further hinder cooperation in international trade.

 Efforts to maintain a free and open global trade system

 Under the backdrop of rapid economic growth and expanding foreign trade, China’s Ministry of Commerce will actively address trade frictions in an effort to keep economic globalization and the global trade system free, open and fair.

 We will remain dedicated to our policy of openness. The past 30 years and more have witnessed China’s opening up to the outside world. This process can be viewed as China’s participation in economic globalization, and the achievements that China has gone on to make are visible to all. China will continue its commitment to openness, share opportunities for cooperation and development with other countries, liberalize and facilitate trade and investment, formulate and implement trade policies conducive to economic development, and oppose all forms of trade protectionism. In addition to pursuing its own development, China will work together with other countries to promote the growth of the world economy.

 We will strengthen our efforts to promote the Doha Round of trade talks. China resolutely supports the multilateral trading system, and has always viewed it as a cornerstone of its international trade policy. An early, impartial and balanced conclusion to the Doha Round negotiations is not only needed for the establishment of a rational international economic order, but also for the balanced development of the world economy. Both developed and developing members should show a greater level of perspective, sincerity and determination, respect WTO authorization, consolidate advances that have already been made, and push for a comprehensive and balanced conclusion to the Doha Round, so as to realize its intended objectives as soon as possible.

 We will strengthen negotiation efforts so as to safeguard our legitimate rights and interests. China is an advocate and a resolute supporter of free trade. All countries should fulfill the commitments made at the G20 Summit in Toronto, namely, to refrain from imposing additional restrictions on commodities, investment and services, and to promote international trade with a more open attitude. In line with the principles of mutual benefit and common development, we should strive to resolve trade frictions through dialogue and negotiations. We will carefully formulate strategies for the handling of trade frictions, adhere to the principles of addressing problems on just ground, to our advantage, and with restraint, negotiate for the interests of Chinese enterprises at various bilateral occasions, express our concerns, and safeguard the interests of Chinese enterprises. In addition, we will step up anti-dumping, anti-subsidy and safeguard investigations against imported products and take punitive measures in conclusive cases in order to defend the legitimate rights of domestic enterprises and deter other countries from abusing trade remedy measures to the detriment of Chinese products.

 We will vigorously implement a strategy to develop free trade areas. Currently, China has already signed 10 Free Trade Agreements (FTAs) and is currently negotiating an additional 4, covering 27 countries and regions altogether. In addition, government-industry-university joint feasibility studies on free trade area between China and South Korea and between China and Switzerland have already been concluded. China deems FTAs as important means of opening up further, promoting the development of a harmonious world, and diversifying export markets. FTAs are conducive to settling international trade disputes, and will help China to convey itself as a major country that is open and responsible. The establishment of the China-ASEAN Free Trade Area at the beginning of 2010 has led to the rapid growth of bilateral trade and investment and put bilateral economic and trade cooperation back on the fast growth track. From January to November 2010, bilateral trade between China and ASEAN rose by 40.6% compared to the same period of previous year, exceeding the growth rate of China’s imports and exports. With this, ASEAN has become China’s fourth largest trading partner. Moreover, in the first three quarters of 2010, bilateral investment between China and ASEAN totaled at USD 6.1 billion. In the future, we will take active and prudent steps to promote free trade and establish free trade areas around the globe. At the same time, we will also encourage Chinese enterprises to use these agreements to their favor and expand trade and investment links with China’s FTA partners.

(Originally appeared in Qiushi Journal, Chinese edition, No. 2, 2011)


Note: Author: International Trade Representative of the Ministry of Commerce of the People’s Republic of China

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