Experts question reports of trade threat
US and Chinese experts are skeptical about news reports that the Trump administration may announce the initiation of a Section 301 probe against China.
News media in the United States reported last week that the Trump administration was going to announce last Friday a broad inquiry into China’s trade policies, especially on intellectual property rights.
Later reports suggested that it was postponed.
Wayne Morrison, a specialist in Asian trade and finance at the Congressional Research Service, said if the US Trade Representative began a Section 301 case against China and then initiated a World Trade Organization dispute settlement case against it, that would not be a big deal because every WTO member can initiate such a case.
“However, if the United States did not use the WTO dispute settlement process and at some point imposed sanctions against China, that might generate concerns that the US was undermining the very process it fought to create when the WTO was established,” he told China Daily on Monday.
“China could also challenge the US use of unilateral sanctions in the WTO or might respond with its own sanctions against the United States, which could threaten to cause a trade war,” he said.
Chad Bown, a senior fellow at the Peterson Institute for International Economics, described the possible action by the Trump administration as dusting off an outdated US trade law that allows the US president to unilaterally impose tariffs on another country.
Section 301 of the US Trade Act of 1974 was used most by the Reagan administration.
Bown said Trump’s pro- posed solution may only make matters worse. He said the use of an obsolete trade law is likely to shift attention from China’s actions to Trump’s policies.
The US government conducted 122 such Section 301 investigations since 1974, but only once since 2001.
Bown noted that US trading partners have become increasingly unhappy with such an “aggressively unilateral” approach, with the US government acting as police, prosecutor, judge and jury.
Bown said triggering a Section 301 case is problematic because it would provide added fuel to the argument that the Trump administration is undoing the US commitment to rules-based trade and decades of work to establish international cooperation.
He said a Trump decision to operate outside the WTO rules would spur China to follow suit.
“The fallout from Trump’s rogue use of yet another outdated US trade law would be considerable,” Bown wrote on Peterson’s website.
Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics in Beijing, said the Trump administration has addressed China differently than the US has in the past.
If their trade ties were to be profoundly altered or damaged, the outcome would possibly end the era of spreading global prosperity, Sang said.
“US consumers should be aware that China has not only been providing them cheaper and increasingly higher quality products, and US manufacturers an increasing magnitude of foreign demand, but it has also been leading much of its surplus saving to the US, which has been derelict in saving enough to support its own economy,” Sang said.
China could also challenge the US use of unilateral sanctions in the WTO.” Wayne Morrison, specialist in Asian trade and finance
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