Economy

Experts warn of impacts from trade protectionism

By Ding Qingfen (China Daily)
Updated: 2010-04-09 10:08

Experts warn of impacts from trade protectionism

Containers loaded for exports. Global trade in merchandise is projected to rise 9.5 percent this year. [Asianewsphoto]

Developing nations will probably feel mounting trade protectionism in 2010 due to continuing high levels of unemployment and the weak economic recovery in developed regions, said analysts.

But they suggested developed nations should be cautious and warned that trade protectionism would prolong the global economic crisis.

Although most G20 member countries have been broadly successful in holding back protectionist pressures, they must remain vigilant, especially in economies whose employment and new job opportunities are shrinking, said a recent World Trade Organization (WTO) report.

China, the major target of trade remedy cases worldwide last year, will be undoubtedly watching the trend.

Sun Zhenyu, China's ambassador to the WTO, warned that China will face increasing trade protectionism this year as its exports increase and unemployment in the US and Europe remain high.

US President Barack Obama is coming under increasing pressure over the value of China's currency, with US senators and economists insisting the yuan is undervalued by up to 40 percent and suggesting the dispute should be taken to the WTO. No country has ever challenged another's currency policies at the WTO.

A group of US lawmakers also recently urged the Obama administration to take immediate action to resolve a long list of trade disputes with China and others in a bid to meet the stated target of doubling exports over five years.

Chinese government officials and many experts repeatedly said it will not help either side if the US takes trade protectionist measures related to China, a move that would also hurt global economic recovery.

And it's not only the US. A paper industry association from the European Union has appealed to the European Commission to launch an anti-subsidy investigation into imports of coated paper from China. The move follows an anti-dumping investigation announced by the European Commission in February.

"Developing nations such as China outgrew developed nations during the financial crisis, so they are the scapegoat for economic problems," said Zhou Shijian, a senior WTO expert.

Since worldwide financial turmoil began in late 2008, trade protectionism has surged to reach a record high last year, according to statistics from the World Bank.

Seventeen nations and regions from the G20 launched 78 investigations since late 2008 that covered a wide range of measures from trade remedy cases, trade restrictions, tariffs and subsidies for exports.

WTO statistics show new anti-dumping investigations reached 250 last year, up by 20 percent, and new anti-subsidy cases grew by 193 percent to 41.

Nations launched 118 trade cases relating into China affecting exports worth $13 billion, according to the Ministry of Commerce.

As global trade shrank by 12 percent last year, the biggest yearly fall in 70 years, China, the world's largest exporter, recorded a decline of 16 percent in exports.

While the WTO predicts merchandise trade volumes will rebound and expand by 9.5 percent this year, many still are worried about spreading trade protectionism worldwide due to uncertainty in the global economy, unemployment and consumption in the US and some European nations.

Wan Jifei, chairman of the China Council for the Promotion of International Trade, urged China to turn the tables and initiate more trade complaints by using WTO rules and regulations.

Last year, China filed appeals with the WTO on two cases involving leather shoes and fasteners, and also lodged appeals to the WTO on a US tire case.