China’s tit-for-tat retaliation troubles USTR

By Tom Miles, Reuters

GENEVA–U.S. Trade Representative (USTR) Ron Kirk said on Saturday the United States is not in a trade war with China, but he is troubled by China’s tendency to retaliate when other members of the World Trade Organization (WTO) launch trade cases against it.

“I am troubled by what I see as a trend of China to retaliate when members — not just the U.S., other members of the WTO — bring China to dispute settlement over legitimate matters,” Kirk said in an interview. “That’s not only disruptive to global trade, it’s not only not in the interest of the members of the WTO. “But I think long term it’s not in China’s interest. It begins to cut away at their credibility and their belief in the two-way value of trade in which not only they marvelously and spectacularly benefit as they have, but they’re also committed and have a commensurate responsibility to open up their markets fairly to us.” Asked if the United States was in a trade war with China, he said: “I really do push back on that. It is not a trade war for me to use the tools, the resources that every member of the WTO has open to them, to go to China and say: ‘We believe the way you’re executing this policy — that is WTO-inconsistent.’”

Kirk was speaking on the last day of the WTO’s biennial ministerial conference in Geneva, where the 153 member states agreed to admit Russia, Samoa and Montenegro and clinched a landmark reform of government procurement rules.

But the conference was held amid very low expectations because of deadlock over the 10-year-old Doha round of trade talks, which has effectively paralyzed the WTO’s ability to legislate. Many diplomats had hoped for a constructive meeting, but on the eve of the gathering China slapped punitive duties of up to 22 percent on large cars and SUVs made in the United States, a U.S. export flow worth nearly US$4 billion a year. China’s decision to impose duties was widely seen as a tit-for-tat move after challenges from the U.S. to China, most recently in the solar industry and poultry sector. “Part of a foundation of a rules-based system is dispute settlement,” Kirk said. “That’s what we think is so important about the WTO. How China reacts to that is up to China. But I just cannot buy into the argument that our standing and protecting the rights of our exporters and workers is somehow igniting a trade war or being protectionist.”