China is to hold talks this week with the United States on its
controversial steel safeguard tariffs. A Chinese delegation left
Beijing for Washington on Wednesday, said He Ning, director general
of the World Trade Organization (WTO) Affairs Department of the
Ministry of Foreign
Trade and Economic Cooperation (MOFTEC).
The delegation was headed by Shang Ming, commissioner-general of
MOFTEC's Fair Trade Bureau for Import and Export.
China hopes the issue can be resolved properly through bilateral
talks with the United States, he said in an interview with China
Daily.
"If the talks fail to satisfy China, we will not rule out starting
multilateral dispute resolution mechanism," he said.
The director general criticized the US action as "evident trade
protectionism" which has irritated countries.
On
March 5, US President George W. Bush slapped safeguard tariffs of 8
percent to 30 percent on several types of imported steel in an
effort to help the ailing US industry.
The tariffs took effect today.
China applied to the WTO to arrange talks with the United States on
March 14.
This is the first time that China has turned to the multilateral
trading system to resolve its trade dispute with another country
since becoming a member last December.
MOFTEC said China is still in the early stages of the procedure and
is seeking rightful compensation from the United States.
"But China reserves the right to start the WTO dispute resolution
mechanism," said a MOFTEC spokesman.
If
the talks fail, US steel tariffs are likely to cause China's first
complaint to the WTO.
Zhang Hanlin, a professor with the Beijing-based University of
International Business and Economics, said China could rightfully
ask the US to increase its imports of other products such as
textiles from China or lower its tariffs on these products as
compensation for losses incurred on Chinese iron and steel
companies by US steel tariffs.
But he suggested that a more likely solution to the issue would be
for the United States to lift its steel tariffs after several
months.
Some analysts guessed China will retaliate by imposing safeguard
tariffs on farm product imports from the US if it is not granted
satisfactory compensation.
US
farm products are very competitive on the global market and are
expected to flood into China after the country's WTO entry, dealing
a heavy blow to local farmers.
At
a press conference during the fifth plenary session of the Ninth
National People's Congress, Premier Zhu Rongji said farmers'
incomes were a major concern of the Chinese Government and jokingly
proposed a retaliative 30 per cent tariff on soybean imports from
the US to protect Chinese farmers.
Although the premier made the remark jokingly, analysts are
convinced senior Chinese officials are considering such
measures.
But Liang Yanfen, a senior researcher with the Chinese Academy of
International Trade and Economic Cooperation - a MOFTEC think tank
- dismissed such retaliative measures as impossible for the time
being.
"Such measures are irrational and unwise," she told China
Daily.
She said the Chinese Government should be more prudent and
carefully weigh all possible options before taking any action.
She suggested China should keep a close eye on the development of
the issue and wait for other entities such as the European Union to
act first.
"China, with only US$350 million annual steel exports to the US,
compared with about US$4 billion from the EU each year, should not
take the lead in standing against the US," she said.
China exported about 700,000 tons of steel products worth more than
US$300 million to the US last year, according to industry
estimates.
China is the world's biggest manufacturer of steel but is still a
net importer because domestic demand for high-end products far
outstrips supply.
The most important thing for domestic iron and steel companies at
present is to sell orders at hand and explore new markets, Liang
said.
The entities hardest hit by the US steel tariffs include Japan, the
EU, South Korea, China, Ukraine, Brazil and Russia.
The Chinese Government immediately voiced its "strong displeasure"
with the US decision after the US president's announcement of the
tariffs on March 5, condemning it as flouting WTO rules.
"We retain all of our rights within the WTO framework," the
Government responded.
MOFTEC reminded the US that China's steel exports to the US make up
too small a proportion of the country's total import to damage US
industries.
It
demanded that the US take that into account when tackling the
issue.
"China and the United States are important trading partners and
China hopes the issue can be properly and quickly resolved through
bilateral talks to avoid damage to Sino-US trade ties," it
said.
MOFTEC also urged the US Government to be responsible and take into
consideration the great harm its action would do to the
international trade order.
China is not alone in its pronounced anger against US steel tariffs
and threats to take the dispute to the WTO.
Other US trading partners also reacted negatively to the US
decision: the EU lodged formal complaints with the WTO and Japan
declared to take similar action immediately after the tariffs took
effect.
(China
Daily March 21, 2002)