China has taken to heart Robert Zoellick's proposition that the United States and China should behave as responsible stakeholders. But this time again the US has behaved as an irresponsible stakeholder by further enlarging export controls on technology goods to China, an act that hamstrings US competitive industries in their efforts to expand their exports to China and further worsens the trade imbalance.
It also undermines China's efforts to redress the trade imbalance with the US.
Following the strategic economic dialogue, China began to take a series of measures to boost domestic consumption and expand imports from the US on the one hand, and on the other take dramatic measures to slow down exports.
The Chinese government has decided to suspend or reduce export rebates for 2,800 export items as from July 1, this year. This would increase costs by up to 17 percent for 37 percent of Chinese export products.
However, the US instead of appreciating it, has decided to enlarge export controls that nullify China's efforts, made in good faith, to solve a US problem.
It appears that by taking such a measure, the Bush administration has bowed to the will of the protectionist group in Congress. It does not augur well for the multilateral trading system and China-US trade relations. Protectionist measures will not improve, but precipitate the US trade deficit.
The US trade deficit is attributable first of all to an internal structural problem, for example, the sustained fiscal deficits. Imports from China, a large part of which is owed to US investment in China, contributes to keeping a low inflation rate in the US in spite of its sustained large fiscal deficits.
It is inappropriate for the US to shift all responsibilities to its trading partners for an internal structural problem.
The US action is protectionist pure and simple. It violates the fundamental principle of open trade of the World Trade Organization (WTO) and deprives China's right of access to technology accrued to it under the general framework of the General Agreement on Tariffs and Trade as well as the Information Technology Agreement (ITA). Still worse, it represents a crude discrimination against China in breach of the sacred principle of most-favored-nation (MFN) treatment for all WTO members.
The restriction is directed against China alone. The US by accepting the Protocol on the Accession of the People's Republic of China (to the WTO) committed to grant unconditional MFN to China. It had not entered any reservation in the accession documents. Therefore, the discrimination embodied in this latest action by the US cannot be justified by any excuse. It has breached its WTO obligations.
National security is used as a pretext for export controls. The latest action has nothing to do with US national security. The true motive behind it is to prevent China from obtaining foreign technology for the development of its own civil aircraft. China will forge ahead with building its own aircraft without US technology.
But the damage to international norms and obligations should not be tolerated.
China has the right to request for dispute settlement in the WTO to protect its legitimate rights accrued to it under the WTO agreements.
The author is China's former senior WTO negotiator.
(China Daily June 26, 2007)