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Expert Calls on New Thinking in Solving Trade Disputes

China needs to rethink its strategy in dealing with increasing trade disputes in the new era after it entered the WTO, said an economist Wednesday.  

"China should learn to use international rules to win the disputes," said Zuo Xiaolei, top economist from the Yinhe Securities, in a signed article in Wednesday's China Securities Journal.


When commenting on the current textile dispute with the United States and the European Union, Zuo said the government should also urge domestic companies to improve their enterprise mechanism and pay attention to communicate with trade partners in global market.


On the excuse of the rapid growth of exports following the canceling of textile quota system, Washington and Brussels decided recently to impose restrictions on some kinds of Chinese textile products, igniting textile disputes with China.


Though China voluntarily imposed export tariffs on 148 categories of textile products on January 1, 2005, and decided to raise export tariffs on 74 categories of textile products on May 20 to curb the export surge, the gesture was not met with understanding from the US and the EU. In response, China announced that it would lift, as of June 1, export tariffs on 81 categories of textile products that it previously imposed to curb exports of Chinese textile products.


Zuo said China will face more trade disputes as it opens wider in the integrated economy. To win in the new situation, China needs to know more rules about the international trade game and to be farsighted in making decisions. As on the textile issue, Zuo said that China should have known earlier that the US and the EU would surely launch so called "special protection" measures after canceling the quota system and should prepare better for the dispute.


She said the textile dispute also rings a warning alarm for domestic companies on how to improve their own structure and sharpen their competitive edge in world trade.


Zuo said domestic companies should improve their internal mechanisms, technical upgrading and structural readjustment. Employees in many companies now lack welfare policies like social security and medicare and their payments are also at a low level, said Zuo, adding that the government should take measures to urge companies to improve their own performance in these respects.


"It might bring up cost for the companies," said Zuo, "but in the long run, it will help ease the trade dispute and will be good to the further development of exports."


Zuo also said that China should improve communication and exchange with world trade partners.


Most of China's export products, especially light industry products, are of low value-added. In many cases, raw materials are imported, processed in China and then exported.


"But without explaining, the world community might not know the truth, and that's why there would be a false appearance that all the products are exported from China," said Zuo.


(Xinhua News Agency June 9, 2005)

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