Beijing condemns protectionism
Bangkok Post
Beijing condemns protectionism
By Apinya Wipatayotin
14 September 2006
Helsinki . China has voiced its concern over increasing trade protectionism by its counterparts, which it sees as the main threat to its competitiveness in the world market.
It has called for the international community to eradicate trade barriers and promote sustainable economic growth.
Protectionism practices affecting China have been spreading worldwide, in the form of political intervention, anti-dumping penalties, higher tariffs and import quotas, according to Fu Chengyu, president of China National Offshore Oil Corporation.
’’Foreign countries have launched more than 700 cases against China. We have become the country that has had the most trade disputes during the last 11 years, resulting in economic damages of more than US$50 billion in exports,’’ Mr Fu said in an address to the 10th Annual Asia-Europe Business Forum in Helsinki.
’’But we believe that protectionism will not be the winner in the long run. Politicians might get more votes in a certain period, but it would make [their countries] lose global competitiveness.’’
China is fast approaching the status as the world’s largest exporter, thanks to dramatically increasing GDP growth since the country opened up to more foreign investment. Its economic performance has been spectacular over the last 25 years with average annual GDP growth at 9.6% and up to 10.9% in the first half of this year.
Since in joined the World Trade Organisation (WTO), China’s external trade has more than doubled from $620 billion in 2002 to $1.42 trillion in 2005.
’’It’s time for us to promote free trade and anti-protectionism because global competitiveness can only be achieved through global competition, not by protection,’’ Mr Fu said.
China has signed free trade agreements with many countries, including Thailand, aiming to expand its economic growth. The proliferation of bilateral free trade pacts has been challenging the effectiveness of the multilateral WTO.
Rufus Yerxa, deputy director-general of the WTO, said that while bilateral trade pacts may be easier to negotiate than broader agreements under the WTO’s multilateral rules, some important trade issues, such as agricultural subsidies, cannot be addressed effectively in bilateral agreements.
’’We must keep in mind that all of the largest bilateral trading relationships in the world depend on the WTO framework. There is no EU-US FTA, nor is there one between the EU and Japan, or the EU and China. So even if one accepts that there will be a continuing proliferation of [bilateral] FTAs, we must consider that the most important trading relationships in the world are still highly dependent on progress in the multilateral realm,’’ Mr Yerxa said.
Haruhiko Kuroda, the president of the Asian Development Bank (ADB), said that the debate over multilateralism versus regionalism is not a case of ’’either-or’’ but of ’’both’’. If managed effectively, they can be mutually reinforcing and bring sustainable development to partners.
But he warned that entering into FTA pacts without well-rounded information could possibly ruin the country’s economy.
’’The proliferation of a large number of bilateral FTAs can lead to well-known ’noodle bowl’ effect. The country might face the difficulty of multiple rules of origin arising from overlapping agreements. Complex rules increase business costs, especially for SME entrepreneurs, as they have a very limited capacity to manage them,’’ he warned.
He said that ADB had launched a major study on the economic effects of FTAs on business in Asia and Latin America to help countries create a ’’best practice’’ approach to build their capacities to negotiate and implement appropriate trade agreements.
According to the ADB’s research, there are currently 81 regional and bilateral free trade agreements in effect in Asia, 52 under negotiation and 50 more have been proposed.
