Minister Chen in the WSJ - April 27, 2009

Strengthen U.S.-China Trade Ties

Now is no time for protectionism.

By CHEN DEMING From today's Wall Street Journal Asia

http://online.wsj.com/article/SB124085557829760091.html

Economic links have always been an important basis for the China-U.S. relationship, and the growth in trade between the two countries has been robust since the establishment of normal diplomatic relations. Today, China and the U.S. are each other's second-largest trading partner; the value of the two-way trade in goods exceeds $300 billion.

U.S. businesses have benefited greatly. In the past five years, American exports to China have doubled. The U.S. trade surplus with China in services has grown 36% every year, and the overall value of U.S. export services to China exceeded $16 billion last year. U.S. businesses have invested more than $60 billion in 57,000 projects in China. In 2007, American-funded companies in China enjoyed a 17% increase of profit, while domestically the profit of U.S. businesses dropped by 3% on average.

But the commercial ties between our two nations are affected by the global financial crisis. Chinese statistics show bilateral trade dropped 6.8%, and U.S. investment in China slumped 19.4%, on a year-on-year basis in the fourth quarter of last year and the first quarter of this year.

History tells us that the more serious a crisis becomes, the more committed we must be to openness and cooperation. Regrettably, however, trade measures by the U.S. against China are on the rise. Recently, American industries have petitioned the U.S. government for antidumping investigations, and for investigations under the World Trade Organization's "special safeguard provision," which could restrict imports of Chinese products. This will seriously test China-U.S. economic and trade relations.

Despite these challenges, the need to foster positive Sino-American ties has never been greater. We need to recognize the existing differences between us in social systems and economic development, and constantly enhance mutual understanding and trust. Both countries should step up cooperation on trade and investment issues, and explore and establish new possibilities for cooperation in such areas as agriculture, new and high technology, finance, energy and the environment. Dialogue and communication also need to be intensified concerning multilateral and regional trade and economic affairs. To that end, I would like to put forth four proposals:

- First, seize the opportunity for cooperation, and work together to tackle the crisis. At present, both governments have rolled out economic stimulus packages on a massive scale, which in turn are expected to become new growth areas for our trade and investment cooperation. For example, China's demand for infrastructure, machinery and equipment, and environmental protection is huge. It is hoped that both countries would turn these opportunities into tangible outcomes.

- Second, mutually open markets to expand trade and investment. The Chinese government does not pursue a trade surplus with the U.S. We will continue to encourage Chinese companies to import more from the U.S., and we will also welcome U.S. companies and trade-promotion agencies to be more active in China.

Since foreign direct investment is a basic element of China's opening-up policy, we welcome American companies that want to increase their investment in China. Meanwhile, we also encourage capable Chinese companies to invest in the U.S. We hope that the U.S. government will welcome Chinese investments and create an open and transparent investment environment.

- Third, strengthen bilateral dialogue and resolve differences properly. As trading partners with broad and close ties, both countries should not allow differences on some issues to affect their cooperation in areas of common interests. We need to use the U.S.-China Strategic and Economic Dialogue and the U.S.-China Joint Commission on Commerce and Trade to boost strategic mutual trust, expand dialogue and cooperation, and establish a high-level and stable regime of bilateral trade and investment facilitation.

- Fourth, safeguard the environment for trade and advance the Doha Round. The U.S. and China, as the largest and the third-largest trading countries in the world, respectively, should take the lead in following up the consensus reached at the G-20 Summit in London and refrain from formulating any new trade protection policies before the end of 2010. We should also exercise caution, avoid arbitrary use of the trade remedies allowed by the World Trade Organization, and honor our commitment to fight protectionism. The two countries should also work together to advance the Doha Round, strictly follow the mandates of the Doha Development Agenda, lock in what has already been agreed to in past negotiations, avoid reopening negotiations or adding new subjects, and seek the success of this round.

A positive, cooperative and comprehensive Sino-American relationship will surely bring new prosperity and development to both economies. I hope and believe that bilateral trade will rise to a new high and exceed $500 billion in the coming five years, growing in a more balanced way.

Mr. Chen is minister of commerce for the People's Republic of China.

WTO ANNOUNCES ESSAY AWARD FOR YOUNG ECONOMISTS

Prize

The annual WTO Essay Award consists of a prize of CHF 5,000 to the author(s) of the winning essay. In the case of a co-authored paper, the prize will be equally divided among the authors. The winning paper will be officially announced at the annual meeting of the European Trade Study Group (ETSG), which is currently the largest conference specializing in international trade. The first WTO Essay Award for Young Economists will be made in September 2009 at the ETSG meetings in Rome, Italy. The winning author(s) will receive funding to attend the meetings.
  

Selection

An Academic Selection Panel is responsible for the selection of the winning paper. From 2009 to 2011 the Panel will comprise:

• Professor Jagdish Bhagwati (Columbia University)

• Professor Robert Staiger (Stanford University)

• Professor Alberto Trejos (INCAE Business School).

• Ex officio panel members will include Dr Patrick Low (Director, Economic Research and Statistics Division, WTO Secretariat) and Dr Hakim Ben Hammouda (Director, Institute for Training and Technical Cooperation, WTO Secretariat).

• Dr Michele Ruta (Economist, Economic Research and Statistics Division, WTO) coordinates the work of the Selection Panel.
    

Eligibility

The paper must address issues related to the economics of the WTO (e.g. the design of trade agreements, contingent protection, trade facilitation, the effects of trade agreements, Aid for Trade, the economic aspects of dispute settlement). The author(s) of the paper must possess or be engaged in the completion of a PhD degree and, if over 30 years of age, be no more than two years past a PhD defence. In the case of co-authored papers, this requirement shall apply to all authors. In addition, to be considered for the Award, essays cannot exceed 15,000 words.
  

Important deadlines

The essays for the first award must be submitted by 30 June 2009. The Economic Research and Statistics Division at the WTO Secretariat will shortlist a number of eligible papers by 15 July 2009 and the Selection Panel will take a final decision by 15 August 2009. Only the author(s) of short-listed essays will be notified.
  

Publication

The winning essay will be published in the WTO Working Paper Series and it is the responsibility of the author(s) to endeavour to secure publication of the contribution in a journal.
  

Submissions

All submissions should be sent to Michele Ruta with the subject line "WTO Essay Award". Submissions should include as separate attachments in PDF format:

1. the essay
2. the CV of the author(s), specifying (i) current affiliation(s), (ii) the academic institution awarding the PhD, (iii) the year (or the expected year) of the PhD, (iv) the date of birth of the author(s).

New Book: Redesigning the World Trade Organization for the 21st Century

A new book - "Redesigning the World Trade Organization for the 21st Century" - sponsored by the EDGE Network, will be published by Wilfred Laurier U Press with Centre for International Governance Innovation and International Development Research Centre (IDRC) in August. Interested readers can find out more about this book here. I'm honored to be one of the contributors to the book.

The chicken war continues - in Geneva

I was in Geneva the whole week for a meeting at the WTO. Yesterday, China decided to take the chicken case with the US a month after Dr. Zhang Xiangchen, China's DPR to the WTO, made the strong statement on chicken in the WTO. It seems Obama is in for a treat of Chinese-style stir-fried chicken. The question is, does he like Chinese take-outs as Bush did?

US ban on China poultry imports slammed
(Xinhua)
Updated: 2009-04-17 22:53


BEIJING - China said here Friday a recent US law banning poultry imports from China is "obviously discriminatory" and harms the due interests of Chinese poultry industry.

The Section 727 of the Omnibus Appropriations Act of 2009, which was signed into US law in March, disrupts the normal Sino-US poultry trade activities and breaches the World Trade Organization (WTO) rules on tariffs and farm produce, said Ministry of Commerce spokesman Yao Jian.

The Chinese mission to the Geneva-based WTO filed complaints to the organization on Friday about the Section 727. According to WTO procedures, once complaints are filed, the two concerned parties usually have some 60 days to resolve disputes through consultations.

If that fails, China can request the establishment of a WTO expert panel to investigate and rule on the legality of the US measure.

Yao said it was China's legitimate right as a WTO member to file such complaints. He urged the United States to attach importance to the strong concerns of China and properly resolve the dispute by WTO procedures.

China had many rounds of negotiations, both bilateral and multilateral, on the issue and the Chinese poultry industry had also voiced strong opposition, but those dialogues failed to address China's concerns, Yao said.

"The international community should overcome the current hardships together, prevent the financial crisis from spreading and jointly fight trade protectionism," said Yao. "That was also a significant common understanding reached at the London summit by leaders of the Group of 20 countries in early April."

According to the Section 727, none of the funds made available in the Omnibus Appropriations Act can be used to "establish or implement a rule" allowing imports of poultry products from China.

China and the United States banned imports of each other's poultry products in 2004 following outbreaks of bird flu. They agreed to lift the bans at the Sino-US Joint Commission on Commerce and Trade in 2004.

China did lift the ban but has complained that the United States was not following suit.

China imported 580,000 tons of chicken products from the United States last year, accounting for about 75 percent of total chicken imports.

Petition to prevent protectionism and collapse of trade

As the G20 meeting opens, Jean-Pierre Lehmann, the Evian Group Founding Director, called for business leaders and academics from around the world to sign a petition to the G20 leaders for an urgent mobilisation of the business community to fight protectionism. The Text of the Petition is reproduced below. Interested readers can also find the text of the petition at Evian Group's website.


The Honourable Gordon Brown

Prime Minister, UK Government

Host, The G20 summit



Prime Minister

We are writing to you as global business executives, business school professors and business consultants a very strong message we would ask you to convey to the heads of government of the G20 meeting that you have convened on 2 April in London.

At this extremely perilous juncture of the global economy, we wish to express our total commitment to the maintenance and indeed improvement of the open global market economy and the rules-based multilateral trading system. Protectionism must not prevail.

We ask the G20 leaders to think back and to think forward. As the current state of the world economy is being labelled the worst since the 1930s, they should think back at the cataclysmic effects – especially in respect to employment – that the protectionist surge then inflicted.

We ask them to think forward. Over the course of the next decade there will be hundreds of millions of young people coming on to the labour markets in the developing world. This is perhaps the greatest challenge the world faces in the immediate future. Trade is by no means a guarantee that there will be sufficient growth for the required number of jobs to be created; but we can be sure that if trade continues to fall at the rate it is at present and if greater barriers are erected, the outlook becomes extremely bleak and millions, perhaps billions, will suffer.

The Declaration of the earlier G20 summit contained the right words on trade, especially paragraph 13 in the sub-section entitled "Commitment to an open global economy". Regrettably the words have not been translated into action. We believe it is imperative for the sake of the global economy and for the credibility of the G20 itself, that the Summit you will be chairing does ensure that action ensues.

We are petitioning the G20 to hear a resounding rejection of protectionism and an unambiguous commitment to an open global market economy along with specific measures and deadlines for implementation.