Temat: Dispute unlikely to lead to full-scale Sino-US trade war

BEIJING, Feb 8 (PTI): The simmering trade dispute between China and the United States is unlikely to lead to a full scale trade war as the two nations share overlapping interests, a prominent trade expert with a government think-tank has said.
"My judgement is that the complaint is probably a reflection of the power struggle inside the US government," the Deputy Director of the Institute of World Economics and Politics (IWEP) of Chinese Academy of Social Sciences, Li Xiangyang said.
The US government had Friday last filed a complaint with the World Trade Organisation (WTO) in Geneva, alleging that China is providing companies with improper subsidies to help its companies compete in world markets.
US Trade Representative Susan Schwab said China's government support for steel, wood, information technology and other industries hurt US firms and prevent them from competing fairly but did not elaborate.
This is the fourth time that Washington complained to the WTO about China's trade policies. The previous three related to China's auto parts import regulation, brown paper and semi-conductor sectors.
"There is no new or strong evidence that could prove China has launched improper trade policies", Li said, adding "We hope both sides could settle the dispute through a consultation."
The United States tried to team up with other trade powers including Japan and the European Union in filing a WTO complaint against China over its industrial subsidies before, but invitations were not accepted.
The United States has asked to open a consultation process which is the first stage of the dispute settlement procedure of the world trade body at WTO over China's industrial subsidies.
The consultation will usually last two months. If it fails, a WTO panel of experts will be formed to handle the dispute. "The Chinese government should brace for the upcoming consultation with US and figure out how to settle trade disputes under WTO multilateral regulations", an expert from the Chinese Academy of International Trade and Economic Cooperation, Jin Bosheng said.
"As the world's third largest trader, China needs to understand how to win the battle under the multilateral rules", Jin was quoted as saying by Xinhua news agency.
The Bush administration might use this complaint to cater to the trade protectionists of Congress in exchange for the renewal of his fast-track trade promotion authority which was set to expire on July 1, in an attempt to rekindle the stalled Doha Round of trade liberalisation talks, he said.
America's free trade agreements negotiations with Malaysia, Thailand and South Korea may also count on the extension of the trade promotion authority, Li added.
China should be cautious against aggravated trade protectionist forces in the United States, director of the Political and Economic Research Centre of the Beijing University, Wang Yong said.
"A worry is that Bush administration might choose to sacrifice its trade relationship with China," he said. While China's trade surplus surged to record high USD 177.5 billion, the country was subject to 86 anti-dumping and trade protection probes in 2006, a year-on-year increase of 37 per cent.
The investigations were launched by 25 countries and regions, involving a combined value of USD 2.05 billion, and 48 cases reached adjudication in 2006, of which 21 ended without taking measures.

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